Being a landlord is one of the most challenging jobs in real estate. So, if you plan to invest in rental properties, you need to understand every duty and responsibility that being a rental property owner entails - ensuring you will do everything right.
Rental property owners have the option to either manage their investments on their own, or to partner with a property rental property manager to do this on their behalf. If you choose to manage your property alone, it’s essential to avoid the most common pitfalls that can be obstacles to your success.
We at Innovative Property Solutions have put together the top 7 mistakes to avoid when becoming a DIY landlord:
One of the most common mistakes of every DIY landlord is the failure to screen tenants. Some landlords are so excited to have their rental home occupied that they forget all the necessary procedures of tenant screening.
This includes performing background checks and verifying the tenant's income and past tenancies.
As a landlord, you should ensure to only accept highly qualified tenants, meaning those who can pay their rent on time and will take care of the property like it’s their own. If you do not screen your tenants well, you could end up with problematic renters.
Before letting a tenant move in, make sure that you have a proper rental agreement in place. Make sure that you and your tenant have discussed the provisions in the agreement and signed it. A rental agreement is legally binding, which means all parties must adhere to the provisions included in the contract.
With a written and signed lease agreement, the terms of the lease are clear to both parties. Since rental agreements are legal documents, it’s best to consult a lawyer to draft the agreement to ensure that all necessary details are included and that you don’t miss out on anything important.
The property that you are renting out is an income-generating asset. So, it’s important to maintain the upkeep of your investment by doing regular inspections. Doing so can help you identify issues early on while they are still small and easy to fix.
Moreover, routine inspections can help you identify tenants who do not uphold their duties and responsibilities in taking care of the property.
Regular inspections are also extremely helpful when it comes to keeping your tenants happy. If you ensure to keep your property is in its best condition, your tenants are more likely to stay in your rental home for the long term.
As a rental property owner, it is your responsibility to understand the market to ensure that your rental home can stay abreast of the changes in the real estate industry. Failure to do so could end up in unnecessary losses.
If you are not knowledgeable about the market in your area, you could end up pricing your rental unit incorrectly. Consequently, if your rental rate is too low, you could miss out on opportunities to maximize your income. But if your rent is too high, you could end up having long vacancies.
To avoid this mistake, make sure to do your research and study the local rental market. A proper rental market analysis should include investigating rental prices to understand how your competitors are doing. This allows you to optimize the rental price for your rental home based on the amenities that you provide, as well as strategize how to stay ahead of the game.
Owning a rental property involves many duties and responsibilities that are mandated by the law. So as a landlord, it's necessary to know your state and local laws so you can remain in compliance with them.
Aside from the landlord-tenant law, you should also be aware of the Fair Housing Act in your state. This law prevents any discrimination against certain protected classes. Make sure to read and understand all these rules and regulations associated with owning a rental home so you won't get into trouble.
Rental property owners should be responsible for addressing tenants' concerns, especially if this is about the property. As a landlord, you have to keep yourself open to any emergency concerns. Maintenance and repair issues should be addressed within a reasonable timeframe.
Failure to do so can result in bigger issues later on which could be more costly to resolve. Also, this can be construed as not providing a habitable space for your tenants, which is a violation of the landlord-tenant law.
There are times when tenants make mistakes, such as delaying a rent payment or failing to report a maintenance issue. These situations should not be taken lightly as if you do, you could end up having to deal with late payments more often than you would like.
It's essential to remain strict with your deadlines and to teach tenants to be responsible. Also, remind your tenants of their duties and obligations to take care of the rental unit. Send formal, written notices if there are issues such as these and take legal action for repeated offenses as soon as possible.
Being a landlord can be tiresome. On top of all the tasks that you need to do, like communication and rent collection, you need to keep track of all the legal duties associated with owning a rental home. To avoid committing any mistake that could result in a failed investment, it's best to partner with a professional rental property management firm.
Experienced property managers like us at Innovative Property Solutions are knowledgeable about everything related to investment properties, so you don't have to worry about anything anymore.