The many hazards of becoming a landlord

Real estate, Money

The day-to-day business of managing 150 rental units took on a new shape for Justin Singer when, early one morning one of his tenants committed suicide by shooting himself in the parking lot.

“The community was traumatized, as you can imagine. The biggest issue was comforting shocked residents as well as the man’s family,” says Singer, a landlord in Houston. “After the suicide, the girlfriend of the resident couldn’t afford to pay rent, so there was a human side to trying to help her find another place balanced with a business side of a non-rent-paying tenant.”

While Singer legally had the right to evict the girlfriend from the unit, he worked with her over the course of a month so she could move out in a reasonable manner. When it comes to any landlord challenge, he endorses pressing your rights as they’re laid out in a rental contract, but also trying to work things out humanely.

“Not only does it feel better on all sides, but often it is less expensive as well,” says Singer. “If we had tried to immediately enforce our rights in the suicide situation and kick out the family, not only would we have been jerks, but they probably couldn’t have afforded to leave and we would have been left with an expensive legal mess on our hands.”

The truth is that all manner of disasters can befall even the most thoughtful and efficient landlord, and options can be limited for those seeking to reduce risk.

Beware of the sure thing

Getting good tenants, who pay on time and abide by rules, is the goal of every landlord, whether the rental in question is short-term or long-term. So one strategy is to acquire rental units with tenants already living there.

“Typically, finding a property that has tenants and is already generating cash flow is a dream for an investor,” says Kendra Barnes, founder of The Key Resource in Washington, D.C., and landlord of six long-term rentals and one Airbnb property.

But even the best-laid plans can go wrong, as Barnes soon discovered. “You could be buying someone else’s problem with no easy solution to get the tenants out. We ended up inheriting tenants that were not paying on time or not paying at all and that would not vacate when their lease was up,” Barnes says.

Screening tenants is important…

When you do have the opportunity to vet potential tenants ahead of time, don’t skimp on the details. “Have a good and consistent contract in place and be very familiar with it. Screen your tenants up front: credit check, eviction check, income verification, speaking to the prior landlord,” says Singer.

Tenant screening is indeed important. But what if you can’t thoroughly screen your tenants in advance, as is the norm with Airbnb rentals?

“A possible solution is to discuss with neighbors what you’re doing,” suggests Michael Vraa, managing attorney of HOME Line, a Minnesota tenant rights group. “Give them your cell phone number so they can call or text with anything they hear or see or concerns they have about the tenants. You could give them a gift card or even a set fee for offering nonintrusive surveillance and peace of mind that anything truly bad will be reported right away.”

…but beware of discrimination

It’s not too much to ask a potential short-term renter to provide more information about the specifics of their stay, especially if they’ll be bunking at your private home. That said, landlords must take care to avoid blatant discrimination.

“Whether short term or long term, it is important not to ask questions during the tenant screening process that could be deemed discriminatory—questions relating to marital status, family status, and disabilities are usually a red flag,” says Victoria Shtainer, a residential specialist and attorney in New York City, referencing Fair Housing Act requirements.

Discrimination against people with disabilities is an especially complicated area for short-term landlords.  Commercial apartment complexes and hotels are required by the Americans with Disabilities Act to accommodate renters with disabilities, but owner-occupied homes and lodging with five or fewer guest rooms are exempt from the ADA requirements.

A recent Rutgers University study found that prospective Airbnb renters who identified themselves as having a disability were more likely to be rejected for a lodging request than people who did not mention a disability—despite Airbnb having a policy that forbids hosts from discriminating based on race, religion, national origin, or disability.

Without knowing the specifics of a particular case, it’s hard to say whether this is outright discrimination or simply the host knowing that their facility is not well-equipped to accommodate the specific needs of a disabled guest.

When all else fails…spy?

How about video surveillance? While there’s a definite appeal, all renters have the right to a reasonable expectation of privacy.

“Any surveillance inside of the building would make tenants uncomfortable,” says Barnes, and it could lead to legal action against a landlord. Video surveillance outside of the property—particularly in common areas, hallways, vestibules, or stairwells—might be helpful for some landlords in case of any break-ins, package thefts, or overall security of the building, she adds.

“I have started looking into security cameras for my properties,” says Singer. “The tenants have expressed an interest, and I have also heard anecdotally from peers that even the presence of cameras is a deterrent in and of themselves.”

Walk a mile in their shoes

Some are inspired to become landlords because of their own rental experiences. Jason Yaple and his wife reserved an Airbnb listing in Mammoth Lakes, California, to bookend a 20-day hiking adventure in the Sierra Nevada mountains. “The property had only a few reviews, but they were willing to store our luggage while we were on our hike,” says Yaple.

Unfortunately, this convenience didn’t balance out the negatives of the situation. “There were people scattered everywhere,” says Yaple of the hostel-like environment, which included dirty, shared, and sometimes-working bathrooms. The travelers had to wash their own sheets. “Guests had to figure out via pictures on their Airbnb reservation which room or space was theirs. The owner even rented out the tiny porch space with a cot.”

Now, Yaple uses Airbnb himself, and conscientiously vets potential guests to his central Pennsylvania home. “Since we live just outside of a major college town, it helps that we understand the need for space based on the area’s events—football games, graduations, visiting a student. If a request doesn’t seem to align with one of those needs, we are much more guarded.”

Would Yaple install video surveillance to keep an eye on his short-term renters if it were legal? “That is too much hassle and goes against the ideas and reasons we do this. Overall, this has been a very positive experience. If we ever became that paranoid that something wasn’t right, I would rather just not do it at all.”