While becoming a landlord can be among the most profitable ventures you ever make, you’re liable to hit a few snags in the absence of the proper experience. Landlords who have never owned and/or managed rental properties tend to make a host of rookie mistakes that hinder their ability to generate returns. Fortunately, avoiding these pratfalls isn’t nearly as hard as some fledgling landlords make it look. To help ensure that you don’t fall victim to the aforementioned mistakes, take care to familiarize yourself with them before proceeding to invest in your first rental.
Habitually Neglecting Property Maintenance
Neglecting property maintenance can hurt new landlords in a number of ways. For starters, a poorly maintained property can present various safety hazards and facilitate costly lawsuits, fines and other legal consequences. Furthermore, consistently placing maintenance on the backburner is liable to result in considerable property damage, which can effectively reduce the value of your rental.
So, whether you tackle most of the maintenance responsibilities yourself or employ dedicated maintenance personnel, you’d do well to make property upkeep one of your top priorities. Furthermore, make a point of responding to every maintenance request that comes your way in a timely and professional manner. Any landlord who’s confused about how to increase rental property value is urged to regard regular maintenance with due importance.
Failing to Properly Screen Rental Applicants
No matter how nice your rental property is or how desirable a locale it’s found in, the absence of tenants who are able to keep up with rent can severely impact its profitability. Since evicting tenants for nonpayment of rent can prove exceedingly difficult, it’s in your best interest to nip this problem in the bud with a rigorous screening process. Thoroughly screening every rental applicant can go a long way towards ensuring that you never take on a tenant who poses a danger to other renters or is unable to afford rent.
So, after obtaining permission for each applicant, you should set to work confirming their income situation, having a look at the credit score and contacting references. When it comes to references, employers and previous landlords are likely to prove more reliable than friends and family members. This isn’t to say that you should expect dishonesty from people who are close to an applicant, but for the purposes of this screening process, people who have maintained business relationships with an applicant will probably provide you with more relevant information.
You should also have a look at an applicant’s criminal background – again, with their permission. While a criminal conviction needn’t automatically tank someone’s chances, it’s important to take the nature of the offense into account. For example, if the crime in question is something that stands to place other tenants or the property itself in danger, taking a chance on an applicant may not be the wisest course of action.
If you have too many responsibilities to carry out the screening process on your own, get in touch with a dedicated screening service. Alternatively, if you employ any property managers or office staff, you may want to consider delegating this task to them.
Not Prioritizing Renter Retention
The happier your tenants are, the more likely they are to renew their respective leases. And the longer you’re able to keep units occupied, the more income your rental property will generate. Conversely, if you regard tenant satisfaction as an afterthought and treat renters’ needs as unimportant, you shouldn’t be surprised to see your renter retention rates plummet.
Needless to say, if you want tenants to stick around, you’ll need to provide them sufficient incentive. Among other things, this entails making yourself reachable, promptly responding to tenant communiques and maintaining friendly relationships with renters. On the flipside, making yourself unavailable to tenants and consistently ignoring their requests will only serve to earn their scorn, garner negative online feedback, damage your professional reputation and prompt people to leave at their conclusion of their leases.
Profitability should never be taken as a guarantee when investing in rental properties. While there’s a good chance that you’ll be able to generate healthy returns, assuming that success is a sure thing is pure folly. This type of thinking is particularly common among first-time landlords, many of whom have little to no experience in property management. So, if you’re looking to make your first foray into rental property ownership a profitable venture, be mindful of the missteps discussed above.
