Any way you look at it, when you have a tenant in an owner-occupied dwelling you're inviting a person to share your home. You can make sure a prospective tenant has a good credit history, stable employment background, and solid references. But people have different lifestyles and habits and you'll have to adapt to that.

What can you do to protect your peace and quiet and avoid small irritations that might escalate into something bigger? Don't worry. First of all, most people looking for an apartment feel the same as you do. If they think a lifestyle involving sharing walls with a landlord might cause problems, they'll opt not to rent.

But no matter who wants to rent from you, the best way both of you can avoid stepping on toes is to have the tenant sign a very detailed lease agreement. You want it to clearly state your expectations — how much noise you'll tolerate from tenants, whether they can throw parties, or if they can work on their car in the backyard.

It's up to you to figure out exactly what habits and behaviors you can tolerate and what will drive you round the bend — before applicants come knocking. You'll get more information about using leases and rental agreements for stipulating acceptable and unacceptable behaviors in Chapter 15.

Dealing with Difficult Tenants

Some landlords never have to face the hard fact that sometimes tenants can cause problems and their leases have to be terminated or they have to be evicted. Dealing with difficult tenants is bad enough. Having to take them to court to get rid of them or collect unpaid rent or damages is even more unpleasant. It costs money to hire a lawyer and go to court. Cleaning up after unruly tenants costs, too — your time and your money.

But the largest toll can be taken by your reaction to these aggravating situations. Are you strong enough to handle evictions? Can you distance yourself and think of the eviction only as an unpleasant, but necessary, side of being in business? If you think it's not possible to keep yourself from getting involved emotionally, perhaps you should think twice about becoming a landlord.

What to Do If You're Not Sure

Once you start meeting potential tenants, you may find yourself unsure about a particular applicant. Even though she appears to have good credentials, a good job, and the ability to pay rent on time every month, you may hesitate to offer a lease. When you're not sure a tenant will work out, it might be intuition telling you not to lock yourself into a lease that will be in force for a full year. You can structure the term of a rental agreement any way you want it. Rather than a full year-long or even six-month lease, offer a month-to-month rental agreement instead.

If you let the applicant move in on a month-to-month basis, neither of you will be obligated if things don't work out. If anything is bothering you, just tell them that their tenancy expires at the end of the month. You have to give thirty days' notice, but you don't have to offer any explanation on a month-to-month agreement. And if things work out well with the tenant and it turns out that you worried about nothing, you can always offer the fixed-term lease after she has been there a while. Better to be cautious rather than sorry.