Common Mistakes First-Time Landlords Make
Are you a first-time landlord who has recently invested in a property to rent out to tenants? If so, a great thing that you can do as a first-time landlord is gain an understanding of some of the most common mistakes first-time landlords make so that you do not go down the same path. They say that understanding the mistakes of those who have gone before us can help us to prevent making the same mistakes in the future. As property managers in Redding who have over twenty years of experience working with landlords, we would like to give you an understanding of some of the most common mistakes that we see first-time landlords make.
- Selecting poor tenants – Having a thorough selection process when it comes to selecting tenants to live in your rental property is important because you will want to make sure that rent payments will be made on time and that the property will stay in good condition. Selecting tenants without first checking to see if they have long-term employment or a stable income setup can result in late rent payments or missed rent payments, which will ultimately fall back on you as a landlord. Selecting tenants who do not care to take care of your rental property can result in damage and repair costs, which can also fall back on you as a landlord. If you really want to make a profit off of renting out your property, it is vital that you take the time to check employment, call references, and run background checks before selecting tenants to live in your rental house or apartment.
- Failing to get the lease in writing – Laying out all of your requirements in a written lease agreement and then having all of your tenants sign it legally binds your tenants to that agreement. This lease includes your tenants’ guarantee that they will pay rent on time and it also includes late fee amounts if they do not pay their rent on time. In the case that a tenant does not make a rent payment and refuses to communicate about making that rent payment, you as a landlord legally have the right to take your tenant to court because you have their commitment to make their rent payments in writing.
- Charging overly high rent rates – A lot of first-time landlords immediately think that the best way to make money off of a rental property is to set high rent rates. The problem with this, however, is that it doesn’t cater to the potential tenants or give them any kind of incentive to want to live in your rental property. It is important that you put yourself in your potential tenants’ shoes. At the most, how much would you be willing to pay? Many landlords end up not being able to fill their rental properties with great tenants simply because their rates are set so high.
- Getting advice from family and friends – People always have opinions, especially the ones who are the closest to you. And when it comes to running a business, which is essentially what you are doing, it is better to get advice and practical wisdom from someone you are not emotionally connected to rather than a family member or a friend. While there are many horrible tenant cases, there are also many success stories. Make sure you connect with landlords who have had success in this business and glean from them. Plus, the people who don’t have success stories most likely made a lot of the mistakes being laid out in this blog post. The fact that you are reading this is a step towards success!
- Underestimating or failing to calculate maintenance expenses – While every landlord wants to give his or her tenants the benefit of the doubt, there is a high chance that your tenants will not take care of the property as well as you think they will. Intentionally or unintentionally, damages do occur. It is important that you calculate and set aside some money as a safety net for potential damages or maintenance repairs. Landlords who fail to do this or underestimate the cost of potential damages and repairs end up in the hole and their rental properties are left worse off than when they started.
- Failing to keep a business-professional relationship with tenants – Many landlords end up in the hole because they allow their relationships with their tenants to become personal and they continue to extend grace when they should be abiding by the lease agreement and sticking to the requirements. Your tenant is essentially your customer. This means that in the same way a customer gives a payment for a product or service, your tenant essentially gives you a payment for a “housing” service. Imagine a customer walking into a business and taking a product without paying or receiving services and then walking out without paying. Not only would that be disrespectful, it is actually illegal and there would be no grace offered for those kinds of actions. It is the same way when it comes to your tenants failing to make rent payments. The requirements must be directly and sternly communicated and if your tenants fail to meet them, legal actions must be taken. The landlords who fail to do this because they don’t keep their relationships with their tenants business-professional are the ones who end up in the hole in the end.
If you have any questions or would like more information on how you can succeed as a first-time landlord, feel free to call us at 530-410-6085! We do property management in Redding and Shasta County and would love to help you in any way we can!
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