When it comes to owning and managing rental properties, many landlords start by living next door to their tenants. For example, purchasing a duplex and renting out one-half can be an excellent way to get your rental property portfolio started. Another common scenario is purchasing a home with an attached apartment you can rent out. However, being a next-door neighbor to your tenants can provide its own unique set of challenges.
Do you know how to be a successful next-door landlord? Find out how here. We will discuss what the benefits and the drawbacks are, and how to best handle landlording from next-door.
The Benefits Of Being Your Tenant’s Neighbor
Living next-door to your tenants can provide you an array of benefits. The following are all reasons you might find landlording next-door to be a positive experience:
- Tenants Will Likely Be On Better Behavior: When you live next-door to your tenants, it is incredibly difficult for them to get away with damaging the property or breaking rules in their lease. For example, if you have a no-pet policy, it will be nearly impossible for your tenants to sneak a dog into the unit. Tenants will also be less likely to throw loud parties when they know they won’t just upset the neighbors, they will also upset you.
- You Can Handle Things Quickly And In Person: If you do need to resolve something with your tenants, such as a late rent payment or a maintenance issue, it will be easy to communicate and won’t take up as much of your time as managing from afar might. While you don’t want to simply pop-in on your tenants all the time, you can set up meetings that will only require you walking to their door from your residence.
- You’ll Know If Something Strange Occurs: We have all heard the horror stories (or experienced them firsthand) about tenants who pack up and leave in the night without warning. When you live next-door, it will be hard for a tenant to pull off a stunt such as this. If anything fishy is going on, you’ll be the first to know instead of the last.
- You Have An Opportunity To Create A Strong Relationship: When you live next-door to your tenant, you are afforded the chance to create a strong relationship with your tenant that can lead to longer leases and fewer vacancies. If you handle the situation the right away (see below), you can win over responsible tenants who treat your property with care.
The Drawbacks Of Being Next Door & How To Mitigate Them
While living next door to your tenants can provide you with some bonuses, there are also some drawbacks. Most of the issues that arise from living next door to tenants can be mitigated simply by handling the situation better.
1. You Still Need To Be Consistent In Screening
When you know the applicants you are screening will not only be your tenant, but also your neighbor, it can be a slippery slope into screening tenants differently than you normally would. Remember, you must abide by the Fair Housing Act even if you are going to live next door to your tenant. Familiarize yourself with your local laws and regulations as well as the federally protected classes.
2. Make Sure You Are Being A Good Neighbor
While your primary relationship with your tenant will be that of the landlord, you also will be their neighbor. Make sure you are being a good neighbor. Don’t fall prey to thinking, “I’m their landlord, so I can do whatever I want and they can’t complain.” Just as you don’t want them throwing a loud party till all hours of the night, they likely don’t want you to either. Make sure you do your part around the shared property to keep things in shape. You will be setting an example by how you treat your share of the property.
3. Communicate Clearly
When you are living next door, it will be critical that you establish clear communication and boundaries. For example, how do you want your tenants to notify you of a maintenance issue? Do you want them knocking on your door every time they need something? Whatever form of communication you prefer, make sure you are up front about that during the lease signing. Let them know if you’d prefer a phone call or if you have someone else who handles maintenance they should call.
It is also important that you determine clearly who will be responsible for what in regards to the property. If you are sharing a yard, who is responsible for yard work? Clearly lay everything out at the beginning of the relationship to prevent confusion down the road.
4. Create A Professional Relationship
There is a fine line between being a good neighbor and a good friend of your tenant. While you should be courteous and neighborly, you need to still maintain a professional relationship with your tenants. Don’t become a pushover simply because you live next door. Make sure things such as late payments are treated with the same professional attitude you would for tenants who lived far away.
Remember, you own the property and you have the right to enforce the regulations of your lease. Be a fair, responsible landlord, and don’t accept anything from your neighbor tenants that you wouldn’t from any other tenant.
5. Screen Tenants Thoroughly
We mentioned above that while your tenants are going to be your neighbor, you still need to stick to the same criteria you would normally use and you must follow the regulations of the Fair Housing Act. That being said, be sure you screen tenants thoroughly. Keep in mind, if you quickly pick a new tenant and skip over the screening process, you will be dealing with any problems that arise on a daily basis. You won’t have any buffer for escaping nightmare tenants. Use a thorough screening process that includes credit reports, background checks, and eviction history.
While living next door to your tenants can sound intimidating, the more comfortable you get with establishing a professional relationship with your tenants, the better you will be at landlording in general.
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DISCLAIMER: Turbo Tenant, LLC does not provide legal advice. This material has been prepared for informational purposes only. All users are advised to check all applicable local, state and federal laws and consult legal counsel should questions arise.