Many investors think that self-managing a rental property is just a matter of finding a nice tenant who pays on time. The reality is that there are many details and laws that pertain to managing a rental property. Choosing to self-manage a rental property can generate increased risk exposure in the form of liabilities, as well as more costs and hassles overall.
Some things to consider when self-managing a rental property are:
- Screening Tenants. Of course, one of the first and most important tasks that a property owner who chooses to self-manage would have to perform would be to screen potential tenants. Rental applications will have to be taken, credit reports will have to be pulled, and a strong, detailed lease with precise language that conforms to state and federal regulations will have to be prepared.
- Trust Accounts/Contracts. Once a landlord has a tenant’s security deposit, the law mandates that it must be deposited into a North Carolina trust account in a licensed and insured bank or savings institution. The deposit cannot be co-mingled with personal funds. The state is very strict about this and the monies have to be reconciled in very specific ways. Everything must be disclosed to tenant, including the location of the funds.
- Tenant-Landlord Relationship. Many laws and processes affect the tenant and landlord relationship. Anyone with experience managing rental properties will admit that it can be a challenge to maintain a professional relationship sometimes, especially with problem tenants. Being an effective property manager requires finesse, tact and the ability to communicate with people of widely differing backgrounds and beliefs. Federal and state laws must be followed despite personal beliefs.
- When a Tenant Doesn’t Pay. What if the tenants don’t pay the rent or their payments are late? Having a written policy in the lease will help ensure that rents are collected in the proper manner. It will also help prevent many issues or problems before they occur and go a long way toward ensuring that the rent is paid on time.
The idea that landlords do not have rights is a misconception; however it is important to treat tenants with respect, respond to issues and handle matters quickly. - Tenant Security Deposit. Being familiar with the laws pertaining to security deposits is essential. Regardless of whether the tenant failed to pay the rent, broke the windows or stained all of the carpets, there are many laws that must be strictly adhered to in the disposition of a security deposit.
Anytime a tenancy is terminated, the deposit that is held by a landlord as security can only be withheld to offset damages if an itemized list of said damages is both created and delivered to the tenant. There are time limits and laws regarding the disposition of funds.
Hiring a qualified and knowledgeable property management company is the best way to limit risk exposure, avoid hassles and enjoy a healthier bottom line. For information about our rates or how to manage investment properties, please reach out to our team of experts at 910.256.3031 or via our website.