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There are few things more frustrating than viewing a rental apartment after a tenant has moved out and discovered it had been entirely demolished. Some units may have holes punched in the doors and walls, while others may be so filthy that professional cleaning is required. It might get so awful that you may need to consider remodeling!
Dealing with damaged rental units is, unfortunately, an unavoidable part of being a real estate investor. Fortunately, there are several steps you can take to guarantee that these situations do not influence your real estate investing firm.
Requiring security deposits upfront can assist ensure that your interests as an investor are protected from tenant damage. In some cases, repaying the money after a renter leaves, can be more difficult, although it is generally still doable. In some situations, both may be required.
Regardless, while there are plenty of things you can do directly to protect your investment from tenant damages, there are also actions you can take in advance. So, if you would like to know how you can start protecting your property from the point of sale, click the link below to book a free strategy call with us.
Ensure tenant damage is being addressed proactively
Requiring a large security deposit before move-in is the greatest approach to protect yourself from unpleasant tenants. One month’s rent is typically used as a security deposit. However, in some circumstances, you might want to request a larger deposit. If the renter in issue has a poor credit score or a shady renting history, requesting a larger deposit in advance could spare you the trouble of trying to collect damages later.
Include a damage clause in your lease
Another proactive strategy to deal with tenant damage is to clearly and spell out the conditions of property damage in your lease. It might also be beneficial to list the expenses of repairs for specific types of tenant damages. This guarantees that tenants know exactly what they’ll be responsible for when they leave, assuming they didn’t cause any harm.
Determine who will be the primary lessee
You should also know who would be responsible for paying for any tenant damages after you move out. Establish a primary leaseholder to pay out any connected damages following the lease term’s end if multiple people are on the lease.
Be cautious of the harm that pets can inflict
Pets are responsible for a wide range of tenant damages, including those to floors. Consider including a no-pet clause in your lease if you don’t want to have to rip up your carpeting or refinish your hardwood floors after each tenant moves out. Alternatively, you may charge a much greater security deposit to potential renters who have dogs.
Screen your tenant properly before they move in
Another proactive strategy to prevent tenant damage at your rental property is to do thorough tenant screening. Call the renters’ previous landlords and inquire about the condition of their previous renting flats. If a tenant has previously damaged properties, be wary of renting or asking them to pay a higher rental price.
Recovering the costs of tenant damage
Unfortunately, landlords are unable to check every tenant who may cause harm to a unit. If you wind up renting to someone who damages your rental property above the security deposit you charged, you’ll have to decide if the money you’re seeking to collect is worth the time and effort.
When attempting to recoup damages, you should first issue a bill to the renter in question. If you intend to take the damages to court, you must first show that you made a “good-faith effort” to collect the losses. This entails keeping track of all correspondence with the tenant and getting quotations from reliable businesses for the work required to restore the unit.
If the tenant refuses to pay for the damages, you should try to get your insurance provider to cover at least a portion of the costs. Call your broker to examine your coverage and see if any of your current insurance may assist you in paying for the damages caused by the tenant.
Discover How To Deal With Difficult Tenants With This Step By Step Guide
Getting ready for small claims court
While the procedure for recovering tenant damages varies significantly from province to province, they all follow a similar path.
The Ontario Small Claims Court, for example, hears claims worth less than $25,000 in Ontario. Some claims that are slightly more than $25,000 but not much more may be called small claims. You’ll have to sue your tenant in the Ontario Small Claims Court to recuperate your fees.
When presenting a lawsuit to a small claims court, you don’t need to hire an attorney. Someone with prior expertise in the small claims court system, on the other hand, is more likely to win their case.
The plaintiff and defendant will each make their case in plain English or French during a small claims court session – the court is supposed to be accessible, so knowing “legalese” is not required.
Following your presentation of your case, the judge will either award damages or rule in favour of the defendant, your former tenant. The strength of your case will be determined mainly by your ability to offer paperwork proving the connection you intended to have with your renter, as well as how they violated it.
Before going to small claims court, gather many documents. Bring a signed copy of the lease agreement, a copy of the tenant’s identity, any governmental orders impacting the apartment issued during the tenant’s stay, and a move-out report describing the damage and costs incurred. Photographic proof, as well as quotes from local suppliers and contractors, should be included in the move-out report, indicating the exact costs you’ll have to spend to restore the unit.
Defending against obnoxious tenants
Recovering tenant damages caused by a careless tenant is a time-consuming and frequently pointless effort. In some cases, it may be more cost-effective to accept the loss rather than wasting time pursuing a renter through the small claims court system.
The legislation affords certain limited legal protections for real estate investors to take advantage of, if the number of damages caused is considerable and broad. So that a bad tenant does not catch you off guard, be aware of your rights and how to defend yourself.
If you would like to learn how mortgage lenders recommend you protect yourself from tenant damage, click the link below to book a free strategy call with our team at LendCity.