This weekly column is written and sponsored by D.C. real estate agent and Kalorama resident Jeffrey Tanck. He can be reached at [email protected].
And we’re back for the final segment on being a Do-it-Yourself Landlord.
At this point you’ve gotten all of your required licenses, identified and vetted a great tenant, signed a lease and are ready to start collecting rent.
In DC, Landlords can only charge tenants a security deposit equal to or less than one month’s rent. This deposit must be placed in a separate interest bearing account and you should notify your tenant of the name and location of the financial institution that is holding the funds.
For leases 12 months or longer the interest earned is to be provided to the tenant upon return of their security deposit, which must occur within 45 days of the tenants leaving. If you’re not planning on returning the deposit due to non-payment or damage to the property, you are still required to inform the tenant in writing of the status of their deposit within the 45-day time frame.
You also need to decide how you would like your tenant to pay you every month.
Thankfully, “There’s an app for that!” Venmo and Paypal are great ways to receive money and they create an easily accessible record of the transaction. You can also ask your tenants to set up an auto-pay with their bank into your account. Checks are also an option — but are increasingly rare.
Management: Hands-on or Arms-length?
Its 2:35 a.m. and you get a call from your tenant that the dishwasher is flooding the apartment. This counts as an emergency — for the tenants and you, but potentially for other apartments adjacent to yours. You need to have a plan in place to deal with the emergencies.
If you’re equipped to deal with something like this (or are willing to be), great.
If you’d rather not get these calls, you can have your property professionally managed. There are several companies in DC that cater to the individual landlord.
Many provide comprehensive services that include marketing, leasing, rent collection, maintenance and accounting. Some firms offer al-la-carte services such as being the point of contact for property emergencies.
Each company has a different fee structure, but a good rule of thumb is 6%-8% of the monthly rent.
For When You’re Ready to Let it Go
Last month the DC Council voted to change the Tenant Opportunity to Purchase Act (TOPA).
For landlords who wish to sell their rental property, this process is now much simpler: notice of the intent to sell the property must be provided to the tenants, as well as to the Office of the Tenant Advocate. No longer does the intent to sell the rental unit trigger an automatic first right of refusal or obligation to work with the tenant.
The good news here is that when you’re ready to sell that rental, you won’t face the potential delays (and costs) that the previous version of the law allowed.
Having a rental unit can be stressful — but it can also be a wonderful asset. Like most things in life, being prepared and planning for the random curveball will put you in a better position for success.