On Becoming a Slumlord, Part 3

How do I protect myself from bad tenants?

You know, sizing up potential tenants becomes a gut instinct...over a lot of time. I'm am still not good at it. You have to keep in mind that people rent for a variety of reasons: They can't afford to buy, they are still too young to buy, they've run into financial difficulties, their getting a divorce, etc. etc. There are a few things you can do to protect yourself and your investment though.

1. Stick to the lease...don't give an inch. As with most anything else, if you give an inch, they will take a mile.

2. Don't negotiate the rent. You set the rent at what you are comfortable with. It is your comfort you should be worried about, not theirs.

3. Do extensive background checking. This includes credit, criminal, and sex offender back ground checks.

4. I can't say it enough but do frequent, unannounced inspections. Leave a note letting them know you were there and what you found, if anything. This let's them know you are watching your property. (Be sure to have it written in the lease that you can enter at any reasonable time unannounced.)

5. Don't get sucked into sob stories, which is easy to do. Again, stick to the lease, or as my real estate attorney says, to the "letter of the lease." If they begin to give a sob story, just refer them back to the original lease saying this is what you agreed to. That's it...

6. Don't allow them to get any of your personal information. Just plain good boundaries here.

7. If they don't pay the rent on time, within the grace period, IMMEDIATELY put a warning letter on the inside of the front door giving them 24 hours to pay. If they don't pay within 24 hours, start the eviction process. Evicting someone can take up to 3 months in some places. Don't delay. If they can't pay, then they can't pay...simple as that.

8. Get a good real estate attorney who works with rental properties. Let your attorney handle everything. This will save your sanity when trying to navigate the legal system...trust me. It will also give you an edge in court. The cost for the attorney can be deducted from their security deposit.

9. Again, stick to the lease to the "t". Keep your relationship with your tenants simple...you're the landlord, they are the tenant. Get a good attorney.