Are you a first-time landlord? Self-managing rental properties is a lot of work, and you'll inevitably make mistakes along the way.
Many new landlords believe that all they'll have to do is collect rent, but there's a lot more to property management than just that! Owning properties can be rewarding, but it's challenging nonetheless. Without proper knowledge, you can make some very costly mistakes.
That's why, in this article, we are going over the most common mistakes that property owners make so you can avoid these mistakes yourself!
So, here are 8 common mistakes that property owners make:
1. Accepting the First Tenant
Many new property owners quickly accept a new tenant, but this is a mistake you should avoid. Before accepting a tenant out of excitement, you should conduct a proper tenant screening.
You want to make sure that your prospective tenant can pay the rent every month and that they won't cause property damages.
2. Failing to Create a Solid Leasing Agreement
Sometimes, property owners believe that if they know a prospective tenant, they can forget about the lease agreement. This is a big mistake.
Even if you know or trust the tenant, having a well-crafted and signed lease in your hands will protect you in the future.
A good leasing agreement provides the terms, conditions and policies between the landlord and the tenant in a specific and clear manner. It helps ensure both parties maintain a good relationship because both parties are aware of their rights and responsibilities.
3. Discriminating Against Potential Tenants
Asking discriminatory questions during a tenant interview may get you reported to the HUD (Housing Urban and Development) Department. As a landlord or property owner, it's essential to learn about the Fair Housing Act.
The Fair Housing Act was created to offer equal opportunity when it comes to housing.
It's your duty to adhere to the law and make sure you're not discriminating tenants based on their race, color, national origin, sex, disability, familial status and religion.
In doing so, you'll avoid potential complaints and heavy penalties.
4. Providing Poor Customer Service
As a self-managing property owner, you have many tasks to do. That said, it's important that you prioritize your tenants when they need you.
Providing poor customer service will leave you with many vacant units as your tenants may feel neglected.
Responding to your tenants' needs and cultivating a good relationship with them will benefit your rental business. Your tenants will share their positive experience living in your unit with their network and it'll improve your reputation.
That being said, interact with your tenants, respond promptly to their property repair requests and ensure you are providing them with solid communication.
5. Failing to Set Up Efficient Systems
Investing in real estate and creating rentals can be very lucrative, especially in a great economy. If you own and run multi-family units and several residential properties, it's important to focus on being efficient. Manual operation can be tedious and can leave room for potential errors.
Assess where you can automate systems and reduce repetitive tasks, and then invest in advanced software! It'll be cheaper and more efficient long-term.
6. Forgetting Preventive Maintenance
You may be busy dealing with immediate issues, but that doesn't mean you should forget about preventative maintenance.
For instance, regularly inspect big systems such as your heater, air conditioning unit, plumbing, ventilation and areas prone to water damage.
Conducting preventative maintenance will not only save you time dealing with repairs in the long run, but it'll also save you money.
Some property issues are simply avoidable if you catch the signs early, so always be sure to practice preventive maintenance.
7. Failing to Review the Contractor's References
If you're looking to hire a contractor, you should always verify recommendations, search for reviews and conduct research prior to engaging a contractor's service. You may also want to look at the contractor's previous projects to ensure their work matches your expectations.
In doing so, you'll have peace of mind that the job will be done to your standards.
8. Ignoring Tenant Violations
As a first-time landlord, you may fail to make your tenants accountable to violations.
Here are some examples of violations:
- Smoking in the premises
- Failing to pay the rent on time
- Bringing a pet in the unit when there's a no-pet policy
This kind of behavior must be addressed as early as possible.
Remember that the policies contained in the lease agreement are made to protect everyone's safety and rights, so you should strictly follow it.
Be firm when it comes to running your rental property. You can also consult an attorney to ensure you're following the due process.
Mistakes are inevitable when operating a rental business, but it helps to be aware of common ones so that you can avoid them!
If you're a first-time landlord, we know how overwhelming it can be. That's why we're here to help. By hiring a property management company, you can eliminate your worry about making these rental property owner mistakes.