The Tenant Checkout Process
You’ve glided through this whole landlord thing with flying colors. The renter you handed the keys to has been checked-in and moved-in for quite some time. You’ve filled out your move-in and move-out checklist to assess the property condition. Well, your tenant has informed you (by giving you a 30-day notice) that they would not like to renew the lease. The time has come to part ways. Maybe they’ve bought a house, relocated for their job, or now have the means to upgrade to a larger apartment in a different neighborhood. Whatever it is, it’s time for you to perform the tenant checkout process!
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Tenant Checkout Documents
If you followed our advice, you’d have an inspection checklist already filled out by the tenant, as mentioned above. This checklist gives you criteria to rate the property against. You may think you remember the condition of the property, but if years have passed, you may not recall how fresh the paint was or how clean the carpet was. If you took photos as suggested in A Successful Rental Check-in Process for Landlords, you have evidence of the property’s appearance. It’s the very best insurance policy against hearing “it was like that when I moved in.” (Hint: You may even opt for a “virtual tour” video of the entire property to really capture the condition!)
Besides the checklist, you should give the renter instructions on how to prepare the property for the next renter. The tenant should be responsible for returning the property to it’s “pre move-in” condition. Fair wear and tear on the property is an exception, but dirty windows, filthy carpet, paint discoloration from cigarette smoke, and a trash strewn lawn is not fair wear and tear (fading paint from sunlight or age, cracked plaster, and worn carpets are). Ensure expectations are met with a list of tasks the tenant should perform before leaving.
Move Out Preparation Task and Cleaning List
Here are some possible items you could include on a task and cleaning list:
- Call 3-5 days prior to your move-out to schedule an inspection (Free move-in and move-out checklist)
- All keys returned to landlord
- Clean all windows
- Sweep, mop, and vacuum all areas of the property
- Professionally clean any/all carpets
- Clean kitchen(s) and bathroom(s)
- Do not remove window treatments or remove/disconnect kitchen appliances
- Ensure all electric is functional
- Inspect plumbing and ensure no leaks or blockages
- All light bulbs replaced and working
- Call 3-5 days prior to your move-out to schedule an inspection
No, that wasn’t a mistake, #1 and #11 are the same! Really stress that they call you before move out to schedule an inspection. This is critical to the tenant getting his/her full deposit returned.
You may want to be more detailed on your cleaning list than the general items we’ve listed. For example, “clean kitchen” could be broken down into detailed steps:
- Wipe clean all sinks and faucets
- Clean kitchen cabinets, shelves, and countertops inside and out
- Exhaust fans and vent covers clean of dust and grease
- Clean fridge/freezer inside and out, pull out appliances carefully and clean around the area
- Clear garbage disposals and ensure it is fully operational
The tenant won’t be fixing issues they find, nor should they, but being aware of problems with the property ahead of time will help you plan appropriately. If you are in a hot rental market, you may be turning the property in just a week or two, and the quicker you find out about issues, the faster you can be rent ready.
You may feel pretty good knowing that a cleaning list was given to the tenant. You might be assuming that the tenant understands that his/her deposit is at risk if the cleaning list isn’t properly followed. Although they “might” know this, you don’t want them to be surprised when you take $200 out to throw away excess trash or charge $50 to clean a fridge. Tenants always underestimate the true cost of maintenance and don’t realize that you may be charging a penalty for their neglect. Make your intentions known with a list of reasonable fees for trash pickup, vacuuming, carpet cleaning, light bulb replacement, and painting. Put these fees on your Task and Cleaning List so they are aware. Also, make sure that you verify this list yearly (and update if necessary). Better yet, put a caveat that prices are subject to yearly changes in case the tenant has an old copy. Give your tenant a fresh copy of the sheet before checkout. This should help absorb some of the sticker shock to long term tenants, especially if you need to charge them later.
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Property Walkthrough with Tenant
Within 3-5 days of moving-out, the tenant should call you to schedule an inspection (put this in the lease.) This can be done solo or with the tenant, but you might consider having the tenant present for the inspection. The tenant may actually be interested since he/she gets a chance to physically show you where damage occurred and explain the detail behind why it happened, or why it could simply be wear and tear. This eliminates disputes since a tenant may fess up to certain damages if they look intentional and you point them out. This is also a very good exercise for you, the landlord, because you may be able to resolve issues verbally without having to do a formal dispute.
We discussed “fair wear and tear” earlier in this post. Be sure you understand your state laws and tenant/landlord code when it comes to what is fair wear and tear and what isn’t. A popular class action lawsuit in Iowa City, Iowa (Go Hawks) was filed when a tenant found themselves being charged arbitrary costs, for example, a carpet cleaning charge right after the tenant had them cleaned. When the attorney found out that the landlords had illegal leases for years, five thousand over tenants stepped up. Just recently, this court case was ruled in favor of the tenants, making the landlord potentially liable for repaying millions of dollars of illegal charges. Don’t let this happen to you!
Check the news article here: http://www.kcrg.com/subject/news/judge-rules-against-iowa-citys-largest-landlord-company-20150708
This is a good opportunity to throw a few reminders their way before move-out. For example:
- Set thermostat at 60 degrees if vacating in the winter (prevent pipes from freezing)
- Get forwarding address in order to send them their deposit (this is also an almost guaranteed way you are getting a real address, in case you need to bill them or deal with disputes)
- Return garage door openers, mailbox keys, parking placards, etc. when returning the keys to the property
Okay, you performed the walkthrough with the tenant and furniture and belongings were likely still inside. Once the tenant returns the keys to you and officially moves out, it’s time to do a final inspection to ensure everything is as you assumed it would be. Mention in the renter’s checkout communication (and lease) that once the keys are returned, the tenant is giving up possession of the property. Think of it like a hotel “checkout”. Keys are given back to you and now you have full rights to inspect the property…without any privacy invasion concerns. This also signifies that the tenant is done with their cleaning. Make sure to continue charging rent until you see those keys in your hand!
[bctt tweet=”Check your tenant out right and get your property move-in ready once again http://wp.me/p6GBMd-DX”]
One more thing…don’t give the security deposit back to the tenant right away. State laws typically allow you 30-45 days. Make sure to leave yourself enough time to deal with surprises that may occur.
You’ve Come Full Circle…
With the exception of actually selling your rental property, you’ve now completed a full landlord management cycle. If you followed the tenant screening, check-in, management and tenant checkout processes correctly, it’s very likely you had an “IDEAL” investment experience. In other words, you got some Income via cash flow, Depreciation benefits, Equity increase (if you took out a mortgage) Appreciation over time, and Leverage (if you used “other people’s money.”)
It’s time to start advertising for a new tenant and getting organized again. Whether you knocked it out of the park or you had some major problems with your last tenant, now’s your opportunity to do better! Keep tuning into our helpful posts and get ready for another great tenancy and many more to come!