Being an ADU landlord isn’t something that you should take lightly. There’s a lot of work and responsibility involved that you need to be prepared for. With preparation and patience, you can be an amazing landlord.
Evaluate for Good Tenants
If you want to be a good landlord, it always helps to have good tenants. Good tenants are easy to work with, and they should make you want to be the best landlord you can be. When looking for a good tenant, screening them thoroughly for potential red flags in their histories is important.
For starters, you should run a credit check on them to make sure that they have good payment histories. You should also look into their employment and income situations to make sure that they have enough steady income to cover the rent. Finally, you should run a background check to look into potential criminal histories.
Set Clear But Fair Lease Terms
Once you have found the right tenants for your ADU, you then need to set clear but fair lease terms in a written agreement. In the lease, you need to include information about payment terms, rent due dates, late fees, etc.
You also need to include information about any rental restrictions. For instance, are pets allowed? Is smoking allowed? Are modifications to the property allowed?
Not only does a lease act as a protection for you, but it also helps the tenant know what exactly is expected of them.
Know Your Rights and Responsibilities
As a landlord, you have certain rights and responsibilities — as does the tenant. In order to be a good landlord, you need to know your responsibilities and consistently meet them. The most important responsibility of a landlord is to make sure that the property is safe and habitable.
In addition, you must abide by the terms set forth in the lease agreement. You must follow all federal, state, and local laws that relate to landlords and tenants. You must respect your tenant’s right to privacy by providing them notice to enter the premises except in the case of an emergency.
Make Sure the Property Is Move-In Ready
If you want to start your landlord-tenant relationship off on the right foot, then you need to make sure that the property is move-in ready on the agreed-upon move-in date. Tenants don’t want to move into a dirty or run-down property with countless unresolved issues.
Instead, you need to make sure that all necessary work is completed and that the unit has been professionally cleaned. This is also a great time to replace any items that are on the outs. For instance, if you know that the dishwasher is on its last leg — don’t wait for it to completely stop working right after the tenant moves in.
Conduct Both Move-In and Move-Out Inspections
Move-in and move-out inspections are important components of any lease. The move-in inspection allows the tenant to identify any potential issues beforehand. This also gives you time to address them.
The move-in inspection also helps you document the condition of the property. Come move out, conduct another inspection and make a note of any new damages that have occurred. Because you conducted both of these inspections, you have proof that the tenant caused any damages, and you can charge them accordingly.
Respond To Issues in a Timely Manner
Issues will inevitably come up when you’re an ADU landlord. Issues aren’t really the problem; instead, it’s how you respond to them. You need to make sure that you respond to issues in a timely manner and maintain an open line of communication with the tenant.
Also, keep in mind that some issues are more urgent than others. For instance, a big leak is an urgent issue that needs to be addressed as soon as possible. On the other hand, if a lightbulb goes out, you probably don’t need to rush over to fix it immediately.
Be Proactive About Potential Issues
Just because issues are inevitable doesn’t mean that you shouldn’t be proactive at the same time. Performing routine maintenance is a part of being a good ADU landlord. After all, this is an investment... you need to take care of it!
For instance, if the original home’s roof is old and needs replacing, don’t wait for it to spring a leak that can potentially cause even more damage. Be proactive about replacing it before it becomes a costly issue. If the HVAC unit is having issues, consider replacing it before it completely cuts out in the middle of the summer, leaving your tenants with no air conditioning.
Respect the Tenant’s Privacy
As a landlord, you need to respect your tenant’s right to privacy. This means not coming by the property at any time for any reason. Landlords give them advance notice if they need to come by. If possible, arrange a time that works for them based on their schedule.
Be Firm But Fair
It can be difficult for landlords to maintain a friendly relationship with tenants while still keeping in mind that this is a business relationship at the end of the day. As a result, it’s important to remain firm but fair.
It’s easy to determine what is fair since you have the lease agreement that you have both agreed to. However, you can also exercise your judgment if there are special circumstances that require special consideration.
Use a Property Management Company If Necessary
Being an ADU landlord can be demanding (but rewarding) work. If you want to take more of a hands-off approach, you should consider using a property management company. This is an especially ideal solution for those who live a far distance from their rental property.
A property management company will take a majority of the work off your hands. They will deal with collecting the rent, performing maintenance, and communicating with the tenant. At the same time, you need to keep in mind that property management companies charge you based on the work they perform.
On average, you can expect to pay between 8% to 12% of the monthly rent collected for their services. If you’re looking to maximize your ADU income, you may want to learn how to effectively manage the property on your own and perform some of the maintenance yourself. This is especially true if you choose to continue to live in the main home of your property while renting out the ADU unit, or vice-versa.
Work To Keep Your Tenants
A good tenant is worth their weight in gold, so your goal as a landlord should be to keep the good tenants. This means communicating with them and treating them with respect.
It also means treating them fairly and going the extra mile to keep them happy. A great way to keep your tenants is by offering only modest rent raises or even keep the rent the same.
Keeping (and Renting) House