If you’ve been real estate investing in rental income property for any amount of time chances are, unless you’ve been lucky, that you’ve had to evict a problem tenant.

Eviction is one of those nuances of investment property ownership that will not go away. Unfortunately, there are tenants who, sometimes even despite their best intentions, are going to experience the hardship of paying rent and have to be evicted.

Thankfully, a process for eviction does exist. It is good that a real estate investor does have legal recourse to defend his or her rights against a tenant occupying an income property while refusing to pay rent.

On the other hand, eviction is bad for the real estate investor because it means a disruption in rental income along with the time and cost it takes to evict a tenant.

Along these lines then, we might say eviction is like a door lock—thankfully we have locks to defend ourselves against intruders; sadly intruders exist that we must defend against.

Worst of all, eviction is an ugly process. The removal of a family or an individual from the place where he or she lives does not sit well with society, and almost always the tenant comes off looking like a victim and the owner is perceived as the bad guy.

In a perfect world, of course, eviction would not be required. In reality, however, people do exist that are going to step outside the parameters a landlord has set for his or her rental properties, and as a consequence tenants must be taken to court and eviction cases do occur.

An eviction case, however, is not a slam dunk for the real estate investor.

You might find the courts very sympathetic to the tenant and very critical of your points for bringing the action for eviction. Moreover, the decision of the court might actually rule in favor of the tenant.

Though the laws for residential or landlord-tenant relationships vary in every state, they do offer similar protections for the tenant and have similar rules that force the owner to prove any allegations made against the tenant.

As a result, having experienced unfavorable court decisions, some rental property owners virtually regard an eviction case more a matter of pure luck than justifiable legal recourse–believe it, or not.

Okay, as a rental property owner what can you do when faced with a problem tenant and the probability of an ensuing eviction?

1. Before beginning on eviction, try to negotiate a meeting of the minds with the tenant. Sometimes this will result in a better outcome.
2. Study the rules in the state where your property is located. Mistakes may result in losing your case or cause you to restart your case all over again.
3. Abide by the grace period stated in your lease or rental agreement. You cannot start an eviction until the legal grace period given a tenant to pay the back rent in full has lapsed.
4. Beware of charges of landlord retaliation. Never evict a tenant for the sake of vengeance or because you are mad with the tenant for some reason.
5. Avoid face-to-face confrontations with the tenant that might result in you saying something stupid or might give the tenant cause to make other claims, such as discrimination.
6. Carefully weight the odds of winning and in cases of uncertainty, perhaps consider avoiding eviction and lawsuits and offer the problem tenant money to vacate the unit.

Knowing when to evict a tenant, understanding the eviction process and state guidelines, representing yourself in court, and staying clear of eviction pitfalls are one of many nuances of real estate investing that none of wished for but a reality, nonetheless.

Smart real estate investors do not ignore learning about eviction, and are achieving success because they have discovered how to cope with it effectively.

Charging a security deposit to cover potential damages a tenant might inflict on a unit is part of rental income property ownership inherent to smart real estate investing.

There are rules, however, and not unlike other landlord-tenant issues, there are state limits and exemptions regarding deposits that real estate investors should be aware of.

Should You Charge a Security Deposit?

Real estate investors who do not charge a security virtually let in tenants who have nothing to lose by damaging the unit.

Yes, you should charge a security deposit—the bigger the better. You inherit less of a financial burden if the tenant leaves owing you rent or if you have to repair damage, and the tenant who has money at stake is more likely to respect the property.

How Much Deposit Can You Charge?

Many states limit the amount that can be charged for a security deposit.

Alaska, for example, exempts income property owners from security deposit laws when the rents are above $2,000. Hawaii and Massachusetts restrict the security deposit to no more than 1 month’s rent; Iowa and Virginia to no more than 2 month’s rent; Nevada to no more than 3 month’s rent.

Sometimes, the state limit is based on other factors such as the age of the tenant, whether the unit is furnished, what kind of rental agreement is being used, or whether a pet or water bed is being permitted.

The best advice is for real estate investors to learn what state limits are and to charge as much as the legal limit and the market will allow—though it is not uncommon for the market to dictate a security deposit below the legal limit set by state and local law.

The Importance of Remaining Consistent

If you charge different security deposit rates to different people you can be headed for trouble–a claim of discrimination could be held against you in a lawsuit.

Whatever deposit you charge, therefore, just be sure that your security deposit policies remain consistent with every tenant and avoid even the appearance of discrimination.

Can You Increase a Security Deposit?

Let’s say a long-time tenant obtains a pet—can you legally increase the security deposit? Yes, but it depends on the situation.

If you are using a fixed-term lease, you cannot raise the security deposit during the term of the lease unless the lease allows it. Otherwise, you must wait for the lease renewal date to increase the security deposit.

If you are using a written rental agreement in a month-to-month tenancy, the security deposit can be increased the same way that the rent is increased—by giving the tenant proper notice, which is typically 30 days.

If your rental properties are under rent control, raising the security deposit may have even more restrictions. In this case, real estate investors who own rental property under rent control are advised to understand the restrictions before raising deposits.

Must You Pay Interest on Security Deposits?

State laws vary regarding security deposit interest requirements.

Whereas some states impose no regulations, many states require that landlords accrue and pay interest on deposits.

Washington, for example, unless it is specified in the lease or rental agreement, permits the landlord to keep any interest accrued; Iowa lets the landlord keep the interest for only the first five years of tenancy. New Mexico requires payment of interest if the deposit exceeds 1 month’s rent; Minnesota requires the landlord to pay interest, period—accruing the month after the security deposit was paid.

Conclusion

Real estate investing consists of layers of nuances particular to real estate investment property important to successful investing—like security deposits.

Whereas a smart real estate investor will charge a tenant a security deposit before use and occupancy of a rental property to insure payment of rent on time and responsible care of the unit; the prudent investor will also understand state and local regulations where the income producing properties are located, and above all, abide by them.

Whether you are seasoned or beginning real estate investing for the first time, if you are unsure about these issues, do not hesitate to consult with legal and other real estate professionals for advice.

Gathering sound investing real estate information from reliable and knowledgeable sources is what a smart real estate investor does.

The responsibility to maintain a rental income property comes with income producing property ownership; some maintenance being common sense, and some a legal requirement.

For example, in addition to keeping the buildings up to fire and safety codes, many states and localities have laws and ordinances that require rental income property owners to remove junk cars.

In fact, many state and local laws forbid the existence of junk and unregistered cars at rental income properties. In this case, owners will be held accountable for this and can be punished by fines and imprisonment if the situation is not remedied.

Regardless, smart real estate investors should not permit junk and unregistered cars to remain at a property for any reason because it looks bad and sends the wrong message to prospective tenants. And it’s contagious–when one show up it usually isn’t long before more will.

There are towing services available to help remove these automobiles when they either are not moved by the owner or are abandoned. Just be sure to contact your state and local authorities regarding the removal of such automobiles and be sure it is done properly so that you are not held liable for tampering with someone’s personal property.

Remember, the investment property represents your future wealth; and your future wealth means college tuitions, travel, and retirement. Don’t let the shortcomings of a few tenants who deify junk ruin it for you.