As a landlord, you want to make sure that you’re doing everything in your power to protect your rental property and ensure a positive return on investment. Owning rental property is a great way to earn passive income. In fact, rental property investors saw an annual average return of 9.06% in the third quarter of 2021.
Despite the good returns, landlords still have to put their best foot forward to ensure maximum returns. On the surface, a landlord’s job sounds super easy. What’s so hard about making a few renovations, collecting rent, and keeping the property clean?
Sounds easy enough, but being a landlord is no walk in the park. One little mistake and all your efforts go out the window. Read on as we highlight some common mistakes landlords make and how they can avoid them.
Failing to Run Enough Checks on Potential Tenants
It’s important to be as diligent as possible when screening potential tenants. This means running a background check and credit check. All this is important regardless of how eager you are to welcome new tenants to your rental property.
You’d be surprised at how many landlords skip this step. They take the tenant’s word that they have a steady job and no criminal history. But word of mouth isn’t enough proof to substantiate the applicant’s viability as a good tenant.
Failing to carry out checks is like rolling the dice and hoping that everything goes well. And we all know how that usually turns out.
Asking Illegal Questions During Interviews
Interviews are an important part of the tenant application process. However, it’s important to steer clear of any illegal questions.
For example, landlords cannot ask questions about an applicant’s religion, ethnicity, or disability. Other than those no-brainers, landlords should also avoid asking questions about an applicant’s plans to have children or their marital status.
The key is to focus on questions that will give you a better idea of whether the tenant will be a good fit for your rental property. Questions about their job, current living situation, and rental history are all fair game.
Just make sure to avoid anything that could be construed as discriminatory or disrespectful.
Neglecting Maintenance Issues
As a landlord, it’s your responsibility to keep the rental property in tip-top shape. This means regularly checking for maintenance issues and repairing them as soon as possible.
Some landlords think that they can get away with neglecting maintenance because it’s not their primary residence. But that couldn’t be further from the truth.
Neglecting maintenance will only end up costing you more money in the long run. Not to mention, it could also put your tenants’ safety at risk.
If you’re too busy to schedule regular maintenance, you should consider hiring a reputable property management company to handle it for you. They’ll also offer valuable real estate investment tips to help you expand your investment portfolio.
Overlooking the Security Deposit
Some landlords don’t give enough thought to the security deposit, despite its importance. Remember, the security deposit acts as a safety net in case the tenant damages the property or fails to pay rent.
But many landlords overlook the security deposit and don’t take full advantage of it. They either don’t collect one at all or they fail to properly document any damage to the property. As such, they’re left to foot the bill for repairs and back rent.
To avoid this, landlords should make sure to collect a security deposit from all tenants. They should also document any preexisting damage to the property and take photos as proof.
Being Sloppy With Paperwork
Landlords should also be mindful of the paperwork involved in renting out their property. This includes the lease agreement, rent schedule, and any other relevant documents.
Being sloppy with paperwork is a recipe for disaster. It creates confusion and can cause problems down the road. For example, if you forget to include a late fee in the lease agreement, you can’t suddenly start charging tenants for it.
Being careless with paperwork could even lead to costly legal issues down the line. To sidestep any issues, landlords should take their time to fill out all the paperwork correctly and have their tenants sign off on it. They should also store the paperwork properly, in an organized and systematic way.
Postponing and Eviction
No landlord wants to deal with the hassle of evicting a tenant. But it’s part of the job description. In the event of an eviction, landlords should take action as soon as possible.
Postponing an eviction will only prolong the process and make it more complicated. It also gives the tenant more time to damage the property or rack up a higher bill. The earlier you do it, the better it is for you and your property.
However, don’t forget to give the tenant at least one month’s notice before evicting them. The earlier you give them the eviction notice, the better they can prepare themselves for the eviction.
Failing to Enforce Lease Terms
Lease agreements are legally binding contracts. As such, landlords should take them seriously and enforce the terms to the best of their ability.
Failing to do so could come back to bite you later on. For example, if you allow a tenant to have a pet even though the lease agreement explicitly prohibits it, you’re setting a precedent. The next tenant could argue that they should be allowed to have a pet as well.
When renting a property, ensure that tenants are fully aware that they should abide by the lease agreement. However, they’ll be quick to exploit any laxity on your part and breach the agreement.
Serious Landlords Don’t Make Mistakes
We can all agree that landlords have it rough, but serious ones do their best to avoid the above mistakes. If you own rental property, avoid these mistakes at all costs. They’ll only sink your investment or land you in legal trouble.
If you’re having trouble keeping your property in check, you can always outsource management to a property management company. They’ll leverage their expertise and experience to ensure you get maximum returns from your rental real estate investment.
Contact us today for professional and expedient property management.