Getting your hands on a good rental property and becoming a landlord can be an immensely profitable venture. This is, of course, you have a solid grasp of what you’re doing. Unfortunately, far too many first time landlords dive into the rental property game without understanding the tenets of a successful landlord. Needless to say, this can result in a host of rookie mistakes that stand to severely compromise a rental’s profitability. Fledgling landlords looking to set the stage for lasting success would do well to avoid the following blunders.
Not Consulting Experienced Investors
Fledgling and first time landlords stand to greatly benefit from the advice of seasoned real estate investors. Most notably, experienced investors can help educate you on the tenets of a profitable rental property. This can then help ensure that you don’t make any unwise investments. So, at the outset of your rental property journey, make sure to seek guidance from any friends, family members or general acquaintances who have owned and/or managed rental properties.
You may also benefit from consulting with a real estate investment company with a proven track record of success. In addition to teaching you the basics of rental property investment, long-time experts will be able to enhance your knowledge of a wide range of real estate-related topics, such as when to sell real estate investments.
Allowing Upkeep and Maintenance to Fall by the Wayside
Regarding upkeep and maintenance as an afterthought is unlikely to work out well for any landlord, especially first time landlords. For one thing, a laid-back approach to maintenance is liable to draw the ire of tenants, many of whom won’t hesitate to voice their displeasure all over the web.
Needless to say, this stands to damage your professional reputation and make it harder for you to attract new renters. In addition, depending on how much the maintenance issues you’re ignoring are impacting tenants’ quality of life, you may even find yourself in legal trouble. Furthermore, since no one relishes residing in a property that isn’t properly maintained, a lack of attention to maintenance can often facilitate low renter retention rates.
Secondly, by ignoring maintenance and upkeep, a first time landlord is essentially lessening the value of your own property. The longer certain issues are ignored, the more expensive addressing them is likely to be. Why would you expect a property you refuse to properly care for to generate sizable returns?
With all this in mind, make a point of regarding upkeep and maintenance as top priorities. When dealing with small single-family properties, landlords can often tackle the bulk of maintenance responsibilities on their own. However, when it comes to large multi-family properties, first time landlords are likely to need outside help. In fact, if the property in question contains dozens – or even hundreds – of units, you may very well need to employ full-time maintenance personnel.
Failing to Screen Rental Applicants
Without dependable tenants, no rental property would be able to generate profits. As such, you’ll want to do everything in your power to avoid taking on unreliable tenants. This is where a robust screening process can serve you well. Unfortunately, far too many landlords neglect to properly screen rental applicants. They wind up with tenants who are unwilling and/or unable to stay current with rent as a result.
Regardless of how favorable a first impression a potential tenant makes, it’s imperative that you screen every person who submits a rental application. After all, the ability to present oneself in a positive light doesn’t necessarily equate to being a reliable renter. So, with each applicant’s permission, take a careful look at their credit, employment situation and proof of income. Furthermore, take care to get in touch with any references they provide.
If a first time landlords receives too many applications to screen on your own, consider enlisting the aid of a dedicated screening service. Alternatively, if you employ any property managers, delegating the screening process to them can save you a considerable amount of time and effort.
First Time Landlords Beware!
Fledgling landlords should never assume healthy returns are a given. Although rental property ownership can be extremely rewarding, not every landlord sees their desired level of success. While this is sometimes due to circumstances that are outside of their control, landlords often have no one but themselves to blame when rentals prove unprofitable. First time landlords who are eager to minimize their chances of disappointment should make an effort to avoid the missteps discussed above.