Everything you need to know about insurance basics, like coverage types, limits, cost and more.
What Is Considered Normal Wear and Tear?
As your tenant’s rental agreement comes to a close, and you’ve already received news of their intent to vacate the property, it’s time to schedule an inspection of the rental. If you’re new to being a landlord, figuring out exactly what is considered normal wear and tear can be a tricky question to answer. In addition to navigating landlord-tenant laws, you need to take into consideration a number of other factors — where some may result in fines if tenant damage is significant enough. Review these important tips to get a solid understanding of what’s considered normal wear and tear and what might qualify as excessive damage.
Manage Problem Tenants Carefully
In addition to always staying level-headed when dealing with difficult tenants, express your concerns in ways that are defined in the lease agreement. By pointing to clauses and sections of your lease, your tenant may be more willing to work with you because they agreed to these terms when they signed on.
What’s the Definition of Normal Wear and Tear?
Normal wear and tear is damage that naturally occurs in a rental property due to aging and regular use. Properties degrade over time. When a renter lives in a property, the space is expected to depreciate a bit. The polish on hardwood floors will erode along trafficked pathways across the unit and the paint around light switches can expect to be discolored.
The job of a landlord or property management company is to compare the condition of the space — relative to the state it was in before your tenant occupied — and figure out if the damage you uncover is in line with how the space is expected to depreciate. Distinguishing the difference while performing your move-out inspection requires a trained eye.
Help put your tenant at ease when reviewing the property condition as they move in. Walk them through the space with your printed inspection report and discuss the state of your property so you both agree on items of concern and preexisting issues.
How to Document the Condition of the Property Before Your Tenant Occupies
One of the best ways to protect your real estate investment is to get a property inspection app. For a small fee, apps like zInspector and InspectionManager allow you to manage before-and-after photos and notate the photos. These are bundled into a report you can print out or send via email to your tenant and really help to keep your business organized. Here are a few points to consider when performing your pre-occupancy inspection:
Walk through the property completely. It may seem unnecessary to take photographs in storage areas or unfinished basement areas, but you’ll be glad you did if you find damage there later on.
Document existing damage and other issues. Photograph and notate problems that are present before your new tenant takes occupancy and clearly state in the pre-occupancy inspection report that this damage is not the incoming tenant’s responsibility.
Offer a chance for the incoming tenant to review and amend. Once you’ve delivered the inspection report to the tenant, allow them time to rebut and add items to the list that you may have missed. This step helps to empower the tenant to explore the condition of the space and tells them that you care about their findings as well.
Install security cameras in public areas. In addition to adding a level of protection to your investment, they also offer a unique opportunity for landlords to uncover property damage as it occurs. If your tenant’s claiming someone broke into your space, but your security camera footage clearly shows them busting through a back door, you’ll have the proof you need to charge them for the repair.
Photograph floors, ceilings and windows carefully. Consider looking at these photos in two years. Are you going to be able to distinguish one panel of living room windows from another? Bring a handheld white board and dry erase marker along and write down details on the position of the images, being sure the photo captures this information.
Photograph the interior of your appliances. From the fridge to the dryer, snap a few shots of each appliance inside and out. It’s also a good idea to jot down if the appliance is in proper working order. By documenting before your tenant occupies the rental unit, you’ll have an important catalog of images and notes for comparison purposes that you can use after inspecting the property, but prior to your tenant’s exit.
What’s the Difference Between Damage and Normal Wear and Tear?
It’s best to check in with your real estate attorney and learn about how state, federal and local codes impact the actions you can legally take against a tenant when damage is an issue. Here are a few tips for helping you make the important call when reviewing a space for damage before your tenant’s lease is up. If money’s going to be deducted from the security deposit, be sure your lawyer’s in agreement with your findings.
Recognize the difference between expected and excessive damage. Damage caused by normal wear is typically the landlord’s responsibility. Small nail holes in the wall would be considered normal. Water damage on the wall that results from the repeated overwatering of hanging plants would be considered excessive damage.
Review the condition of the space before occupancy. The key to reviewing normal wear and tear is take into account the age of your rental, the preexisting condition of your space and amount of time that’s transpired since the last inspection. Those factors are the key to determining if damage occurred. If wear was already present, and it’s a bit worse, it’s likely normal. But doors that no longer close because the hinges are bent may likely be the product of tenant damage.
How to Build Exit-Condition Expectations Into Your Lease Agreement
Have your attorney help you craft a few clauses that discuss the condition you expect the property to be in upon your tenant’s exit. Ideally, you should expect that the tenant leave the property in a cleaned-and-ready state for the next tenant.
Discuss how the security deposit will be returned or used. Be sure you mention that any excessive tenant damage will be repaired using funds from the security deposit before delivering back the remainder.
Specify that the space is to be returned clean. Although you’re responsible for generally cleaning the place up after a tenant exits, if it’s excessively dirty you may be able to charge for the difference paid to return the space to a move-in ready state.
Site specific examples of certain “tipping points.” The carpet may be worn, but if a stain in the middle of the master bedroom’s carpeting won’t come out, you will charge the tenant for the costs to replace it. Likewise, small chips and holes in the paint are expected, but if holes in the wall exceed an eighth of an inch, you’ll be charging the tenant for repairing and repainting in order to get the condition of the property back to its original state.
Don’t get beat up with small cost items. Mention that the tenant’s expected to maintain light fixtures, change lightbulbs and return the space with faucet screens and shower heads installed. Because each one of these items require time and materials, small cost items can add up quickly. Document items that require replacement and charge for time and materials accordingly.
How to Attract Great Tenants With Amenities and Credit Checks
Avoid difficult situations by filtering out tenants with poor credit or a checkered past by advertising that criminal background and credit checks will be performed on all applicants. By charging a fee for these services, you may find well-qualified candidates are flooding your inbox, hoping to rent your space. They’re more likely to treat your place well and care for your investment as their own. Today's tenants are likewise looking for modern day conveniences like USB-ready outlets and stainless steel appliances in the kitchen. Ads that focus on perks like these get attention.
Insure Your Rental Carefully
Because the unexpected can happen to more than just the cosmetics of your rental, it’s important to be sure your investment is protected from weather, theft or other covered events. Reach out to your American Family Insurance agent and schedule an insurance review to verify that you’ve got the right coverage for your rental. Our agents are trained to help you easily understand how your coverage is protecting your real estate and you’ll find the peace of mind to focus more clearly on your thriving business.