After you have selected your tenant and agreed on the rent, tenure, plus any other details you need, put those into writing in a tenancy agreement, rental contract, or whatever similar term might be used in your jurisdiction. The clearer and more explicit you are in the terms and conditions, the better it is for both parties.
You need to be clear in the agreement who both parties are, how much the rent and deposit will be, where they should be paid, when the start and end dates are (or whether it is open ended), notice periods, termination clauses, repairs (for example, that the tenant needs to do small repairs below a certain threshold himself), extension options and many other details. Your letting agent can help you with the agreement or you can obtain standardized forms from paralegal services or Landlords’ Associations. Don’t take this lightly as you will be legally bound by this contract. In many countries you will have to register the tenancy agreement with relevant government authorities.
Good And Bad Tenants
Provided you did your due diligence correctly, dealing with your tenants should be smooth sailing and only require minimal to no effort at all. That is the beauty of receiving passive income – it does not require much time to obtain this type of income after the initial effort. Tenants are human beings and as such, all will have issues, problems in their lives, and can be emotional. If you are building up good relationships with them, solving any issues that might come up during the tenancy will be so much easier for both sides, so do make the effort.
Despite all good intentions and best efforts, things don’t always go as planned. In such scenarios you should first try to resolve them to mutually benefit both parties. If that does not help, you might need to refer back to your tenancy agreement and see what it says about that particular scenario and potentially enforce what is in the contract.
Should your tenant, for example, stop paying the rent, first you should give a gentle reminder and not automatically assume the worst. Perhaps simply his standing order or auto-payment expired or there was not enough money in his bank account. If this was a genuine oversight, he might pay up immediately. If, however, a second reminder does not help, or the tenant does not respond to you, you can apply his overdue amount against the deposit you are holding. If after this the rent doesn’t get paid, you might be entitled to evict him from your property, depending on the contract and applicable law. In some countries, this process is fairly easy and straightforward, in others it is lengthy and bureaucratic. In the worst case, you might need to consult a lawyer and sue your tenant in a court of law. Hopefully you will not need to experience that!
Other unpleasant surprises might be tenants constantly asking for repairs or leaving your property behind in bad condition. For the former, it is your judgment call what “reasonable” repairs mean and for the latter, you have the deposit that you can utilize to do renovations before paying the balance back to the former tenant. You can also ask your letting agent for help.
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