Some people may assume that being a landlord is a simple job. However, a lot more goes into the position than you may think. That said, when investors first begin their career as landlords, they’re bound to make at least a few minor mistakes. After all, nobody is perfect. But still, the goal is to avoid costly errors and run a successful business. So, if you’re starting out in the rental industry and need some tips, keep reading to learn about eight common landlord mistakes to avoid in your career.
Owning rental property is an excellent way to build wealth while generating passive monthly cash flow but there are some things that landlords do that can kill their rental property profitability.
MISTAKE #1- NOT RENTING VACANT UNITS QUICKLY
One of the costliest mistakes that a landlord can make is not turning over (renting) vacant units quickly.
Some landlords are fond of waiting until after a tenant has moved out until they start marketing their vacant rental but the reality is that waiting can prove to be costly and what was supposed to be a short vacancy can turn into a long-term vacancy.
From the moment that a tenant has notified the landlord that they intend to move, the landlord should move forward with taking steps for getting that property in rent-ready condition so that once the tenant moves out, they can quickly make repairs, or clean the property then list it online.
MISTAKE #2- TAKING TOO LONG TO TURN YOUR UNITS
Whether after you have acquired the property or your tenant had moved out, it is important if you can ensure that you have the contractors that are ready to go turn that specific unit. This assures that jobs such as repainting, repairs, re-carpeting, installing bulbs and even leasing can be done at the right time. Taking too long will surely drain your money and resources having contractors that are ready to help save a lot of time and opportunity cost.
MISTAKE #3- INEFFICIENT TENANT SCREENING
Tenant screening is the ‘lifeblood of any rental business because it’s the quality of the tenants that we rent to that will bring in the long-term, consistent income.
When a landlord doesn’t screen their tenants efficiently, they may ultimately rent to someone who ends up being a troublesome tenant who doesn’t pay their rent on time or worse, ends up evicted.
To avoid screening tenants efficiently, landlords should always use the best tenant screening services available while paying close attention to things like an applicant’s rental or credit histories because those things will help the landlord to know if the tenant is going to be a good long-term tenant.
MISTAKE #4 - NOT VERIFYING THE RENT RATE
Not doing enough due diligence when it comes to your market is something that can kill your chances of getting the income you want. What makes it useful if you do your research is that you can be able to push up the rent higher if you are updated with the market.
MISTAKE #5- OVERCHARGING TENANTS
If you’re a new investor, you’re probably eager to start making money on your rental property. However, this is one of the biggest landlord mistakes. Even though the goal is to make a profit, you don’t want to overcharge your tenants. If you do, you’ll notice your prospective tenant pool shrink, and current tenants will be less likely to renew their lease.
To make sure you’re asking for a fair rental price, research the average prices in the area. That said, if you decide to work with a property management company, they will have insight into current market trends and rates that similar properties are going for. This will allow you to stay competitive while not overcharging or undercharging tenants.
MISTAKE #6- DISOBEYING THE LAW
Even if you are a new landlord, you are expected to fully understand and follow local, state, and federal housing laws. Some of the most important laws to become familiar with include:
Discrimination Laws– Landlords cannot refuse to rent to someone based on factors such as race, religion, national origin, sex, disability, gender, or familial status.
Privacy Rights- You may need to enter your tenant’s unit for a maintenance issue or repair, but it’s crucial to give them at least 24 hours’ notice before doing so.
Wrongful Evictions- Although it’s a hassle for both parties if you must evict one of your tenants, it needs to be done correctly.
It can be easy to accidentally break the law if you don’t educate yourself on the expectations in your local district. To avoid legal trouble, make sure you comply with all the laws that apply to leasing rental properties.
MISTAKE #7- FORGETTING TO INSPECT PROPERTIES
When you purchase a property to rent, you have to complete an inspection to ensure it is compliant with all the local building codes, fire codes, and safety standards. This process is mainly focused on tenant safety and the livability of the rental unit. If anything of concern pops up during a property inspection, landlords must make the necessary repairs before allowing a tenant to live there.
Additionally, the move-in and move-out inspection process is one that all landlords should not neglect. During these walkthroughs of your property, you can document all the damages, issues, and concerns within your rental. If you fail to inspect your properties between tenant stays, you may end up being responsible for significant damages that cost you more money than you anticipated.
If you have long-term tenants living in your rentals, you’ll also want to do annual or semi-annual inspections to ensure the property is still in good condition and well-maintained. Just remember that, even though you own the property, you have to inform your tenants ahead of time before entering the rental unit.
MISTAKE #8-DOING BANDAGE FIXES AND REPAIRS
This means that if there are some repairs to be done, bandage fixes and repairs is not a good thing as this will just increase the repair cost in the long run. For instance, if there’s a leaky roof, do not just apply a temporary solution like patching, it is best to replace as the repair cost will be doubled or tripled sooner or later.
Need Management Help for Your Rentals?
If you’re new to the industry and want to avoid making some of the most common landlord mistakes, hire a trusted management company. After all, when you don’t have to worry about completing all the grueling tasks of running a rental business, you can be a better landlord and create better tenant relationships.
Overland Management offers full-service property management. We offer property management for single-family, multifamily and commercial properties. Contact us today to learn more about our services or to get a quote by clicking here