If there were a job that could be considered interesting and rewarding, being a landlord would probably be at the top of the list. However, just like most jobs, there are great landlords, and there are bad landlords, and the only thing that separates them is the mistakes made.
If you are looking to join the many landlords of the world, there are a few things you should be aware of, especially the mistakes that should be avoided. This article will cover a few of the most common mistakes landlords make, so you don’t have to make them yourself.
Not Knowing When to Hire a Property Management Company
One of the first mistakes many landlords make, especially those new to being landlords, is not knowing when to hire a property management company. To be more specific, many landlords don’t fully understand how much work will be required of them and take on too much, too soon, and don’t get the help they need.
While trying to save money by managing the property yourself may be tempting, this can often lead to more problems than it's worth. Property managers have the experience and expertise to deal with any issues that may arise, from finding reliable tenants to dealing with repair requests. In addition, property managers can often get better deals on insurance and other services, which can save you money in the long run. As a result, hiring a property management company is often the best decision for new landlords.
The other side of the coin applies too. Many new landlords immediately request the help of a property management company. While there is nothing inherently wrong with this, it just means that you won’t be getting the experience that you need to become a great landlord. Learning when to hire the help of a property management company is essential to not becoming overwhelmed and gaining experience.
Not Doing Background Checks on Tenants
Another common mistake many new landlords make is not doing adequate background checks or screenings on tenants. While receiving rent and ensuring your properties are filled is obviously important, what’s more important is the “health” of your properties and actually receiving rent.
If you are not doing proper background checks on tenants, you are inviting the possibility of your property being damaged. More than this, if you just let anybody rent your property without doing a credit check, how do you know if you will even receive rent? It is far better to wait a little while to verify your tenants than to rush to fill the properties with uncertainties.
Not Budgeting Properly
There is nothing quite like the feeling you get when you first receive rent from your first property. Unfortunately, many landlords get caught up in that feeling and spend all of the rent money as disposable income. This isn’t the best approach for the long run.
This is because there will be repairs that need to be paid for or unforeseen accidents that might cause damage to your property. You might even need to renovate to justify a price increase. If you spend all of the rent money each month and aren’t budgeting or saving, you will run into financial problems eventually.
Not Treating Tenants Properly
An issue many new landlords face is not treating their tenants properly, which is understandable since acting as a landlord rather than a friend comes with practice. As such, there are a few things you should avoid doing as a landlord.
For example, you can’t just rock up to the property and let yourself in since this would be an invasion of privacy and is grounds to be sued. More than this, you should avoid neglecting the needs of your tenants at all times. If you neglect the needs of your tenants and something goes wrong, this will be your fault, and your tenants could sue you for the negligence of their safety.
Not Setting the Right Price for Rent
While there is absolutely nothing wrong with trying to get the best price for your property, there is a fine line that new landlords need to know how to walk. For example, if you are very rigid on the price of your property in a constantly fluctuating market, you could find yourself without tenants, which means no rent money.
More than this, if you overvalue your property, you will also find difficulty finding tenants, especially if the prices don’t match those of other properties in the area. You should also consider that if you set the price too low, you are inviting potential trouble since pricing does set standards.