You’ve invested in some rental property. This can be highly profitable if you stick to some basic guidelines. However, owning rental property can also be very costly if you make a few common mistakes.
It can be a bit of a steep learning curve for new property owners to know the do’s and don’ts. Alltrade has got you covered to help you learn the ropes.
We’ve created a list of common mistakes made by property owners so you can manage your property stress free.
A lot of first-time owners try to manage everything by themselves. This seems like an easy solution to save a bit of money.
There are a lot of intricacies in property management. Trying to do everything yourself might end up costing more as simple errors can add up, especially when it comes to documentation.
Contracts are difficult to understand, especially if you aren’t experienced in knowing where to look in the fine print. Missing critical details in contracts can be costly.
An experienced professional can help you analyze the documents. They’ll guide you through the purchase contract and keep your best interests at heart. Working with a professional will save you money and a headache.
It’s very important to get the correct property insurance. Sometimes it seems obvious to opt out or seek the minimum, but your property must not be dealt with languidly. Having the right insurance will also give you peace of mind.
When you invest in insurance, consider getting property and liability insurance. Consequently, this will save you money, as a renter is bound to cause some sort of damage.
As well as getting the right type of coverage, it’s important to get the right amount.
Investment insurance is more complicated than your average homeowner insurance. Hiring a licenced insurance professional is an important step in getting the right coverage for your investment.
Many first-time landlords want to become friends with their tenants. It’s easy to want to be the “good guy.”
As with many jobs, there is a fine balance of being a professional and someone’s friend. You can still be kind, polite and considerate, but it can become very ethically challenging to be your resident’s friend.
When you become friends with your tenants, you might subconsciously give them special treatment. They might also expect extra leniency on certain issues. Furthermore, they might ask for extensions on late payments, which will cost you in the end.
It can become very difficult to address this if you are too close. Other renters might notice special treatment. Legally, they are able to file for a lawsuit because they might feel as if they are being treated unfairly.
It’s important to have good quality tenants that fit your building. It can also be challenging not to immediately fill a vacancy without screening potential renters, as having an empty unit can be costly.
Be patient and screen your tenants properly. It’s important to know who each tenant is and their rental history. You want tenants who will treat the unit with respect, so that your maintenance is limited.
Rushing to fill your unit might mean that you end up with a bad tenant and, worst-case scenario, evict them. This can be avoided from the start by screening your tenants properly. The eviction process can be awful and costly.
Save yourself from a future headache and extra costs by screening your tenants properly.
It’s important to screen your tenants effectively, while treating them with respect. Avoid asking discriminatory questions during the screening process. These questions go against the Fair Housing Act.
It’s illegal to reject an application based on race, national origin, color, sex, handicap, marital or family status. Refusing a tenant based on these guidelines may have you facing complications with the law. As a landlord, it’s important to learn the Fair Housing Act.
Do screen properly, but also follow the guidelines of the Act.
The skill of setting rules and guidelines is a priority for first-time rental property owners to develop. We recommend stating these rules in the lease so that you will have it in writing. This way you won’t forget about any of them as you are going through the lease with your new renter.
Here are some questions to ask yourself when you’re making the rules:
You might be totally capable of doing the maintenance in your units. However, one little slip can cost you a lot of money.
The same goes for allowing your tenants to do their own repairs. If they do a poor job, or something goes wrong, the liability is on you. As a landlord, you will be paying for their mistake.
It’s important to find affordable and quality contractors to do your maintenance. It will save you additional worries and costs in the end.
It’s important to learn about the housing codes for your area. If health and safety standards are below code, your tenant has the right to break their lease. It might also end up in a lawsuit.
We suggest doing regular check-ins on your tenants. Make sure the property is up to standard and provides the tenant with a safe and livable home. It’s also important that you let the tenant know you are coming in advance.
Drop-in’s are also a good way to keep tabs on the property.
This has been our round up of first-time property owner mistakes. If you wish to talk to a property manager, Alltrade is here to help!