Education and news for smart DIY landlords!
Practice makes perfect, so the saying goes. As someone who manages a property to rent out to tenants for the first time, there may be a lot of areas you’re not well-versed at. This means one thing: You’re more likely to commit rookie landlord mistakes. Mistakes as a landlord can be painful because they waste your time and money, and even put you out of business.
Below, you’ll see a list of these common mistakes. Steer clear of these errors as much as possible to increase your success.
The tenant selection process is an important step in getting good tenants. Tenants who break rules, don’t pay rent on time, steal other tenants’ belongings, and have a poor history with several past landlords - you’ll want to avoid them. Do protect your business. Ask them for previous references, why they’re moving in, and whether you can run a credit check.
Suggested reading: Top Tips for a Successful Tenant Screening Process
Many people who go into the rental business fail because they see it more as a hobby. It’s easy to fall trap into tenant scams if you don’t view real estate in a professional light. Enforcing rules and policies, managing your taxes, creating separate bank accounts, and keeping an eye on your property and tenants are all aspects of being a real landlord.
Every rental property must be maintained to stay in excellent condition. Maintenance keeps your units attractive and ensures a problem-free rental experience for you and your tenants. Be sure that the rent amount you charge your tenants covers maintenance repairs. Appliances can break anytime and plumbing systems fail. Over time these things fail. If you own an older rental property, you’ll deal with more maintenance issues.
Suggested reading: How Can Landlords Deal With Tenant Maintenance and Repairs?
Insurance protects you in cases of property loss and liability lawsuits. Unfortunately, insurance is not something that most new landlords talk about. In a previous blog post, I discussed the topic on insurance issues for landlords and mentioned that you need two types of insurance: Property insurance and liability insurance. Property insurance provides coverage for the damage and destruction of your possessions while liability insurance protects you against injury claims.
Documentation is extremely important, from rental applications to lease agreements to walk-through inspections and getting repairs done. Writing everything down protects you in the courtroom. It’s your first defense against ruthless tenants who may file a lawsuit against you. It would help to record calls, save text messages, and take pictures and videos. Keep your documents in a safe place. Keep them organized. I suggest that you adopt a basic record keeping system.
Suggested reading: Basic Record Keeping System for Landlords
Anyone can assume that he or she knows about landlording. Just because family members and friends heard of tenant horror stories from people they know, doesn’t mean they’re the best people to turn to. To make better decisions, take landlord training courses (online and offline), watch webinars, subscribe to newsletters, and read blog posts from authoritative websites.
A rental property business, when running well, can be the path to financial freedom. If you are just getting started, remember these rookie mistakes to avoid unnecessary burden. Got more ideas to share? I’d love to hear about them.
Finally, I offer you the opportunity to take a complete DIY landlording course: Landlord Prep: Video E-Course and How-To Tutorials. Everything you need to know to become not just a landlord, but a successful landlord, is here.