Thursday, November 24, 2011
Real Estate Investor Mistake # 5 - Not Charging Tenants for Damage
It isn't OK to allow your tenants to get away with damaging your property and not paying for it. You are running a business after all, and your responsibility does not include being their baby-sitter and repairing things that are either damaged by accident or willfully. Realize that if you fix things that you shouldn't, you're telling the tenants that it is just fine to be negligent. And guess what?....they'll take that to mean that they can be negligent in the future and this will cost you $$. Stop these activities by clearly advising the tenants at the first time you meet with them or have your manager meet with them of what is taken care of and what isn't.
Place repair limits by writing into your lease. For example, write in that any repairs under $100 are the responsibility of the tenant. Alternatively, a more aggressive approach if the tenants call complaining about a damage repair that wasn't your fault, is to estimate what the repair would be on the phone and tell them to have payment ready when the repair person arrives. This is not a recommended technique as it may create tension between your tenant and manager, but it can be used depending on the situation. Many times, the tenant will just take care of the problem themselves.
How about If your tenant tells you that their apartment has been "broken-into"? Insist that they give you a police report. Only do related repairs on receiving a copy of the police report. Most likely what happened is that they either lost their key or misplaced it...were likely drunk at the time and broke into their own apartment. Now they're claiming that there was a break-in. Doesn't it make sense that if you have a break-in, you'd call the police anyway??? It sure does. Don't believe everything you hear or see.
Until next time........