Becoming a landlord can be the perfect opportunity to make some good passive income. You’ll have to invest in property, but it’s worth it if you can charge enough rent to make back your money.
However, it’s not as easy as it looks, because there are some mistakes you need to avoid. Otherwise, you could find yourself in serious trouble.
Here’s a list of the most common ones.
Not doing your research
One of the biggest mistakes that new landlords make is not doing their research. This can lead to a lot of problems down the road. For example, you might not know what kind of tenants to look for or what properties are in demand in your area. You could also end up overpaying for a property or investing in a property that doesn’t generate enough income.
To avoid these problems, it’s essential to do your research before you even start looking for properties. Read up on the current market trends, talk to other landlords, and figure out what you need to charge to cover your costs and make a profit.
Not screening tenants properly
One of the biggest mistakes that new landlords make is not screening tenants properly. This can lead to all sorts of problems, such as rent arrears, damage to the property, and even eviction.
To avoid these problems, it’s important to screen tenants properly. This means checking their credit history, references, and previous landlords. You should also meet them in person and see if they seem like a good fit for your property.
For example, a tenant who doesn’t have a job might struggle to pay their rent on time. Anda tenant who has a reputation for causing damage to other properties might not be ideal.
Not getting the right help
One of the biggest mistakes that new landlords make is not getting the right help. This can lead to all sorts of problems, such as rent arrears, damage to the property, and even eviction.
It’s important to get the right help. This means getting professional advice from a rental property management company. They will be able to help you with things like tenant screening, finding tenants, setting rental prices, and more.
They can also help you with things like tax planning and lease agreements, so you know exactly what you’re getting into. Having professional help can save you a lot of time and hassle in the long run.
Not setting proper expectations
One of the most important things that new landlords need to do is set proper expectations. This means ensuring tenants know what they can and can’t do and what they can expect from the property.
For example, you should clarify what type of rental agreement you are using (month-to-month, fixed-term, etc.) and what the consequences will be if they break the agreement. You should also ensure tenants know how much rent is due each month and when it’s due.
You should also clarify what kind of repairs and maintenance the tenant is responsible for. For example, will they have to pay for a plumber if they accidentally block the toilet? What about repairs to damage caused by the tenant’s negligence?
Make sure you set these expectations as soon as possible. This way, your tenant will know exactly what to expect from the property and how to take care of it.
Not keeping up with repairs
One of the biggest mistakes that new landlords make is not keeping up with repairs. If you don’t fix things when they break, your tenant might not have an excellent experience. This could potentially lead to them breaking the rental agreement, and it can also cause problems if an inspector comes around.
Fix things when they break as soon as possible. It’s also a good idea to arrange a property inspection every few months, so you can spot any problems before the tenant does. If you have a small number of tenants in a single property, it might be worth doing these inspections yourself.
Overcharging for rent
One of the biggest mistakes that new landlords make is overcharging for rent. If you charge too much, then you might not be able to find any tenants at all. And even if you do find tenants, they might not be happy with the high rent prices and move on to a different property.
To avoid this problem, it’s important to charge a fair price for your rent. This means charging enough to cover your costs and make a profit, but not so much that your tenants can’t afford it. You should also consider the current market rates in your area so that you don’t end up charging more than everyone else.
Charging too much for rent can also lead to other problems, such as late payments and damage to the property. This is because your tenants might not have enough money to pay you on time, or they might need to cut back on the things that protect the property.
So these are some of the mistakes that new landlords need to avoid. By avoiding these mistakes, you’ll be able to make your experience as a landlord much easier and more successful.