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Rental Property Owner Risk Mitigation A to Z

When you have a rental property (or properties) there are a ton of things to keep track of on an ongoing basis, much of which if incorrectly managed, or completely overlooked, can quickly get you into hot water. As property managers with the nation’s largest manager of residential real estate, we have seen it all and then some. 

Are you aware of how to stay compliant and are you making the smart decisions that will keep you out of trouble… not only now but down the road as well?  Below we have outlined some key areas that help you mitigate risk as a landlord. Are you aware of, and routinely managing these areas?  


Insurance is a necessary evil. You don’t need it…until you do, and then you had better be properly insured and have followed all the rules of the policy. Otherwise, the insurance company just may succeed when they try to deny coverage…and try to deny they will. 

Understanding the types of insurance needed, and then buying to match the risk, is imperative to ensuring your long-term success. Many rental property owners are not aware of, or undervalue, the different types of risk and coverages that are needed to mitigate those risks. You probably understand that property insurance is needed in case there is a catastrophic loss like a fire, flood, or hurricane…this is very similar to the insurance you likely carry for your primary residence (just make sure your agent understands there is now a tenant in place).   

What you may not be aware of, is that since you now have a tenant living in your rental property, and are essentially running a rental property business, you are exposed to liability if that tenant, or one of their guests, hurts themselves while on the property. Do you understand what to say and do when the tenant calls, or the tenant’s lawyer calls?

Does your tenant have renters insurance? Did you require them to purchase renters insurance when they signed the lease? Should you? All great questions.  While renters insurance doesn’t cover your loss, it may cover the tenant’s loss during a covered accident and may keep the tenant from looking to you to help cover their loss.  

And what about the guys that cut the lawn, clean the pool or perform routine maintenance on your property? What happens if one of them gets injured? Are they insured? Does your insurance cover them? What if one of their employees gets injured while working on your property? Now what? Vendor liability and worker’s compensation insurance is complex and often overlooked by landlords. Worker’s compensation can also be one of the costliest areas when there is a loss.  

If you understand what levels of coverage are needed and are up to date on those coverages, great, if you are not, it may be time to consult with a team that gets it. We have been around for over thirty years, have seen firsthand just what can go wrong and routinely work to make things go right!  

Are you ready to put our experience to the test?

Regulations and Laws 

Staying up to date on local, state, and national governmental rules and regulations can seem endless… not to mention Homeowners Association (HOA) requirements. The rules can vary based on your location and saying you didn’t know won’t fly when you’ve missed an important law and aren’t following everything to the letter.  

The regulations begin when you purchase your property. Hopefully, you’ve done your homework, understand that your property is properly zoned and that you can legally offer your property for rent. Thank goodness it’s infrequent that a new owner finds out after closing that they’re not able to rent out all or part of their property, but it does still happen, and it’s worth understanding prior to purchasing the property.

Also, what about the work that others have done to the property prior to you coming along? Is that work up to code? If the work that was performed required a permit, was a permit actually pulled? Was the permit closed, as opposed to remaining open and clouding the title? Can you now locate the contractor that did not close the permit? And don’t think your inspection company or title insurance will cover you 100%. You must do your homework and know what you are buying inside and out! 

Generally speaking, code items are fairly common-sense type items, but you would be surprised at some of the compliance issues we have seen over the years when beginning to manage a new property. Many owners may not even be aware that they have certain issues. Again, it’s a good idea to dig a little deeper and really understand the condition of the property prior to purchase.  

Once you own the property and are renting it out are you remaining within compliance? Are you keeping up on routine maintenance items which when not maintained can cause you to become non-compliant? Some of the often overlooked, but certainly not exhaustive, are lack of screens on windows, the ability for the windows to open, functioning up-to-date smoke detectors and adequate water pressure. Is there heat in addition to your air conditioning? Having heat is the code. While you may be able to get away with being grandfathered in on some items, it is best to practice applying the most recent code for items involving life safety. 

And what about when you get a complaint or violation from the municipality or the neighborhood? Regular inspections of the property can help identify most issues. Continuously educating and communicating with your tenants on staying compliant with their actions and encouraging them to report maintenance needs, goes a long way toward keeping your property in compliance. Still, knowing how to reply and how to interact with the powers that be, is an important part of staying in good graces and out of court. Knowing, understanding and communicating with your city inspector, HOA manager or other figurehead is an excellent strategy.

Understanding the ins and outs of the various regulations takes effort, focus and, not to mention, a great deal of time.  Your best bet is to regularly educate yourself, do your homework, be prepared and stay vigilant.  As managers of a large portfolio of residential properties, we routinely educate ourselves on the changing landscape, employ best practices and are constantly on the lookout for red flags signaling something that is not right. Are you able to consistently spot the red flags?

We’d love to share our experience and expertise and talk about your particular property! 

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