How to Minimize Eviction Exposure

Most landlords and property owners are very familiar with this common situation.

A mortgage payment is due for one of their properties at the first of the month but the rent payment did not arrive. The long and expensive eviction process has begun.

In this time the landlord or property owner must continue to pay the mortgage and other expenses such as utilities and eviction costs out of their own pocket. Since there is no rental income to offset expenses, the costs can add up in a big way. Eviction is a risk that landlords and property managers should prepare seriously for and there are a variety of ways a landlord can minimize this risk.

Below are a few easy tips to help ensure that you as a landlord won’t have to deal with an eviction situation.

Utilize a Legal Lease Agreement

Many Landlords and property owners fail to use a lease agreement that is legal in their state or province. This may sound obvious but the first thing you should do before signing a new tenant is to obtain a legal for your area. If the landlord is expecting to enforce their contract then it must be legally binding and enforceable. 

Screen Potential Tenants for Income, Credit & Criminal History

Before you get to the process of signing paperwork your potential tenant should be fully screened for Income and Credit. Rental applicant’s income and credit history should be carefully verified before anything is signed. This will avert 90% of rent default scenarios.

Insure Against Tenants Default on Rent Payments

Most Landlords aren't familiar with it, but now there is actually insurance which prevents losses from tenants failing to pay rent. Costing around $250 per year, landlords can insure against their tenants defaulting on rent. When the rent is late the landlord or property owner can initiate the eviction process and file a claim.

Be Ready for the Eviction Process - And Start It Immediately When Rent Is Late

In most US states, the eviction process takes several months. It is critical that landlords begin the process on the very first day that the rent is late. Besides simply avoiding further delays, it sends a message to your tenant that they need to prioritize paying the rent over other bills.

Evictions can sometimes not be avoided, but the risk can be minimized through a multi-pronged approach. Screening potential tenants properly for income and credit history is critical as is using the eviction proceeding due to unenforceable legal forms (what?). To minimize the period that rent is not flowing inward make sure to act quickly when tenants default.