Practice makes perfect. This applies to sports, art, instruments, and even being a landlord. There are several places where new landlords tend to stumble in the beginning. However, with a little research, you can avoid many mistakes that tend to trip up first-time landlords. In the list below are some of the most common mistakes made—but it’s always a good idea to ask seasoned landlords for advice as well.
Not Running a Thorough Background Check
Running a background check is your property’s first line of defense against a bad tenant. And while you may be anxious to fill the vacancy at your property and have a tenant to pay rent, it is important to know that this tenant actually can pay their rent. You can also learn if your prospective tenant has a history of damaging properties. By running a background check, you are taking the first step to protect your property both financially and physically.
Assuming the Property Will Always Be Vacated
You will need to make sure that you can afford the mortgage for the property even if it stays vacant for months at a time. Sometimes finding the right tenants can take time, and to do so, you may need to be flexible with either your price or certain policies. Something like allowing a pet can make it easier to find a renter more quickly. It is also proven that renters with pets tend to stay longer at a property, which gives you more time until the property is vacant again.
Underestimating Repair Costs
Even when a property is occupied, it still needs sporadic maintenance to keep tenants paying. You’ll need to make sure you’re charging enough in rent to help with ongoing expenses like water and garbage collection. However, you’ll need to be prepared in case a larger maintenance issue comes along (like fixing AC or replacing a kitchen appliance). It’s always a good idea to allot at least 35% of your annual rental income to maintenance costs; excluding taxes, insurance, and mortgage.
Not Enforcing the Lease
In your lease, there are specific terms laid out about living situations, rent, maintenance, and more. As the landlord, it’s important to do more than know your lease, you need to enforce it. If your lease does not allow pets and your tenants take in a cat, it is up to you to make sure the correct penalties occur. While it may be difficult to fine or penalize your tenants at first, it’s important to do so because if you let things slide, your tenants will keep pushing the boundaries of the lease.
Treating the House as a Home
It’s important to differentiate between your house and your rental property. While you think red walls for the kitchen will make it feel vibrant and welcoming, your tenants may not feel the same way. When it comes to design, it might be a good idea to check what is standard in rental homes before you start laying down patterned carpets.
As a first-time landlord, you’re not going to get everything right—there will be several learning opportunities and challenges ahead of you. However, the more time and effort you put into preparing your property and choosing a tenant to fill it, the more likely you are to succeed as a landlord.