I am the first to tell you that I am an always-learning landlord. Heck, my 14-page lease is growing faster than I wish to acknowledge. Things come up constantly. Today, I’m explaining why I added a deductible to that long lease.
As a landlord it is very important for me to take care of my property. But, on the other hand, I am a busy working professional. Time is a rare commodity. I also hate being the bad guy.
Here are some of my favorite situations. I had to laugh at these. What else was I supposed to do? It was a frustrated laughter, but I was laughing nonetheless.
- “Will you hire an exterminator? A Palmetto bug (flying cockroach) is in the house!” (Mind you the windows are wide open, and these bugs are so popular in South Carolina they have their own name!)
- The call that the dishwasher isn’t working only to find that food is down one of the pipes. How did that happen?
- The drain not draining but the tenants just washed A TON of cat hair down the drain.
- The three garbage disposals that went out.
I could keep going. These situations always seem to be the result of a tenant error but it’s almost impossible to prove.
Why I Added a Deductible
While most won’t see it, I HATE being the bad guy. I like saying yes, not no. I don’t want to be put in situations where I have be a hard tush, but I also have to protect my investment AND I have to follow my lease. If I don’t follow my lease to the letter, we could be penalized because we didn’t follow fair housing rules.
Therefore, I decided to try something new. I had seen various people mention a deductible. I do a lot of research and have seen this showing up more and more. I have also personally noticed over the past 3.5 years of home ownership/landlording that creating skin in the game for both the tenant AND the landlord makes for better relationships all around.
My experiment is adding a deductible. I now have tenants pay the first $100 of repairs. The point isn’t to have them pay to fix my roof leak but to have them watch what goes down the disposal, etc. It is still the early part of the experiment but, so far, so good. I receive fewer calls about things that are the tenant’s responsibility per our signed lease.
Stay tuned, because if it fails — I will write an article about it! We will see how things go over at these next few turnovers.
What do you do to create skin in the game? Do you have a deductible? If you are/were a tenant, would a deductible be a bad thing?16