7 Things to Expect in States that Favor Tenants

Before the typical new investor pulls the trigger on buying a new rental property, they’ll do mountains of research on cap rates, cash-on-cash returns, and market economics. Those are all good things, but an equally important factor tends to get swept under the rug: landlord/tenant legislation.

When choosing where to invest, knowing the legal landscape can make all the difference.

It would take an eternity to delve into each state’s specific laws, so this article covers the generals. That way, you can be aware of certain trouble areas when you enter tenant-friendly states.

1.     Landlord access notices can be troublesome

Consider this scenario: you’re selling a property and need to get it appraised, but your tenant doesn’t want to be disturbed. What do you do? Well, that all depends on your state’s laws.

In Alabama, a 48-hour notice is required. In some states, you don’t have to tell the tenant at all; in others, much more than 48 hours is needed.

Ask your property manager for your state’s laws. Once you know, you can plan for schedule changes and protect the tenant’s peace and quiet.

2.     Tenants can withhold rent if essential services aren’t provided

The sink is leaking. The fridge doesn’t work. The air conditioning is lagging. No one—landlord or tenant—wants to deal with these issues, but the situation can get a lot worse when the tenant legally refuses to pay part of their rent until the items are fixed.

The easiest solution: Find a good property management company and avoid the problems in the first place.

3.     Tenants can make repairs and withhold the cost from the rent

Wouldn’t it be nice if we all had considerate tenants who were also skilled in handiwork?

In some states, tenants can do repairs on the property, and unfortunately, something usually goes awry. Maybe they find the most expensive plumber instead of the trusted one you use. Now the tenant is withholding $500 from their rent, even though it could have cost only $300.

Alternatively, they might get a cheap repairman, but it wasn’t done exactly right, so now you have a bigger problem a few years on.

4.     Rent increase notices must be given early

As an owner, you shouldn’t have a problem giving someone 30 to 60 days of notice that their rent is going to increase when they renew their lease. That’s fine.

Yet some states have even more stringent laws, especially with month-to-month contracts. In many circumstances, landlords only have to give tenants 30 days’ notice before eviction, but at least 60 days just to raise the rent by $20.

Go into real estate deals with both eyes open, fully aware of the laws. That way, you won’t be as surprised when a rule like this hits you.

5.     Remedy periods are required before evictions

Troublesome tenants are one of the most worrisome things for landlords, no matter where you live. Whether it’s a tenant who can’t obey the no-pet policy or one who refuses to pay rent, an eviction might be the only option.

Know what you need to do before you can legally kick someone out. When you’re prepared for those obstacles, you’ll save yourself a ton of future headaches. Check with your lease first, which will identify breaches of contract. Then look at state laws for specific remedy rules.

6.     Security deposit amounts and return periods are limited

If you’re reasonable with your security deposit amounts and return rates, this won’t ever be a problem. Some owners like to keep the security deposits regardless of how well-kept the property is. That’s why laws like these were created.

That said, it’s still important to know your limits as a landlord, especially in states with tough laws.

7.     Termination notices for lease violations can vary

Ask these questions to your property manager or turnkey provider. If you’ve chosen a good company, they’ll answer all your questions about termination notices and more.

Final Thoughts

The goal here is to accomplish a win-win scenario, where the tenants stay long term because they’re happy, and you get revenue without a major headache.

Know your rights in case of future conflicts, but don’t be dead set on turning your relationships with your tenants into a fight. Don’t fall into the scarcity mindset. Be prepared for problems, but focus on the positives instead of all the “what ifs.” Remember, your tenants are your customers, not villains. They’re paying off your home.

You can still be successful in tenant-friendly states. Just keep your eyes open and educate yourself so you can mitigate risks.