Once again, we welcome our contributor Elizabeth Colegrove from Reluctant Landlord to offer her personal experience on dealing with landlording stress.
Recently I spent a couple of months with a prospective tenant. They were applying sight unseen, so I took at least two hours to answer their questions and do a live walk through. We set up a time for them to see the house in person. They seemed ready to sign, but wanted to check one more detail before they did.
When I checked in with them again, it turned out they were looking at another house, and that they wanted to let me know the next day. You all know where this is going, because we have all been there before; the next day they let me know they were going with the other house.
I bear the renters no ill will, as they were taking care of their needs, just as I would do for my family. However, I also felt a lot of frustration. It was a little upsetting that I hadn’t understood that they were looking at other units, as my expectation was that we were all ready to seal the deal. I was annoyed that I had made an exception and cleared my schedule for them, which is something that I don’t usually do due to this exact scenario. But it was the slow season, and we all seemed ready to go, and I was anxious to secure these renters. I also always try to take care of another military family like my own.
A similar situation happened later on that same week. It wasn’t the first time, nor will it be the last. It happens often. In the last six months it has happened at least eight times in some shape or form. I share this story to illustrate that treating landlording like a business is the best policy. Establish your policies from your own experiences, and learn from them. And in the times when you decide to make an exception on your own unwritten rules, be prepared to bear the blame, without allowing it to get you down.
I am fundamentally able to not only survive but thrive as a landlord based on three important beliefs.
I use a strict and specific lease that is over 20 pages long. While I use a basic lease format, each agreement has certain aspects that are dependent upon the individual unit. The lease makes it clear what the consequences will be for certain violations by the tenant. That way, if a violation occurs, I don’t need to hesitate before responding. My lease keeps me fair and consistent. If you are curious to learn more about my lease language, check out this book. It explains everything I put in my lease and why: (https://www.reluctantlandlord.net/everything-lease-addendum-landlords/)
2) Do not hold a property for a tenant
I have learned the hard way that holding a unit does not pay. I make it clear to all applicants that I will rent the unit on a first come, first served basis. As a businessperson, if my house in not rented then I am not making money. In my experience, tenants who are truly interested in the property will be anxious to nail it down with a deposit and will make themselves available to sign the lease. On the other hand, those who are still shopping around will drag their feet and waste time.
3) Early termination fee
The process of placing tenants is a lot of work: meeting with applicants, reviewing applications, performing background and credit checks, performing walk throughs, and signing the lease. I always include a lease termination clause that requires the tenant to pay a fee in order to leave the lease early (of course, this does not apply to tenants covered under the Servicemembers Civil Relief Act). It gives me peace of mind to know that a tenant who departs early will pay a penalty to help make up for my lost income as well as the time that I will have to put into replacing that tenant.
These three simple steps will help you weather the tough days more easily. These measures make it less likely to fall into many of the most common causes of a bad day as a landlord.