Becoming a landlord can be an exciting and profitable experience, but it’s crucial to remember it also is a business. Maintaining a professional mindset and avoiding these 10 common mistakes will set you on the right track to successfully operate your property.
1. Failing to properly screen potential tenants
While filling your vacancy is a crucial first step, it’s important to properly screen tenants before jumping into anything hastily. Making sure they fill out an application, checking out their credit report, and verifying references from past landlords are all great ways to assure you have a qualified renter.
2. Not knowing your location
When selling your listing, it’s critical that landlords know the ins and outs of the area so they can attract tenants and accurately price the rental. Choosing a prime location is key when investing in a property. Easy access to transportation, supermarkets, shopping malls, parks and other features are all key selling points that could appeal to a more desirable tenant at a greater leasing price.
3. Considering your rental a hobby
In order to turn a profit, it must be remembered that owning rental properties is a full-time business. Establish a business plan and an organized system of keeping track of revenue and expenses. If you fail to set yourself up with professional resources, like accountants or a helpful network of past landlords, it’s more likely to make mistakes and lose profit.
4. Ignoring fair housing laws
Not understanding fair housing and discrimination laws, which allow equal access to housing, can lead to asking illegal interview questions that could get you sued. The Fair Housing Act states you cannot deny a renter’s application based on race, color, religion, national, origin, sex, martial status, handicap or family status. Aside from potential legal issues, it is essential to always treat all potential tenants equally.
5. Not putting everything down in writing
Without a written lease agreement, it can be hard to prove any wrong-doing should anything go south with a tenant. Making sure there are clearly stated rules on a signed contract is imperative when maintaining a profit as a landlord.
6. Being lenient with lease terms
Getting down the terms in writing is important, but only goes so far unless you strictly enforce the rules. One month’s late rent can quickly turn into two unless you learn to put your foot down. It’s okay to have sympathy for tenants’ personal problems, but if you let yourself get walked all over it will damage your business.
7. Underestimating cost of maintenance and repairs
Lets face it, good things only last for so long. When determining rent, it’s crucial to anticipate costs for upkeep in order to keep tenants happy, comfortable, and coming back. There are some damages and repairs you won’t be able to foresee, so always accounting for a little extra is a smart move.
8. Overestimating your properties demand
No matter how much time and effort you put into a listing, there’s always a chance the property may not be rented for periods of time. Make sure you can afford the mortgage before closing on a property to avoid a large financial burden.
9. Overlooking tenants and landlord commitments
As a landlord, your work is far from over after getting a lease signed. Keep up with your property and tenants regularly, ensuring everything is running smoothly, but do make sure you are abiding by tenant privacy laws when administering check ins. Your property is your responsibility.
10. Not using marketing to your advantage
How you sell your property is going to determine its ultimate value. Featuring high-quality pictures, detailed amenity descriptions, and even virtual tours are great ways to attract qualified tenants. Know your properties’ strengths and show them off.