Perry T. writes: What do you think about using email as a primary means of communication with tenants? I like the idea of automatically having a written record of what has been said, but are there any downsides to email, or things I should watch out for?

Rental Agent Guide answers: Email can be a great tool for keeping in touch with tenants. Opening up this channel of communication can facilitate easy, convenient dialogue between renters and landlords, which is generally a good thing, as long as both parties have an appropriate sense of proper boundaries. However, any communication that serves a legal purpose should be delivered in the form of a physical notice, as this is what will hold up in court. (Email is great as supporting evidence, but not as primary documentation.)

You should also be aware that not everyone checks email regularly—younger tenants tend to communicate via texting, or through social channels such as Facebook, and may rarely look at email. When you’re in the process of signing a lease with a new tenant, it’s a great idea to ask them how they prefer to be communicated with and to collect the relevant contact information. You can provide the same information to your tenant. The easier it is for you and your tenant to keep in touch, the happier you’ll be.

Ellen M. writes: I have a tenant whose lease is ending in a couple of months (yes, right in the middle of winter, terrible timing.) The rental is a cute, two-bedroom house in a popular neighborhood, where demand for rentals has increased substantially since she moved in. Based on the current market, I think I could raise the rent by about 15 percent (roughly $200/month) and still rent the house within a month or so of listing it. However, I know that a 15 percent increase would be out of the reach of my current tenant, who has had to cut back on her hours at work due to a health situation in her family. She’s been an ideal tenant—she pays her rent on time each month, and maintains the property beautifully. What should I do?

Rental Agent Guide Answers: This is an increasingly common dilemma in the current housing market, and it’s a difficult choice to make. In your particular case, it sounds like there are several factors in play:

1) The lease is ending right after the winter holidays. No matter how hot the rental market is in this particular neighborhood, no one wants to move in January. If your current tenant were to vacate, you’d likely either have to price rent significantly below market to get the house rented quickly, or potentially endure an extra month or two of vacancy than you would in warmer months. Either way, you likely don’t come out ahead in terms of your total yearly income from this property. If you’re renting your house for around $1200 per month, two months of vacancy costs you the entire yearly $2400 you were hoping to gain from raising the rent by $200 per month.

2) Your tenant’s ability to pay a higher rent may change in the near future. You say your tenant is currently feeling squeezed financially due to “a health situation in her family.” Health situations change, and this one may resolve within a few months. Once she returns to work full-time, she may be ready to pay a higher rent, especially when she glances through the rental listings and realizes that she’s not likely to do better by moving.

3) A reliable tenant is a huge asset. No matter how carefully you screen tenants, you never know quite what you’re going to get until your tenants have moved in. Tenants who pay their rent on time, take good care of your property, and never cause disturbances in the neighborhood save you a considerable amount of time and money. Anytime a good tenant moves out, you risk a more problematic tenant moving in. As long as your cash flow from this rental is within a normal range, you might consider keeping your tenant’s rent a bit lower than the market rate to keep her from moving elsewhere.

All that said, it seems like a reasonable solution to your problem might be to sign a six-month lease with your current tenant. This way, the next year-long lease you sign will be set to renew at the beginning of summer, when the market is at it’s peak. You could tell your tenant that you appreciate what a great renter she is, and let her know that you’re willing to keep her rent at its current level for the next six months—but that come June, you’ll be raising it to something closer to the market rate. That gives her some time to work through her family’s health crisis and decide what she wants to do.

If you don’t think you need a rental agent to help you manage your rental property, consider these two tales of trainwreck-y landlord/tenant relations from the archives of the personal finance blog Get Rich Slowly:

1. The tenant who cost his landlord over $13,000 in lost  rent over a broken air conditioner. 

When this duplex dweller’s air conditioner stopped functioning, and his landlord, (who lived 20 miles away, and was busy with his day job),  failed in several attempts to have it repaired, the tenant decided to “research his options.” In the course of that research, he discovered that his landlord didn’t have a “rental certificate” in place for his apartment, which is required in LA in order for the landlord to legally collect rent. The tenant further discovered that his apartment was ineligible for a rental certificate, because the building was zoned as a single-family residence. Long story, short: The tenant decided not to pay rent for every day that the AC went un-repaired, the landlord tried to evict him, the tenant had the apartment declared illegal…and the landlord couldn’t rent it out again until he had it rezoned, which took months.

2. The tenants who filed for bankruptcy in order to live rent-free for four months.

In order to rent their house quickly in a soft rental market, these landlords decided to rent to a couple who had dicey credit, and who were going through bankruptcy due to a failed business venture. Since these tenants had recently declared bankruptcy, the landlords knew that the couple couldn’t file again for years, thus they figured they would be able to take legal action if the rent went unpaid. Well, the rent did go unpaid, and the tenants filed for bankruptcy again, the same day they were served eviction papers. Even though the filing was bogus, the tenants were granted an Automatic Stay, a situation which took the landlords 13 trips to court, over a period of about three months, to resolve. Meanwhile, the tenants lived in their house rent-free.

