When a lease ends, and a tenant is not going to continue with a new lease, and has given you proper notice of his leaving (usually 60 days when a lease is involved), you’ll have up to 30 days after they’ve moved out in which to return their security deposit. You are allowed to deduct money from this security deposit for any repairs you will need to make to their unit, provided these repairs are not associated with normal wear and tear. If they damaged a washer/dryer, or didn’t report a bathtub leak and it produced damage to the flooring – you can deduct for items like these. But if they did tell you about that leak in a timely manner, and you did nothing about it, then you can’t deduct for any damages associated with the leak.
Vacancy is one of those expenses you must plan on when working on your pro forma income statement for any property you’re considering making an offer on. It’s best to allow conservatively for a one month vacancy per year for each unit in the building (about an 8% rate). If you want to be more conservative, say 10%. In a very slow market, you may need to bump that figure up even more….
Other features to look for in your rental property search
There are a number of other features that will affect the value of any rental property. It’s always best if you can locate properties that have separate meters for electric service for each unit. Also, and even better, is if the property has separate heating systems for each unit. It’s always best if the tenant can pay exactly what they use in terms of heat, hot water and electricity, rather than when a property only has one heating plant, for example, and you charge them an increased rent based on the estimated heating cost from their unit.
In addition, it’s always better when a property has it’s own on-site parking area than not. Tenants value discreet parking spaces for themselves and their family very highly.
Who pays for snow removal, shoveling sidewalks and walkways?
You’ll also want to figure out what the common areas of any property are, and how you’ll be maintaining them. Will you do it yourself? Will you hire a manager? Or possibly a contractor/superintendent? Many landlords will designate a tenant they trust to perform these services in return for a break in rent.
photos courtesy of thehappiercompany.com, keysinvestorsalert.com, stamfordadvocate.com