So you made a real estate investment, and now you’re the newest landlord in town. That’s excellent news, but it’s crucial to realize quite a few pitfalls are waiting for brand new landlords who don’t know their way around the business yet.
Fortunately, many of these mistakes are avoidable for observant landlords with plans.
One of the most significant and all too common mistakes new landlords make is not screening their tenants thoroughly. Unfortunately, that can lead to all sorts of problems down the road, from damage to your property to late rent payments.
Check detailed references and always run a credit check on all potential tenants. You won’t have to search far for horror stories of tenants who landlords vaguely knew or knew as friends. However, it’s still worth using practical checks to ensure they’re credit-worthy.
Another big mistake is not getting everything in writing. That includes the lease agreement, rules or regulations, and anything else you expect your tenants to adhere to without fail. By having all details of your arrangement in writing, you’ll be able to avoid any misunderstandings later on.
Have a qualified attorney read your rental agreement to ensure it’s legal. It may come in handy later if trouble strikes.
Another mistake new landlords make is not knowing the landlord-tenant laws in their state. These laws vary wildly from one state to the next, so it’s essential to be familiar with the ones in your area. In addition, not knowing these laws can bite you later if there are any problems with your tenants. Brushing up may sound boring, but it’s worth it.
Another mistake new landlords make is not keeping up with maintenance and repairs. That can lead to your property becoming run-down and eventually uninhabitable. Be sure to do regular inspections and address any issues as they come up.
Another mistake new landlords make is giving in to tenant demands too quickly. While you want to be accommodating, you also don’t want to be a pushover. Be firm with your tenants, and don’t let them take advantage of you.
Another mistake that new landlords make has unclear or unrealistic expectations. That can lead to frustration on both your and your tenants’ part. Set realistic expectations from the beginning and communicate them clearly to your tenants.
Another mistake that new landlords make is not doing regular inspections. That can lead to problems going undetected for too long and eventually becoming more significant. Instead, regularly inspect your property and address any issues as they arise.
Inspections and maintenance will keep your property earning for decades. Regular work is better than allowing projects to build up to unmanageable levels.
Another mistake that new landlords make is not enforcing the lease terms. If you don’t enforce the lease terms, your tenants will start to think that they can get away with anything. So be sure to implement the lease terms and take action if your tenants violate them.
Another mistake that new landlords make is not keeping good records. That can come back to bite you later on if there are any problems with your tenants. Keep perfect records of all communications with your tenants and any repairs or maintenance you have done.
Being a landlord is a business venture requiring excellent paperwork and bookkeeping. However, disciplined landlords make superior returns! You’ll find plenty of great software to help you manage rentals, which is a big bonus.
The final mistake that new landlords make is not getting proper insurance coverage. That can leave you vulnerable to a lawsuit if something goes wrong. So be sure to obtain and maintain the appropriate insurance coverage for your property and tenants.
Insurance may seem pricey, but the horrible consequences that the policy protects landlords against cost a lot more.
With experience, you’ll get better at being a landlord, especially when you start on a positive note. Staying organized and dealing with incoming problems and situations will keep you ahead of the game.
You have an opportunity to build large sums of equity using other people’s rent money. That’s a blessing and a massive responsibility because it’s their primary residence! So always treat your tenants with professionalism and enjoy your passive income.
If you need help managing your rental property, be sure to reach out to our team!