The Biggest Mistakes Landlords Make
While finding a good deal on rental properties is quite a feat on its own, it is absolutely nothing in comparison to having to successfully manage your own real estate investment properties like a true professional. If you decide to enter the realm of real estate investing without prior research beforehand, it is extremely easy to lose a lot of money, time and sleep. There are a few steps that will help you manage your rental properties successfully.
Not Increasing Rent
Many new landlords have the mindset that if they increase the rent, their tenants will move out, and nobody else will want to rent their house. However, that is very often not the case. In reality, you probably have a tenant that has been living in your property for more than a year, and they are getting one heck of a good deal. It definitely isn’t your fault that inflation keeps moving steadily along, and the price to keep things as they once were is increasing. But, it is most certainly your fault if you actively choose to not keep up with inflation.
It is highly unlikely that your tenants will call in to complain if your rental increase is justifiable. If you just stay on pace with what is considered competitive in your area, though disappointed, your tenants will likely be expecting some kind of increase year to year. As long as your increase is reasonable for the area, your tenants will likely not take on the cost of a move to pay a slightly lower rental rate someplace else. Even if they look around, they will often make the decision to stay where they feel comfortable and at home.
Screen the Potential Tenants More Thoroughly
Even though you may feel anxious to find a tenant who can move in and start paying the rent, it is definitely worth taking the time to check their credentials beforehand. In order to ensure that you are finding some good, trustworthy tenants that have the ability to pay the monthly rent, use a rental application form that will provide you with enough information, so that you can do a credit check and contact their references. Even if a tenant seems extremely desperate to move in and is able to make an immediate deposit into your bank account, don’t let yourself feel pressured into making a potentially costlier mistake.
Underestimating the Cost of Repairs or Property Maintenance
If you want to ensure that your tenants will continue being interested in staying (and thus paying) in your rental, you have to keep maintaining it. Hence, be sure that you charge enough rent to enable you to cover at least some of the maintenance costs. In addition, always have some cash reserve on the side for those unfortunate days where you might need to make some major one-time repairs.
Others…
- Relying on spoken promises only
- Neglecting your tenants
- Not meeting state and local housing codes
- Delaying evictions
- Assuming your property will be rented
- Not charging late fees