Being a landlord may sound easy. You only buy or build a rental property, rent it out to tenants who will pay without issues, and maintain the property occasionally. Wrong! Being a landlord is demanding, and there is a lot you must do to ensure your investment is profitable. You need to work with the mindset of a business expert if you want to succeed. New and inexperienced landlords make mistakes that cost them money, time, and peace of mind. Therefore, it is vital to be informed and know these mistakes to avoid making them. Here are the mistakes you should avoid.
Underrating the Cost of Repairs and Maintenance
Property maintenance is vital if you want to avoid vacancies in your property. Make sure the monthly rent you are charging will also be enough to cover this maintenance. Never underestimate the cost of maintenance and repairs. They may even amount to thousands of dollars. You might need to operate at a loss if your property is not making enough profits. Make sure you always have money ready for repairs like replacing appliances, structural damage, painting, cleaning, etc.
Not Signing Agreements
A rental property is a business, and businesses don’t rely on promises. You must make it legal to ensure you are also protected. It is crucial to ensure your tenants sign legal documents carrying lease agreements. There should be terms of the lease that the tenant must follow and a binding document in case of litigation. Ensure your property complies with the state laws of leasing to ensure your contract will be valid in case of a legal issue.
Abandoning the Tenants
Your rental property is your responsibility. You need to check up on your tenants to know how they are doing. Check the condition of your property and look for ways to improve it. Listen to your tenants’ complaints and fix them. At the same time, remember to honor the rule of privacy. Please don’t show up at their door unannounced, and don’t place cameras inside their houses.
Not Screening Tenants
As much as you want to fill tenants in your property to get the rent, it is best not to rush. You must screen your tenants and check their credentials. Screening the tenants protects your property keeps other tenants safe and ensures you get tenants who will pay. You will need an application form that tenants can fill out to get more information about them. You can check their payment history to see if they had issues paying in their previous rental. Checking their background and other things can take time. So, manage your rentals with landlord software which automatically gives you information about the tenant. It can be tempting to let a desperate tenant ready to make a full deposit into your property. However, avoid the pressure and ensure everyone is screened before getting the keys to their apartment.
One benefit of screening the tenants is to ensure they can pay the rent on time and your other tenants are safe. However, if you start to experience issues with tenants such that they don’t pay their rent or are a nuisance to other tenants, you need to evict them. Delaying evictions is a mistake you should never make. Make sure you inform them about the eviction. If you don’t know your rights or proceeding, find help from an eviction attorney.
Assuming Tenants Will Always Pay on Time
If you have taken a loan to complete your property, you will need to pay the mortgage as agreed. Don’t assume that your apartments will always be complete, or tenants will always pay on time. It would help if you planned your financial diligence to ensure you can pay the mortgage. Avoid foreclosure because of failing to pay the loan. Understand there will be times when you will need to look for other sources to pay the loan.
Not Treating It as a Business
Many new landlords take renting as a hobby. However, you must treat it like a business if you expect to make profits. You need a bank account, proper management, bookkeeping, paying taxes, etc. if you don’t treat it like a business, expect to make many mistakes that will lead to unrecoverable losses.
If you have decided to venture into rental properties, you must understand that they operate like any other business. Therefore, come with a business mindset and take every process like a professional. Ensure you can manage your property and avoid the mistakes mentioned above. Always screen your tenants before letting them and maintain your property.