6 Top Mistakes a Landlord Can Make

If you’ve taken the plunge into the role of landlord, you’ve likely realized there’s a lot more that goes into the job than at first glance. From placing tenants to repairing damages, legal issues to vandalism, there are a host of worrisome frustrations that can come along with this investment. However, the benefits reaped from a rental property business can be more than worth the hassle that comes along with it. While you can look to make a lot of money from a rental property, there are easy ways your business could fail. Browse through these common mistakes to get an idea of what to look out for if you decide to become a landlord.

Using a General Lease

You need to make sure your lease covers every single facet in your rental property. Should any legal issues comes up, your lease will be your saving grace and keep you from expensive trouble. Take the time to go through your lease provision by provision, and have legal counsel well-versed in real estate look at it with you as a preventative safeguard measure.

Not Screening Your Tenants

It’s understandable to want to rush the tenancy process, but selecting a renter without making sure they’re properly screened first is a big no-no. This is probably the one way you will most definitely find yourself in a bad situation with your rental property. Be wary of renters who offer you more money to avoid the screening process! Extra cash each month isn’t going to make up for the unnecessary drama and damages that could come from an untrustworthy tenant. Always use a certified screening service like Transunion Smartmove to properly vet any potential candidates and keep yourself and your family safe from nightmare tenants.

Not Maintaining a Property

Letting your property fall into disarray is much easier than you might think, especially if you don’t go over to walk the grounds and update things when necessary. It may pain you to shell out the money for repairs and maintenance each month but these intermittent costs are much more manageable than the ones you’ll be faced with should you allow your property to run itself into the ground. Ensuring your property is in top condition will keep you in good standing with your renters. Maintaining your property will also make it easier for you to get the house back into shape when turnover does occur.

Assuming Your Property Will Always Be Rented

It’s a lovely thought, but don’t count on your rental property being consistently filled. Vacancies can be extremely expensive, and if you’re counting on your rental income to cover expenses like your mortgage, you could be in for a nasty surprise. Prepare for these vacancies with an emergency fund that will cover you should you go a month or two without tenants.

Not Taking Property Rental Seriously

Becoming a landlord isn’t simply taking on a new hobby. In most cases property rental is the equivalent of picking up another job entirely on top of the responsibilities you already have. Property rental is a business, and must be treated as such if you have any hope of seeing return from your investment. From financials to time constraints, you’ll need to plan ahead if you hope to manage your property on your own without the help of a property management team. You’ll need to financially prepare, and get advice from an advisor from a company like Edward Jones on how best to approach your situation. This will entail creating separate accounts for your rental business and your personal banking, you’ll need to follow strict local, state, and federal regulations, and you’ll be opening yourself up to a variety of liabilities that could come back to bite you if not handled with care. You will probably also want to strongly consider setting up a property management LLC.

Being Lenient on Lease Terms

You may want to give breaks to tenants who you really like, but this is a surefire way to dig yourself into a hole of being taken advantage of. If you don’t enforce the rules, you can’t expect your tenants to follow the rules. If rent is late, charge the late fee due (as long as this is a provision within your lease). Giving your renters a break will only see them falling into a pattern, leaving you wondering when you’ll receive your money each month. The moment a rule is broken, bring down the iron fist, so to speak. This will ensure mutual respect for you and your tenants, and remind everyone that this is a business relationship and should be treated as such.