Individual owners account for 74.4% of the rental housing market. That is 16.7 million individual rental properties. If you are looking to become a first-time landlord you will want to make sure you are prepared for the responsibility.
Many new landlords don’t do the proper research and preparation. This leaves them open to expensive mistakes.
Don’t fall into these 5 common mistakes that beginner landlords make.
1. Skipping the Insurance
Your renters aren’t the only ones who need to purchase insurance. You need to obtain the right amount and type of insurance coverage.
The first type of insurance you need to get is property insurance. This will protect your property from damage. This could be from vandalism or natural events.
The other type of insurance you need is liability insurance. You need this insurance in the event you are sued with a claim of negligence on your part, or injury of someone on your property.
2. Incomplete Tenant Screening
There are two traps that you can fall into when it comes to tenant screening. There are those who never create thorough screening procedures and those who were diligent but have since become lax.
No matter who you rent to, follow the same in-depth procedure. If a potential tenant does not meet criteria, decline their application. If you deviate from your procedures, you run the risk of approving a problem tenant.
Make sure you have a set of questions that you require each potential tenant to answer. Then run a credit check to confirm that your future tenant will be able to afford the rental.
3. Ignorance of the Law
Before you decide to become a landlord, you need to learn all of the relevant laws. You can end up in big trouble if you violate landlord/tenant law. Ignorance of these laws is no excuse.
There are rules on how you can collect and maintain your tenant’s security deposits. The law defines your maintenance responsibilities. There are also laws on whether you can enter tenant occupied locations.
Finally, there are specific laws on how you must go about evicting a tenant. If you don’t follow them, you could end up owing a nonpaying tenant!
4. Slacking on Maintenance
When you ignore a maintenance problem it doesn’t go away, it will only continue to get worse. The worse the problem becomes, the more expensive it will be to make repairs.
You also need to comply with the law as there are certain things landlords need to repair within a certain amount of time from notice. If you ignore these required repairs, you may face legal consequences.
5. Being Too DIY
There are some things that you just plain shouldn’t do yourself. Your time is valuable so hire outside help when it comes to things like plumbing, electric, maintenance, and security.
If you are a landlord to commercial property, you will want to provide security services for your tenants. Warehouse security guard services ensure that both your building and your tenant’s property remain secure. This reduces your liability.
Skilled experts are an authority in their area of service. You can’t know everything about everything, so leverage their knowledge to benefit you.
First-Time Landlord Lessons Learned
Being a landlord can be a lucrative and rewarding venture. But if you are a first-time landlord there are many pitfalls that can sabotage your success.
You will be ahead of the game by keeping an eye out for these common landlord mistakes. The most important thing is to do your homework, know the laws, and be prepared. By protecting yourself, you will save yourself a lot of money and headaches.
You may not want to DIY your landlord duties, but there are plenty of things you can do. Check out these posts for DIY how-tos.