Though owning a rental property is financially rewarding however, investing in such real estate has its own pros and cons. The very idea of buying another house or apartment so as to receive more income does seem to be a good investment opportunity. Property owners need to be aware of the fluctuations in the housing market depending on the property’s location, supply and demand, and the state of the economy.
Rental properties can be said to be financially rewarding and also have several tax benefits, such as deduction over maintenance costs, interest over the mortgage of the property, etc. At the same time, the drawbacks of owning rental properties are the cost of maintenance of the property, difficult tenants and the appeal of the neighborhood in which the property is located.
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How to settle disputes with a landlord?
While having tenants in a rented property, are times when the landlord and the tenants disagree on certain terms. Instead of immediately going to court, there are other options of dispute resolution. One must keep the following things in mind before going to court.
Be aware of the law –
The best way to resolve a dispute is by avoiding them before they even arise. Many problems arise because one party does not know that they have broken the lease agreement, or they’re unaware of their rights under the law.
Talk it out –
Many problems with landlords can be solved if the issue is discussed thoroughly from both sides. Working it out between the two parties is almost always cheaper and easier in the long term.
The parties can appoint a mediator to help resolve the issue. A mediator is a third party who helps the disputing parties to come to a middle ground thereby creating a win-win situation in which both the parties are happy.
Arbitration is similar to mediation, but arbitration is binding. An arbitrator will hear both sides of the case and issue a binding ruling to which the parties must adhere.
After exhausting all other avenues, the parties may approach the courts. The courts will hear the grievances of both the parties and then come to a conclusion. However, in case of a civil suit between the landlord and a tenant, it usually takes a lot of time before the case is finally settled.
What are the common problems that landlords may face from their tenants?
Tenant problems are a common issue for landlords. There are certain situations that can be resolved by the landlord issuing a notice to the tenants, and at other times there are issues that have to be resolved in a particular manner. Also, there are times when despite precaution and due care the landlord has bad tenants. Some of the common problems that landlords may face are
- Non-payment of rent
- Delayed payment of rent amount
- Breaking the terms and conditions of the rent agreement
- Destruction of property
- Disrupting the neighbors who live in the vicinity of the rented property
What is reasonable wear and tear on a rental property?
The term reasonable wear and tear in the context of rental property is usually associated with the reduction in the property’s value, which results from the tenant living in the property. It is important to note that these damages are not caused to the property due to the neglect of the tenants
Wear and tear of a rental property occur due to its regular use. A landlord can anticipate the dulling and discoloration of his property over time due to its continuous usage, irrespective of having tenants. An inevitable physical decline occurs throughout the tenant’s occupancy; the longer a tenant occupies the property, the more wear and tear can be expected of the property’s premises.
Normal deterioration of the property includes furniture and fixtures or appliances that are used by the tenant on a daily basis. All these items that are used by the tenant such ad opening or closing of doors also suffer from wear and tear. Some of the things that are considered as normal wear and tear of real estate are –
- Faded, peeling or cracking of paint.
- Torn or faded wallpaper
- Clogged up sinks due to aging pipes
- Floors needing a new coat of polish or varnish
Can a landlord keep a deposit for unpaid rent?
There are often disagreements between landlords and tenants with respect to the security deposits. A landlord can make deductions for repairing or cleaning costs from the security deposit, so as to restore the property to its prior condition before the arrival of the tenant.
Further, a landlord has the right to keep the security deposit for unpaid rent, any outstanding utility charges, damages caused to the property or any other financial obligations. Since in most cases the tenants pay rent monthly, it does cause much of a problem. Nonetheless, there are times when the tenant might stay for a longer duration than the official moving out date, and does not pay for the extra time spent in the rental property or leaves the property on time, but has remaining unpaid rent from previous months. In such cases, the landlord has the right to keep the security deposit which has been paid by the tenant at the time of taking possession of the property.
Can a landlord charge for cleaning?
Many tenants make it a must to leave their previous homes in good conditions. This usually done in order to prevent the landlord from deducting any amount from the security deposit. The most common reason for a deduction in the deposit amount is the cleaning costs involved in the property.
It has been observed that a landlord may use the security deposit for cleaning or repairing the housing property so as to restore it to its previous condition before the beginning of the tenancy. However, the landlords cannot use the deposit to cover the costs of ordinary wear or tear of the property.
Further, it is essential to look at the contract drawn up at the beginning of the tenancy. The contract should clearly state the condition in which the property should be left once the tenancy is over. In most cases, the contract contains a clause stating that the tenant must ensure that the property is in the same state as it was when the tenancy agreement came into existence. The contract must also state that the landlord can charge the tenant for the costs of cleaning after the tenancy is over or that after the period of the tenancy is over, the landlord will be charging the tenant with a certain amount of money as costs towards cleaning/maintenance of the property.
Owning a rental property may be a good financial move for some depending on their financial status. A person, who is financially in a good shape and has some spare time, may not mind handling home maintenance emergencies. A person who is the patient may find the right property to rent and can make a good deal in terms of profit on a rental property.
Just like the two sides of a coin, investing in rental property comes with some financial benefits as well as certain risks. Some tenants don’t pay their rent, and the headache of being a landlord involves that the property is maintained for the new tenants. Property owners need to calculate the taxes, real estate appreciation, mortgage, and rental property maintenance costs. They also have to be aware of the underlying problems associated with the property. By avoiding property maintenance, there are higher chances of losing tenants.
Lastly, the property owners must treat the rental property as a business. They have to be aware of the risks associated and should always ensure that the property is not damaged.