Seattle landlord Reggie Brown has owned his two current rental property for approximately five years, and owned small properties “on and off” for more than a decade.

RAG: In your view, what are the most important factors in maximizing a rental  property’s cash flow?

RB: The big keys are stable tenants and timely maintenance to keep good tenants in the property. I also think having professional support, especially during the rent-up process (prepping and marketing the property) is crucial.

RAG: How has your rental agent helped your business?

RB: My current rental agent is highly skilled at marketing, and can rent a house in under 30 days, which is amazing, especially when you consider it often took my former agent an average of two or three months to get a property rented. However, different agents have different strengths. The agent who wasn’t great at quickly filling vacancies is excellent at maintaining property. He’ put together a crew of skilled workers, is good at a building rapport with tenants, and is able to charge below-market rates for his services. So now I use one agent to rent my properties, and another to manage them after tenants are placed.

RAG: What is your communication like with your rental agent in the course of getting a property rented? How do decisions get made?

RB: When we’re renting a house, my agent and I typically talk twice a week. He’ll give me feedback about how the house is showing, what prospective tenants are saying, that kind of thing. He does the initial tenant screening, but he’ll pass on applications where the tenant qualifies in terms of income, but has some risky things in their profile, like a history of late payments. He puts those in front of me so that I can make the trade-off between renting the house sooner, or holding out for someone with a more solid profile. Every day that a house sits vacant, I lose $50-60 dollars, so I have to consider that. Meanwhile, if a great tenant comes through, my agent will contact me immediately and encourage me to act right away.

RAG: Is there a particular challenge either of your rental agents has helped you cope with?

RB: Yes, I had to evict a tenant once, and my agent handled all the details. Beyond the emotions involved, it’s a complex process. If you don’t serve the right notices at the right times, you’re disqualified from proceeding, and you have to start all over again the next month. My agent knew what to do, and the eviction went smoothly. He was also the one who physically showed up to take care of all the various steps—from nailing the notice to the door to showing up in court. He earned his fee that month!

RAG: Any advice for new rental property owners?

RB: Be happy with a stable situation and ride out the downturn!

Thanks, Reggie!

Dan L. writes: How can I keep my tenants from having visitors who are more like unofficial occupants? I have one tenant who’s boyfriend stays with her 3-4 days a week on a consistent basis. I’m paying for utilities, and beyond that, there’s general wear-and-tear on the property—and let’s face it, nuisance—to consider. Several of his buddies often show up while he’s there, and I’ve gotten more than one weekend noise complaint from the neighbors.

RAG answers: Professional rental agents generally handle this by by incorporating specific language into their lease documents prohibiting over-staying “guests.” When it comes to preventing someone not on the lease from from becoming a semi-permanent resident, the less room for interpretation you leave, the better.

For example, some leases stipulate that visitors may not stay for longer than X number of days without the written permission of the landlord, but that likely wouldn’t help you in this situation. A better way to phrase the limitations is to spell out the number of overnight visits a tenant can host per month, or per lease term. Three to four nights per month, or 10 nights per six-month period is reasonable.

While language like this may not prevent the occasional overstaying guest, it should help eliminate situations like the one you describe above, where the tenant’s boyfriend has taken up part-time residence without your permission.

With regard to your current situation, if your lease agreement with the tenant in question has a clause stipulating that she may not sublease the apartment without your written consent, you have legal grounds to ask that her boyfriend either put his name on the lease, or limit his visits to a number of days and nights per month that you deem reasonable.

This likely won’t go over well, so you should consider whether you feel the boyfriend’s presence is just an annoyance—or whether it’s causing actual harm to your business. If it’s causing harm to your business, consider offering to let your tenant break her lease early in the event she doesn’t want to curtail her boyfriend’s visits.

Chris V. asks:  I realize it’s normal for a tenant’s financial history to include some minor red flags, but what should I do when a prospective tenant has decent credit, but a history of past evictions?

RAG answers: You’re right to be cautions about renting to a prospective tenant with an eviction in his or her past. You’re well within your legal rights to refuse to rent to past evictees, and you’d be wise not to rent to someone who has been evicted more than once.

However, if your prospective tenant has a single eviction several years in the past, and has since developed and maintained good credit, built a stable employment history, and has more than enough monthly income to qualify for your rental, you could reasonably decide to rent to this individual.

If you decide to move forward, there are several steps you can take to lower your financial risk:

1.  Ask for first and last month’s rent up front. In the event that you have to evict a tenant for non-payment, the process can take a month or two to complete, and that’s assuming everything goes smoothly. By requiring last month’s rent up front, you have at least some insurance against the lost income you’ll suffer during the process.
2. Require the tenant to pay rent via Direct Debit. With your money scheduled to come directly out of your tenant’s bank account at a certain time each month, you’re much more likely to receive payment in full, on time, when rent is due.
3. Thoroughly check references. This probably goes without saying, but when a prospective tenant has a shaky financial history, taking the time to call all of his or her references is especially important. You want confirmation that this tenant has indeed gotten his or her financial life in order before you sign a lease agreement.

