So far, in the first article you started looking into managing your investments yourself as a possibility. It is just a matter of knowing how to do it. These step by step articles bring the property management job to a more enjoyable exercise. It is like eating an elephant, just one bite at a time until is done.
The tenants are qualified over the phone and at the actual interview they filled the application. After running a credit report and checking the income or the employment, the applicant becomes a tenant by paying the first month rent and the security deposit. The security deposit is your security, and you have to use it if necessary.
Counter Stools Metal
The security deposit should be a different amount than the rent being charged, but no more than one and half the rent. For example, for a 0 rent the deposit could be between 0 and no more than 0.
When the tenant moves out and the property/apartment is left in good condition, and normal wear and tear is accepted, the deposit is refunded, less a carpet cleaning fee in our area.
To make it clear the Rental Agreement should have this line: "The tenant will be charged a cleaning fee, separate from the security deposit tendered for this agreement."
Here is what my Residential Lease/Rental Agreement has about the Security Deposit:
SECURITY DEPOSIT: $__________ as security deposit is to indemnify owner against damage to the property and for Tenant's fulfillment of the conditions of this agreement. The Bank holds deposits into a commercial account. Deposit will be returned to Resident, thirty (30) days after the residence is vacated if:
- Lease term has expired or agreement has been terminated by both parties, and - All money due Management by Resident have been paid, and - Residence is not damaged and is left in its original condition, normal wear and tear expected, and - Management is in receipt of copy of paid final utility bill (electricity, gas) and, - Deposit will not be returned if Resident leaves before lease time is completed. Deposit may be applied by - Management to satisfy all or part of Resident's obligation and such act shall not prevent Management from claiming damages in excess of the deposit. Resident may not apply the deposit to any of the rent payment.
In my eight years of property management I returned a full 100% deposit few times. If the tenant leaves behind anything, that becomes "trash removal" and I charged for each bag. The reusable items get to "Salvation Army." Many times I can not recover the rent lost or the cost for repairs.
Garnishing the ex tenant' job income, is one solution, and that means per month for few months, until the ex tenant changes the job and disappear, from my radar screen.
My lawyer was able to recover my loss from an evicted tenant by getting the state tax check refund. It amazes me how much one can do with knowledge and a court judgment paper. If the tenant(s) leave without a forwarding address I mail the "Security Deposit Notice to Tenant" with proof of mailing to vacated apartment address and let the Post Office to redirect the mail further. I still have my proof of mail receipt and eventually the returned envelope in case some ugly ideas comes in an ex tenant' mind. You should recover your losses using your landlord' rights and the help of your team of advisers.
The lists of "Normal wear and tear versus Damages" can save us from disputes. Here I have both lists for you:
Wear and Tear
Peeling or cracked paint; Worn enamel in old bathtub; Worn or cracked linoleum in places where appliances had been; Cracked window pane due to faulty foundation and settling; Door that sticks in humidity; Small pieces of wall plaster chipped; Faded Tile; Faded lampshade; Slow sink drainage because of system; Floors need new coat of varnish; Wallpaper corners coming loose because glue has aged; Closet sliding door sticking; Paint faded on kitchen walls; Dirty or faded window shades;
Damages
Drawing on walls; Shower rod missing; Chipped and broken enamel in bathtub; Round holes in the floor where tenant removed bar counter stools; Broken window caused by tenant slamming the window shut; Holes in carpet by cigarette burns or carpet damaged by ruse and mildew stain from tenant' plant containers; Cracked wood door that does not close properly because resident hammered in the metal striker; Large chunks of plaster ripped of wall; Painted over kitchen or bathroom tiles; Missing fixtures; holes in ceiling where fixture has been removed; Toilet backed up because resident flushed unknown object down it; Wood floors gouged when moving furniture; Closet sliding doors off track; Walls burned in Kitchen from burner tuned too high; Tiles missing or cracked; Torn window shades;
The Move in List signed and dated no later than 7 day from getting the keys and some pictures may discourage tenants from getting into a dispute over damages at the end of tenancy.
My next article, part 4 will be "The eviction process. The ways of communicating with a problem tenant".