The A-B-C's of Residential Rental Property Management in Washington, DC

Owning a home in the nation's capitol is one of the best financial decisions one can make. Given the robust economic environment thanks to the government, schools and top-notch national and international organization, as well as high demand for space, DC remains the best place for real estate owners and investors alike. While there are many benefits to owning and renting real estate in Washington, DC, homeowners who decide to take the plunge into becoming a landlord need to be aware of the very strict and somewhat complicated guidelines that are in place.

First and foremost, landlords must understand that Washington, DC remains a town geared toward tenants and their rights. This is a direct result of unfair and unscrupulous landlord practices back in the 70's and 80's which prompted the city to enact tighter restrictions on landlords. One of the main restrictions is rent-control. Rent increases are under very strict limitations if an investor owns five or more properties in DC. This means that rent increases must fall under the guidelines in place which prohibit the landlord from increasing the rent beyond the low single digit percentage each year. Landlords whose rental properties don't fall under rent-control must practice caution when increasing rent beyond what's reasonable as this could open up complaints by tenants to the city.

Landlords must also register their rental properties with DC and obtain what's called a Basic Business License from the Department of Consumer and Regulatory Affairs. Applications can be lengthy and, if you're an out-of-town owner, you must have a DC registered agent. Conducting business using your rental property without this license could mean heavy fines and possible legal proceedings not in your favor should the tenant default on making rent payments. There have been cases where the court has dismissed the landlord from collecting back rent from delinquent tenants for lack of having this license in place. Once the BBL application is received, an inspector will be assigned to the property and, if it passes the city inspector's requirements (working smoke detectors, no building code violations, safe and sanitary conditions), then a license certificate will be mailed. This certificate must then be placed inside the rental property and renewed every two years.

Repair requests must be taken very seriously as this could potentially open up a legal case based on "constructive eviction" which basically means that the landlord has made the property uninhabitable and, therefore, the tenant has no choice but to vacate the property. The landlord must address all repair requests in a prompt fashion, hire licensed personnel to complete the repairs and ensure the health and safety of the tenants at all times. Tenants often have complaints about the temperature inside their home. The landlord must take all action to remedy the situation by providing better insulation or making repairs to the heating and cooling systems. All systems, fixtures, electrical and plumbing along with other items inside and outside the rental property must be in good working order. In some cases, it is advisable to purchase a home warranty policy to protect against exorbitant repair and replacement of systems. This works much like insurance except it covers the main components and systems of the property.

Leases must conform to jurisdictional requirements as well. Lead based paint disclosures must also be included if the rental property was built on or before 1978. It is a good idea to complete a move-in checklist to ensure that the property is turned in in the same condition as when it was delivered to the tenant. In DC and most jurisdictions, the landlord must place the security deposit in an interest bearing account and has no more than 45 days after the expiration of the lease to return it to the tenant. Should there be deductions due to damage to property (outside of normal wear and tear), the landlord must submit a breakdown of repairs along with the costs associated; including actual invoices for repairs is a good idea to ensure transparency and full disclosure to the tenant.

Additionally, it is advisable for rental owners to ensure their tenants have adequate renter's insurance policy. The landlord must also obtain a landlord rider attached to their homeowner's insurance policy to further protect against injury or loss as a result of renting their home.

Of course, hiring a property manager helps keep most of these things at bay and ensures that all steps and protocol are followed as required. For a fee, a property manager can ensure the rental properties are properly registered in DC, that tenants have gone through a comprehensive background and credit check, that leases are drafted correctly, that repairs are made on time by professionals, rents are collected and disbursed on time, financial documents are prepared and emergency services are available 24 hours a day, seven days a week. For out of town owners, hiring a professional property management firm is highly advisable.

One of the fundamental aspects of property management is about maintaining a positive relationship with tenants and keeping them happy and comfortable. It increases the likelihood of lease renewals which, in turn, help keep the property in better shape: less turn-over means less cost to landlords.

Landlords in DC have a lot of responsibilities. Doing the property management work can be a lot of work but it's not impossible. Following these steps will help ensure protection against liability and will maintain a positive relationship between the tenants. A home is more than a shelter; it's a sanctuary where people make memories and share their lives with one another. It is a landlord's responsibility to make sure their tenant feels at home at all times through thoughtful property care and management.