November 1, 2011

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When Opportunity Knocks

What Every New Landlord Should Know

Amy K. Stewart

November 1, 2011

So you’ve put up the “For Rent” sign and placed an ad on craigslist. You’ve spiffed up your rental home. Now, all a potential renter has to do is show up and you can choose the best one. Then they’ll sign a contract, write you a check and move in.

Easy as cake, right?

Well, before your cookie crumbles, you should take a few tips from the experts: landlords who have spent a few years in the rental business, as well as those who are officials when it comes to the legalities involved in being a landlord.

Proceed with Caution

It may sound easy at first, but many landlords make mistakes that cost them dearly in the end, whether it be court fees or repairs.

Screening renters properly, being aware of the laws and getting everything in writing are three simple, basic rules for new landlords, according to the experts.

A general check of criminal background, credit and personal references is a basic must. “No one wants to go through the pain and hassle of an eviction. Get the right person in there to begin with,” says Kirk McGary, president of Real Estate Property Management.

A property manager can take the hassle out of the screening process, but some landlords prefer a more hands-on approach.

Greg Harrington and Marlies Burns, who have been in the rental business for several years, like to screen their own renters. “Meeting them, talking with them, making sure they are the kind of person you would want to invite into your home is important, as well as running a credit and criminal background check,” Burns says. “You don’t want problems with drugs or alcohol. Your renter impacts the other tenants.”

Harrington says he feels a management company would not be as considerate regarding the tenants of surrounding condos or apartments but may rather have the attitude of “let’s just get it filled.” On the other hand, Martin Blaustein, managing attorney for Utah Legal Services, Salt Lake City office, is a big fan of having a third party screen renters and do background checks, including criminal and financial credit history. “You should hire another person or company to do that for them,” he says. “That protects the landlord.”

A good rule of thumb when considering a potential tenant is to make sure the rent is around a third of their income. If it is more than that, the probability of the tenant defaulting is higher. Statistics prove this to be accurate and true, McGary says.

Landlords should also require a security deposit—generally worth one or two month’s rent, McGary adds.

Beware of discrimination issues, such as turning down tenant A for tenant B simply because of personal judgments, including the tenant’s race, religion, origin, disability or sexual orientation, McGary advises.

Play by the Rules

”Compliance is a reality,” McGary says. “If you just don’t know, it’s no excuse. And it will cost you.”

For example, there is a set number of days within which landlords must return the security deposit to the renter after they vacate the property. This varies state by state.

Harrington and Burns advise landlords to know the laws in the state, county and city where their rentals are. For example, one of their rental homes is in Vernal and the law in that city dictates no more than four unrelated individuals can reside in the house.

“Being aware of the laws, the rules, the regulations—that is all an important part of being a good and responsible landlord,” Burns says.

Utah Legal Services publishes the Utah Renters Handbook, which helps renters understand their rights and can help landlords understand their responsibilities and—if necessary—the eviction process.

Landlords can also seek legal advice for tricky situations. Indeed, leases are legal contracts and should be treated as such—everything must be in writing. “Treat it like a business,” McGary says.

Having a well-written, detailed lease is a must. “It’s important to put in writing what the responsibilities and rights are as a landlord and a tenant,” Burns says. “Then you all know upfront what the expectations are.”

Be aware of Utah’s fit premises ordinance and especially zoning laws, Blaustein advises.

Landlords need to make sure their units are up to standard and take photos of the property before and after the tenant moves in. If the tenant is going to do some repairs in place of paying rent, get all that in writing, he says.

Harrington says it’s a good idea to stop by the rental site periodically. For example, a simple water drip could eventually turn into a larger plumbing problem. “Make an effort to stop in and check things out,” he says.

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