5 Things Self-Managing Rental Property Owners Are Not Aware Of

May 20, 2020

Many owners of rental properties don't realize that owning a rental property is very much different from managing a rental property. Often times the assumption is that the hard part was purchasing the investment property. Now the easy part starts with collecting rent and making sure the occasional maintenance issue is taken care of. Unfortunately, this will lead to a rude awakening as you start to realize that there is much more to property management. You soon become aware that there are a few things you were not prepared for or even aware of. This is right around the time you discover that ownership is much easier than property management. Below are 5 things that a majority of rental property owners are usually not aware of as potential issues that can lead to big problems.

Fair Housing Laws
Landlords are generally not very familiar with the many fair housing laws attached to renting out a property. Example of this would be the numerous times I have been asked not to rent a house to a family with more than 2 children or not to rent to a military family since they can leave if they get orders during their lease. Either of these are a big no-no and can get you into some big trouble as well as leave you open to a lawsuit. There are quite a few other examples that can be considered discriminatory and must be avoided. Navigating through these fair housing laws is paramount when planning to rent out your home.

Background Check
Of course you want to do a background check on the prospective tenant, but there are some procedures that must be negotiated during this process. First, you must have it in writing and signed that this person is allowing you to perform a background check on them that includes pulling a credit report. Further, before you collect an application fee and run the background check, it should be clearly stated what the application requirements are. Should the applicant be rejected, you then must provide an Adverse Action letter immediately which informs the tenant of the reason on why they are being denied. The reason for this is because it is required by law and secondly because it will clearly show that you are denying them based on lawful and credible reasons and closes the door on them making any accusations of discrimination. Lastly, you must inform the applicant that they can request a copy of the same report that you received as long as they contact the reporting agency within 60 days.

Evicting
Eviction isn't just filing some paperwork, showing up on your court date, telling the judge how you have been wronged and then case is closed in your favor. As with everything else property management, there is a process that needs to be followed and executed otherwise you will walk away very confused and frustrated. First, you need to provide the tenant a 3 Day (Pay or Quit) Notice and there is certain information this notice must include. Next, the manner in which you service this notice must be followed correctly as well depending on your State Property Code. Should you fail in this, be prepared that there is a good chance the judge will dismiss your case and you will have to refile, make another payment for court fees and wait for another court date so you can try again. All this and we haven't even covered what is expected of you when you actually get to court and appear before the judge. Not to mention what you are and aren't allowed to do after you prevail in court and are awarded the eviction judgement. 

Service Animals
It's understandable that many owners do not want a pet in their rental property. The fear of the damages these pets can cause will sometimes lead to an owner willing to take a chance that their property will remain on the market as long as they can get a no pet tenant. However, if the tenant has a service animal then there may be no choice in the matter. First, the animal needs to be a certified service animal or a doctor prescribed emotional support animal. There is documentation that must be provided but beware, there are many online sites that for a fee will allow a tenant to print out a very real looking certification. If the animal is a confirmed service animal then they are to be treated as medical equipment and not a "pet". Therefore, you cannot deny them from living with the tenant, you cannot deny them from living inside the home, you cannot impose breed restrictions and you cannot charge pet rent or pet deposits on them.

Security Deposit
While collecting a security deposit is a great resource to provide financial protection to landlords, they can also be a major liability if not handled or disbursed correctly. Many states do not allow for the commingling of the security deposit funds. Meaning, a landlord can not deposit the security deposit into a personal bank account or an account in which they deposit the rent payments. On move out, once your tenant turns in the keys and provides a forwarding address the clock starts ticking. Most states require that you either return the security deposit or send the tenant an itemized list of what was charged within 30 days. If not done in a timely manner, you could be on the hook for 3 times that security deposit amount. You then need to verify that whatever you charged the tenant for can be determined to be due to tenant negligence and not the result of what your state might consider normal wear and tear.

While it may be true that self-managing can help provide you with the opportunity to save on professional management fees, it also means that you will be experimenting with what may be your single largest investment. Mistakes have the possibility of leading to financial losses or lawsuits. If this is your first rental property or you don't feel completely confident in all the challenges that property management will throw at you, perhaps you should hire a professional property management company. This may provide a safer way to maintain your investment property, allow you the opportunity to learn more about rental management and provide you more free time that will enhance the benefits of owning a rental property.

11400 Sean Haggerty Suite 202B
El Paso, TX 79934


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Fair Housing Guidelines for Rental Property Owners in El Paso, TX - Article Banner

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16 Oct, 2020
El Paso rental property owners face many federal fair housing laws and state property codes that must be complied with throughout the El Paso leasing and management process. It’s important that you’re thinking about these laws during the application process, during the tenancy, and during the move-out process.
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