The value of real estate has been exploding over the last few years and has people scrambling to buy rental properties. It is a great time to be a landlord by buying up some apartments or houses and renting them out. This means that many new landlords are out there these days. If you are one, you must know what it entails to be a successful landlord when investing in real estate.
There are a lot of mistakes that new landlords make that you will probably make yourself if you don’t know about them. These mistakes will cost you money and create stress for you so they are best to avoid. In this article, we will go over many common mistakes so you can make sure you don’t also commit them.
Table of Contents
1. Failing to properly screen tenants
The type of tenants you get are going to make or break your experience as a new landlord. In many areas, it is very difficult to get rid of a tenant no matter how badly they ruin your property or neglect to pay rent. This is why it’s so important to make sure you get good people to rent from you that will be responsible.
It’s also a good thing to have long term renters that will renew the lease every year. If you have lots of people leaving after the lease then it is expensive to get new tenants often.
The way to make sure that you have good tenants is to properly screen them. You may not want to do this yourself as you are not experienced and could still end up with the wrong tenant. It’s a good idea to hire rental property management companies in downtown to handle this for you. They will use their resources to find the tenants and then do a thorough screening to make sure that they will be the ones you are looking for.
2. Neglecting the property
It is very common for landlords to not take care of their property. The idea is that when they have to maintain the property, it costs them money and cuts into their monthly profits. While this is true, they fail to take into account that it will cost them much more later on if they neglect maintenance now.
It costs you more to fix when those little problems get bigger but you risk losing good tenants. If your property is often neglected then a good tenant will move on and you will have trouble finding others that are responsible to take their place.
3. Not researching the market
Understanding what type of property is in demand for the area where you plan to buy is critical. It is also essential to know how much you can charge for rent for that type of property.
The only way to do this is to take the time to research the market. If you get the market wrong you can end up buying a property that nobody wants or not being able to charge enough rent to cover your expenses.