Hey, I thought I had good tenants living in my rental house!

Many new landlords are surprised and upset when they discover that after their tenants have moved out, they still need to spend some money on the property before it is ready to be leased again. These folks paid their rent on time and kept the house and yard in good shape, and you were looking forward to getting somebody new in the door right away.

It is almost impossible for tenants to leave the house in better condition than it was before they moved in. No matter how well they take care of your property, there will still be nail holes and marks on the walls, worn carpet, scratched wood, and bare patches in the lawn. This is a fact of life for owners called normal wear and tear. And you can't deduct the money to remedy wear and tear out of the tenant's security deposit. You may be able to have the tenants agree to have the house or the carpets professionally cleaned after vacating as part of their lease terms, but you can't make them pay to completely restore the house to its former pristine condition.

What aren't included in normal wear and tear are repairs needed because of tenant negligence or failure to report them. If your tenants knew of a dripping pipe that led to rotten, moldy wood under the kitchen sink, the cost to repair it can be deducted from the security deposit. But if they notified you and you didn't do anything to repair it, the tenant is not liable. This is why you should encourage your tenants to report every problem, no matter how minor, to you or your property manager.

Now that you don't have next month's rent coming in, it may not be pleasant to write checks for painting, cleaning, landscaping, or replacing flooring, but it's necessary in order to attract good new tenants.

Think about it this way: what do your old tenants have to show for their year of renting your house? Happy memories of living in a nice home, hopefully.

And what do you have show for it? A year's worth of rental income, which may or may not have covered your expenses. But more importantly, you still have an asset you can use to generate further income (and tax deductions).

So plan to spend up to a month's rent on getting the house ready again for some new tenants who will appreciate it. It will be money well spent!