Becoming a DIY Landlord? 8 Mistakes to Avoid
Becoming a DIY Landlord? 8 Mistakes to Avoid
Deciding to become a DIY landlord may sound like a good idea, but it’s crucial to learn about the responsibilities and common mistakes that come with it. Doing so will help you limit errors, build up additional legal and financial protection, and reduce stress.
Keep reading to learn about the common mistakes DIY landlords commit and how to avoid them!
1. Lack of a Written Lease or Rental Agreement
Without a written legal contract, it may be hard to enforce the property policies and the rental terms and conditions. Lease or rental agreements protect the landlord and instruct tenants on what to do in any given scenario. Verbal agreements may be forgotten or misinterpreted, and may not hold up as legal evidence.
Create a thorough rental agreement and have it signed by both parties. If you have a property manager, have them review the lease agreement to ensure the legality of the terms for stronger protection.
2. Not Scheduling Property Inspections
Although conducting rental property inspections may mean reducing your free time, its advantages are significant. Inspections allow you to spot potential issues before they become bigger and costly. As a landlord, you are mandated by state laws to provide a habitable space for your renters; conducting routine property inspections is key to keeping your property in shape.
A well-maintained apartment will help you attract and retain happy tenants. Complying with local and state laws regarding health and safety standards means you’ll deal with fewer tenant complaints and keep loyal residents.
3. Lack of Preparation for Vacancies
It’s normal for apartments to sit empty once in a while, but it’s essential to have a budget set aside for these periods of vacancies. If you don’t already have a budget, you may have to accept renters below your usual standards. Doing so can be stressful and problematic, as a bad tenant may contribute to financial losses.
Preparing for vacancies is strongly encouraged. Ideally, landlords should save up to three months’ worth of expenses to cover the apartment’s maintenance and marketing.
4. Holding off Evictions
Landlords may hesitate to evict a renter for a myriad reasons, but doing so may affect the success of their rental business. If a landlord allows their renters to skip payments or pay late without repercussions, then tenants are likely to keep doing it.
Hiring a property manager may thus be a good idea, as they can enforce the lease agreement and act as your professional representative. Their legal knowledge will also be helpful when handling evictions.
5. Unawareness of the Target Market
Pricing a rental unit accurately can be a complicated process. It’s rarely enough to check a few active listings online. There are several sources landlords should verify to ensure they set the right rental rate. They can also conduct in-person research by visiting rentals on the market to find out the rental price of similar apartments.
It’s also important for landlords to calculate the property’s annual maintenance and insurance costs, include them in the price, and adjust the rent accordingly every year.
6. Not Performing Credit and Background Checks
It’s normal to want to skip certain tasks when you’ve got lots of things on your plate. However, it’s bad practice to skip conducting a tenant’s background and credit check. Screening tenants should be done properly and must not be sacrificed for other duties, as knowing their rental history will help you avoid potential problems.
Take time to evaluate if candidates can afford to pay rent. You can ask the prospective renter to submit pay stubs and bank statements to check their financial means. You can also verify their employment to check the accuracy of the information they’ve provided. Reach out to previous landlords to find out how they were as tenants.
Property managers are efficient at tenant screening; they have years of experience doing so and can easily spot red flags. They also have more resources to deploy, ensuring faster assessment of a potential tenant.
7. Failing to Calculate the Amount of Time for Self-Management
If you’re not a full-time landlord, you may struggle to find the time to operate your rental place effectively. It’s recommended to engage the services of a full-time property manager who can conduct proper maintenance and attend to the tenants, reducing your workload and time commitment.
8. Not Factoring in the Learning Curve
Although property management may sound simple, it does require building up several skills, which may take some time.
With a property management company working for you, you can take better advantage of your rental business’ benefits. Their systems are often advanced and efficient, they have access to tried-and-tested marketing techniques, and they know what the best management practice is for any given situation.
A reliable property management partner offers you peace of mind, time freedom, and plenty of resources to streamline your rental processes. If you’re looking for a trusted property manager, contact B&R Property Management today!