Jenny S. asks: When a tenant doesn’t pay rent, is my rental agent responsible for collections? Who files for eviction and follows through in court?

RAG answers: This is a good question, and something to be sure to clarify within your rental management contract. Essentially, it’s up to you and the rental agent you choose to spell out who’s responsible for what when it comes to dealing with non-paying tenants.

However, assuming that you’ve chosen full-service rental management services, your rental agent will typically handle the legal proceedings. First, he or she will serve the late-paying tenant a “Three Day Notice to Pay Rent or Quit.” If the tenant does not pay rent within the three days, your rental agent will file for eviction and handle the legal proceedings until the non-paying tenant is out of your rental unit.

Many rental owners choose to use rental management companies specifically because they don’t ever want to have to spend the time and energy it takes to successfully get through an evictions process. Many rental owners also feel that rental agents have an advantage when it comes to collecting rent in the first place. If you’re trying to collect rent from a tenant who knows you own the rental, they know you can bend or break the rules for them at will, whereas a rental agent has a legal obligation to make sure they pay rent on time.

Rental agents typically handle a wide variety of tasks for their clients, using their expertise to avoid common pitfalls, save money, and maximize profits.

Common tasks rental agents handle include:

• Pricing rental properties: An experienced rental agent will put his or her deep knowledge of your specific local market to work in pricing the monthly rent for your property in order to maximize your cash flow while keeping turnover and vacancies low.
• Advertising vacancies and showing available units: Rental agents know the best places to advertise when it comes to attracting quality tenants. And they’re available to conduct showings of your unit during business hours, in the evenings, and on weekends, so that you don’t have to be.
• Screening tenants: Rental agents often employ sophisticated scoring systems that take into account multiple factors when it comes to selecting the right tenant for your rental.
• Preparing lease contracts: Rental agents are experts at crafting clear, thorough agreements that include key policies on a wide range of issues.
• Ongoing property management: Often rental agents often offer ongoing, comprehensive rental management once your unit has been rented. This includes everything from collecting rent, managing relationships with tenants, and handling routine and emergency maintenance, to taking care of accounting and preparing yearly taxes.

Tools rental agents bring to the job:

• Local rental market expertise: Having managed dozens, if not hundreds, of rental properties over the course of their careers, experienced rental agents know how to both attract and keep the best tenants.
• Experienced maintenance crews: Rental managers typically either have in-house crews of service professionals or longstanding relationships with local vendors that allow them to take care of home maintenance—whether routine or emergency—quickly and efficiently, often at discount prices.
• Working knowledge of rental law: Landlord-tenant law is more complex and difficult to navigate than many first-time landlords realize. A good rental agent can help make sure that you stay on the right side of the law in all aspects of your rental management, from tenant screening and selection, to writing lease agreements, to property notifying tenants with regard to any number of issues that may arise, to maintaining your property in a manner that complies with local housing codes.
• Systems for rental management: Good rental agents have honed their ability to manage rental properties over years of hands-on, trial-and-error, experience.

Many people use the terms “rental agent” and “property manager” interchangeably. However, it’s possible to hire a professional to handle just the leasing of your rental property and not the ongoing management. It makes sense to refer to someone who handles “leasing only” as a “rental agent” rather than as a “property manager.” But no matter what they call themselves, most professionals offering these types of services offer a full range of options.

For reference, “leasing only” services typically include:

• Market research + pricing the monthly rent
• Advertising the vacancy
• Showing the unit to tenants
• Writing up the lease contract and getting it signed

For most rental owners who aren’t making careers out of being full-time landlords, the decision to use a rental agent is an easy choice—most people simply don’t have time or expertise to deal with all the aspects of renting out their vacant home or apartment.

From finding and screening tenants, collecting rent, and keeping up with maintenance, to dealing with emergencies, doing the necessary accounting, and handling legal issues, the workload associated with operating a rental property can be inconvenient—even overwhelming—for an inexperienced rental property owner

With that said, there are a few situations where the DIY approach might make more sense, such as:

• You have friends or family who want to rent your unit. If someone you know and trust wants to rent your property, you obviously don’t need a rental agent to fill your vacancy, and assuming your potential tenant is responsible and reasonably self-sufficient, you probably won’t have many unexpected difficulties to deal with. As long as you’re careful to make sure your mutual expectations are in alignment, renting to someone you know can be ideal for everyone.

• Experienced rental managers are part of your inner circle. You may not know anyone who wants to lease your rental unit, but if you count property management experts among your nearest and dearest, you probably have enough access to advice and help without hiring a professional. Assuming you have the time to take care of the necessary management tasks, you likely won’t find yourself out of your league when it comes to taking care of your property without the help of a rental agent.

• You live in the same neighborhood as your rental/work only part-time/are handy. If you live close to your rental property, have a fair amount of time to devote to managing it, and/or are fairly expert at home maintenance, you’re at a distinct advantage when it comes to managing your own rental property. While you’ll likely choose to hire a rental agent to handle some or all aspects of your business if and when you expand your rental property portfolio, you may be able to manage a single property, or even a couple of properties, on your own.