Renting out property seems like an easy way to make money until you try it. Some areas of the process, especially those that require planning ahead, can end up being financially problematic. Handling rental property requires the skills of an accountant, organizer, human resource executive, manager, and legal professional combined. It isn’t surprising that most landlords make their fair share of mistakes along the way. The top mistakes landlords make are:
1. Failing to reserve money for vacancies and repairs – To some degree, landlords can estimate when tenants will be moving out and leaving their homes vacant. This allows the landlord to plan on making any needed repairs or upgrades to the home in preparation for the new tenant. It also gives them time to accept and screen applications to get the right kind of tenant for the home. There are still going to be times when tenants leave unexpectedly and leave the landlord unprepared to fill the vacancy quickly. Repairs can be even more difficult to predict. The best protection in this area is to use a portion of the monthly rental payments to pay for maintenance on equipment and appliances to keep it operating smoothly. Otherwise, there are likely to be many more unexpected repairs that are more costly than maintenance.
When landlords put all of their money into enhancements or upgrades to existing features instead of reserving an adequate amount of cash for these types of situations, they can find themselves in a difficult position. Every day that a rental home is vacant is a loss. The same is true for repairs. Repairs need to be made in an efficient and timely manner.
2. Failing to Screen Tenants Properly – Some landlords fail to realize the importance of screening potential tenants properly until they are in a situation they have difficulty getting out of. The application should never be the only resource the landlord uses. They need to check into the potential tenant’s background and learn what types of behaviors they exhibited with previous leases. Find out if they can afford their monthly rent and whether they have a history of paying their rent on time.Tenant screening should also include a background check to ensure they have no dealings with drugs or other criminal activities. Request references and follow through with them. If they kept their previous home clean and have had no previous evictions or other legal issues, they may make a good tenant. Just remember, there are no real guarantees.
3. Prompt Maintenance and Repairs – Landlords are expected to provide a habitable property to the tenants of the rental property. Failing to respond in a timely manner to a request for maintenance or repairs could result in a violation of the lease agreement. A good tenant may turn sour if reasonable repairs are not handled promptly. It will also lead to a poor reputation for the rental facility.
4. Improper Handling of Evictions – It is the landlord’s responsibility to ensure tenants follow their lease agreements. The mistake many landlords make is not being committed to following through on the terms of the lease which includes filing eviction at the correct time when a tenant is in breach. Eviction proceedings can always be stopped and working with the tenant is recommended, but failing to start the process early on will oftentimes cost you more time and money in the end.
If you are tired of the hassle of being a landlord, contact us about buying your rental property. You can fill out our online form or call to learn more.
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