You are moving out of the area for a new job or upgrading your home to fit your life needs. What do you do with your current home? You could sell it and pocket the equity. This may trigger a tax bill that will soon be due. Or, you could rent it.

If you have never been a landlord, you may think that this is easy to do. Unfortunately, if you don’t know the laws in your area and state, you can be putting yourself at risk of being sued.

Here are 5 tips to consider when leasing your property:

1. Screen Your Tenants
You are giving a significant piece of your net worth to someone you just met. Do your homework. Check their income through recent pay stubs. If they are self employed, ask for copies of recent tax filings. Call their current landlord and verify the information on the application. Also, call the landlords before that one. The current landlord may have a reason for moving them out of their property and into yours. Don’t let someone else’s headache become yours. Run credit to see if they have a history of paying their bills on time. There are companies like RentPrep and MrLandlord that offer
services to complete some of the verifications listed. Many states allow you to charge the applicant the cost of these services, so it doesn’t cost you anything. Check with your state and local laws.

2. Set The Expectations.
Clearly define what the expectations are for the tenant to be allowed to stay at the property. Spell everything out in the written lease agreement. Go over the lease in detail at the beginning, before anyone ever signs it. Let the tenant know what will occur if rent is late, what constitutes an emergency, what hours they can contact you for non emergencies, ect. Then stick to the agreed upon expectations. If something needs repairs, repair it quickly. If the tenant has an emergency, be prepared. If the tenant is trying to contact you, answer promptly and answer what you can. You may not
know when the repair people will be on site in the morning, but at least let them know that you are working on the issue. Just like when you are thinking the worst scenario when the rent is a day late, they are thinking that the issue is not being taken seriously. This is their home for now. They want to ensure they are being taken care of and heard.

3. Keep Reserves
This will ensure that the emergencies mentioned above are handles swiftly.

The a/c unit will break down in the middle of a heat wave.
The sewer line will need replacing because of the tree roots that are growing around it. The water heater will need to be replaced at some point. These are items that should not come as a surprise. Things wear out and break. It is part of owning things. It is recommended to set aside a percentage of the rent every month into a reserve account. You pick the percentage. You know the specific needs better than
anyone else. When the time comes for that unwanted expense, you will be more prepared.

4. Develop Consistent Systems
Have a manual you can refer to for anything related to your property. What are your screening qualifications? Do you stick to those qualifications? You could be accused of discriminating against an applicant if you start deviating from the system. Have these in writing that you can use to defend yourself if the time is ever needed. Do you have a set of “House Rules” that you have provided as an addendum to your lease? Make sure that the tenant has agreed to
these rules and have signed it. Have a list of qualified contractors to call if you can’t take care of an issue right away. That leaking pipe under the sink will end up requiring a new cabinet and cause dry rot if not taken care of properly and promptly. It will cost you, not the tenant.

5. Outsource What You Don’t Like
There are many items that you can do, but you don’t want to do. There are items that you can’t do because you don’t have the expertise and/or time to do them. Know your limitations. Hiring a licensed property manager is a solution that will take a lot of the stress off of you. These professionals handle these situations frequently. They have the solutions for the repairs and tenant relations needed to prevent situations from getting out of control. Make sure you turn control of the day to day operations of your investment property to these professionals, but don’t turn over the responsibility. Read the
monthly financial statements and ask for clarification if necessary. There should be no surprises if there is clear two way communication.

If you have questions about this topic or any other property
management related issues, please call Knoxville Real Estate
Professionals Property Management division at (865)900-5500.

Make sure the ground cover around the foundation slopes away from, and not towards the house. Fill in holes and add dirt backfill around the foundation to ensure that water drains away from and not into a basement or crawl space.

Check all windows and doors for gaps and seal them to prevent water penetration. This will also help prevent heat loss in the home. Tenants are prone to renew a lease when the utility bills are reasonable.

Keep the gutters free of leaves and debris. Failure to do so can allow water to overflow and flow into the home.

Routinely inspect all trees for dead limbs or limbs that may be dangerous. Trees that are rotting at the bottom need to be removed before they fall on the house.

Inspect the roof annually for damage. A damaged roof can lead to water penetration and mold. Check the roof after bad storms to make repairs swiftly.

Heating and air conditioning systems should be cleaned and inspected annually. Remind tenants to clean or change filters at least quarterly, or more frequently if they have pets.

If there are ground fault circuit interrupters in the receptacles in the property, they must be tested regularly for safety reasons. It is easy to educate tenants to do this.

Check crawl spaces annually. Look for signs of water leaks.

Wood burning fireplaces should have the chimney inspected and cleaned annually.