Getting started as a landlord can be a little tricky. There are so many things to know, have, and do to be the best landlord you can be!
If you are a new landlord making the switch from an apartment renter yourself, you certainly weren’t prepared for all of the responsibility that comes with managing a home.
Luckily, you’ve come to the right place! Today we’re diving deep into some of the mistakes that new landlords make.
If you are trying your hand at being a landlord it’s important to learn from the mistakes of both yourself and others to prevent making the same mess.
Read on for our guide to avoiding common mistakes new landlords make.
1. Violating Fair Housing Laws
New landlords often make the inexcusable mistake of violating fair housing laws. These laws, which vary by state, prohibit discrimination against individuals on the basis of certain characteristics, such as race, sex, familial status, disability, and religion.
New landlords must understand that there are certain practices and criteria related to renting a property that cannot be considered in determining who to rent to and at what cost. Furthermore, it is essential for them to be aware of the local, state, and federal housing laws so that they are in compliance with regulations.
2. Under Marketing Your Rental
New landlords frequently make the mistake of under-marketing their rentals. This mistake can lead to significant financial losses as the rental property sits empty. Costing the landlord money in foregone rental income and in carrying costs such as monthly rental property maintenance and taxes.
To avoid this mistake, landlords should think of their rental property as a business and market it accordingly. They should take high-quality photos to showcase the property and list their vacancy on as many channels as possible, both online and offline.
They should also be proactive in reaching out to the local community, such as local real estate agents and previous tenants that may be looking for a new rental.
3. Assuming the Property Will Always Be Rented
Many new landlords think that just because they have rented out their property once, it will always stay rented. This mentality can lead to costly mistakes because markets and personal preferences can shift unexpectedly.
It is important to always remain aware of the potential for vacancies and act accordingly. Landlords should research current trends and predictions. To keep their properties updated, modern, and attractive to potential renters.
It may be necessary to invest additional money in renovations or maintenance to ensure the property stays current and desirable.
4. Underestimating the Cost of Repairs and Maintenance
One of the most rookie mistakes made by new landlords is underestimating the expense of upkeep and repairs. With any investment property, it’s natural to want to save money where you can. However, cutting corners and failing to budget properly for maintenance costs can have serious financial and legal repercussions.
To avoid this and protect your income, it’s important to set aside a healthy amount to cover necessary repairs and maintenance. When undertaking renovations, get quotes from several contractors to get the most value for your money and consider the hidden costs of materials and waste disposal.
5. Not Screening Tenants Properly
New landlords often make mistakes when it comes to failing to screen tenants properly. One of the most common mistakes is not taking the time to thoroughly review a potential tenant’s credit and background records.
Landlords should always request permission to review the tenant’s credit history, criminal records, and eviction history by seeing any notice received on Eviction Notice Template Indiana to ensure they’re dealing with a tenant that won’t cause problems down the road.
In summary, conducting a credit report for landlord as part of their tenant screening process is a necessity for landlords in order to protect themselves from defaults, liabilities, and other losses.
6. Use Poor Lease Agreements
New landlords can often make the mistake of using a poor lease agreement when renting out their property. This can be extremely detrimental to both the tenant and the landlord. It will lead to potential legal action if the terms of the agreement are unclear or incorrect.
It is critical that landlords use a professional lease agreement that clearly outlines the responsibilities expected of the tenant and the landlord. In some cases, laws may require specific clauses or inclusions in the agreement, and it is important to understand exactly what these are and to include them.
Landlords should also update their agreements periodically to ensure their documents remain up-to-date.
7. Forgetting an Emergency Fund
Being a landlord is a harsh and unpredictable business, and unexpected costs can arise at any time. Property repairs, legal fees, and unplanned maintenance are some of the most common causes of an emergency fund shortage.
To avoid this mistake, it is essential to budget for unexpected costs in advance. Make sure to allocate a portion of your monthly income as a “rainy day fund” and build it up over time.
8. Setting Boundaries for Tenants
New landlords often make the mistake of being too nice to their tenants in an effort to foster good relationships with them. This should be avoided as tenants may take advantage of their kind-heartedness.
Landlords must set clear boundaries from the start to ensure a professional relationship and adhere to their policies. Avoid giving tenants any surprises, such as giving them special privileges or discounts.
Remain consistent when dealing with tenants so that all are treated fairly. Landlords should also avoid making promises that they can’t keep or going out of their way to please tenants as this could result in them expecting more in the future.
Avoid These Mistakes New Landlords Make
There are so many mistakes new landlords make. New landlords should avoid these as much as possible. Good communication, studying relevant laws on landlord-tenant relationships, and being organized is key.
If you are a new landlord, consider joining a local or online networking group or mentorship program to learn from other landlords. Taking the time to educate yourself will pay off in the long run!
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