Whether you own one property or an entire portfolio, you know how profitable real estate investments can be. While they are good at helping you build wealth, one small mistake can put you and your investments in jeopardy. Today, we’re talking about the risk and liability that Santa Cruz rental property owners are exposed to, and how to protect yourself against claims, disputes, and lawsuits.
Develop a Strong California Lease Agreement
You need a lease that’s legally compliant in California and easy to enforce. A good lease agreement provides you with protection because it’s the first place you and your tenant will turn if there’s a question about what’s allowed or required. The lease protects you and your property; it also protects the tenant and the tenant’s rights. Everything pertaining to your property and your tenant relationship must be included in the lease. You can’t have too much detail. Make sure the lease reflects who is responsible for maintenance, how rent is to be paid, what happens at the end of the tenancy, and whether pets are allowed. Your lease must include all the required addenda as well.
Get to Know the Rental Laws
Once you have a strong lease working for you, it’s important to learn and understand all of the local, state, and federal laws that govern your rental property and the relationship you have with your tenant. There are laws on how much notice you must give before entering the property. There are laws pertaining to security deposits and habitability issues. You need to understand fair housing as well.
Compliance with these laws and regulations is not optional. A single mistake, no matter how minor and unintentional, can cost you a lot of money and take a lot of time to fix. The best way to protect yourself against these potential problems is by understanding all of the requirements and keeping up to date with the changes to real estate and rental laws.
Place High Quality Tenants
There’s less risk to you and your property when you have great tenants in place. Good tenants are less likely to cause problems, stop paying rent, or leave behind property damage. When you’re screening your tenants, pay special attention to the references you receive from current and former landlords. You want cooperative tenants who can communicate well. Remember to screen consistently and fairly, and place the most qualified tenants you can find.
Review Your Insurance Policy
Check your insurance and make sure it’s a landlord policy. Many landlords are renting out properties that they once lived in, and it’s important to switch from a homeowner’s policy to a landlord policy. You need the extra liability protection and you also need additional coverage such as loss of rent insurance. Check your insurance policy and discuss it with your agent to make sure you are properly covered.
Professional Property Management Mitigates Risk
Smart investors know that professional property management can make a big difference when it comes to protecting an investment property. We’re here to make sure you’re compliant with all laws and we’ll actively protect you against any potential issues. We know this property is one of your most valuable assets.
If you have any questions about how to protect yourself as an investor, please feel free to contact us at Portola Property Management.