It might seem like ownership of property can only happen through careful planning, but there are many property owners who’ve become landlords without meaning to. Maybe a relative has passed away and left them a property in their will. Maybe they wanted to sell their home but didn’t get the right price for it, so they chose to rent it out until the market improved. Regardless, what all these people have in common is that they’ve come into possession of rental property without having had the chance to prepare for becoming a landlord.
It’s not impossible for a new rental owner to find a natural knack for management and decide to devote their time to managing their own properties. But for those who feel a tad overwhelmed by their new responsibility, this article will lay out the two most common mistakes accidental landlords make managing their own property, and how to avoid them.
Mistake #1: Placing Bad Tenants
You could own a beautiful property and maintain it perfectly, but it wouldn’t be worth a penny to you if you couldn’t get it rented by good tenants. Not just any tenants, but ones who pay rent on time and are honest about damages to the property and don’t sue the owner or managers with false claims. New owners and landlords are often all too willing to rent their property to people whose credentials (credit, work history, criminal history, etc.) they haven’t thoroughly verified. Looking into a tenant’s history is of the utmost importance, so don’t just call their last landlord — call two or three of the landlords they’ve rented from. After all, the most recent one might speak positively about the tenant only because they want him to become your problem, not theirs.
Taking on bad tenants can get you dragged to court for no good reason, and end up costing you dearly on legal fees even if you win the case. Verification of tenant records should never be skipped over in favor of guesswork. Remember: your rental property is only as good as its renters.
Mistake #2: Legal Blunders
It’s your responsibility as the property manager to know the laws — local, state and federal — regarding rental properties and tenant-landlord relationships. Fair Housing regulations are different from state to state, and you should absolutely know those in the state you own/manage property in. Now, getting taken to court can cost quite a bit. Even if you win the case, you face the cost of having to defend yourself (which calls back to No. 1 — don’t take on a tenant who will put you through this), but it’ll cost a lot more if you’ve actually made the illegal mistake the tenant claims you did. I highly recommend hitting the books a bit to brush up on the laws in your state regarding landlord/tenant relationships. The U.S. Department of Housing and Urban Development is a great place to start.
If you’ve recently fallen into the role of rental owner, you’ve likely already found yourself responsible for a vast variety of decisions regarding your property, but perhaps the two most important are the way you choose your tenants and the thoroughness with which you learn Fair Housing law. Avoiding the pitfalls involved in these two areas of being a landlord can save you innumerable headaches, and give you the foundation you need to move forward profitably with your property.