WHY PAY FOR PROPERTY MANAGEMENT?
People enter the landlord business for many different reasons. Maybe you are an "accidental landlord" who decided to rent out your former residence or you gained a property through inheritance. Or maybe you diligently researched properties for sale and chose to purchase one as an investment. Regardless of how or why you entered the business, being a landlord can be a profitable endeavor - or a costly one if you stumble into some common pitfalls.
Here are 10 of the most common mistakes landlords make.
Top 10 Mistakes Landlords Make:
People enter the landlord business for many different reasons. Maybe you are an "accidental landlord" who decided to rent out your former residence or you gained a property through inheritance. Or maybe you diligently researched properties for sale and chose to purchase one as an investment. Regardless of how or why you entered the business, being a landlord can be a profitable endeavor - or a costly one if you stumble into some common pitfalls.
Here are 10 of the most common mistakes landlords make.
Top 10 Mistakes Landlords Make:
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1. (NOT) Understanding your local market
The three most important words in real estate investing continue to be location, location, location. It means making sure your rental is in a desirable area to attract better tenants. Just because the price is right doesn’t mean the location is. 2. (NOT) Understanding Fair Housing Laws Before you start looking for tenants, you need to understand fair housing and discrimination laws. Fair Housing Laws are Federal statutes that ensure equal access to housing for everyone. It is illegal to discriminate, and many local and state governments have additional protections that you must be familiar with. The consequences for not adhering to these laws can be quite severe. |
3. (NOT) Putting your best marketing foot forward
While advertising a rental property may not be as sexy as advertising a hot new car, there are similarities. You want to attract the best possible tenants. 4. (NOT) Conducting a thorough tenant screening Speed is important in filling your vacancy, but the wrong tenant can be much worse than no tenant. It is important to verify everything an applicant tells you. 5. (NOT) Completing a complete Lease A Lease serves as a binding, legal agreement between you and the tenant. As such, you will want to make sure it thoroughly addresses the rules, policies, and conflict resolution procedures for living on your property, and clearly defines tenant responsibilities. Remember to put everything in writing. A hand shake or verbal agreement won’t hold up in court. |
6. (NOT) Knowing your landlord responsibilities
Securing a tenant for your property is important, but your work is not done. As a landlord, it’s you job to meet your terms of the Lease, respond to maintenance requests, collect rent and know what steps to take if rent is not paid. 7. (NOT) Anticipating maintenance costs Be prepared for the possibility that your property won’t always be occupied. If you are not able to fill a vacancy right away, do you have enough cash set aside to pay for the mortgage, utilities and other maintenance costs? Maintaining a rental property comes with unforeseen expenses, such as damages and unexpected repairs. Complete a cash flow analysis and establish a budget, so you will be able to cover these costs. You must keep money in reserve for larger expenses that will come along. 8. (NOT) Knowing when to hire a professional If you live in the area, are handy around the house, and have the time to quickly respond to requests, you may save some money by handling some of the maintenance and management of your property. However, if you are juggling an investment on top of a full-time job, you may be better off hiring a Professional Property Manager. |
9. (NOT) Managing your time efficiently
For many landlords, managing even one investment property can be a full-time job. Between securing a tenant and keeping up the books, you should understand that any investment property is a big-time commitment. A Professional Property Manager can free up time for yourself and your family. 10. (NOT) Treating your rental like a business However you get into landlording, your rental property is a business – and you need to treat it that way. Consider setting up a Limited Liability Company (LLC) for ownership. This can help protect you personally from legal actions or claims. Consider using accounting software or a spreadsheet to keep track of your income, expenses and returns. Document all of your procedures and communications with applicants, and tenants, and make sure to stick to your procedures. When you are renting a property, you will hear many stories, some will be sad. There are many opportunities to help your community, but keep in mind….your rental is not a charity, it is a business. |