It takes a lot of courage to invest in a rental property and become a landlord. At the same time, being a landlord is no easy task. You’ll be responsible for marketing your property, as well as looking for tenants and screening them.
Once you get a tenant, you’re expected to collect rent, handle tenant requests and maintain your property. As a new landlord, you’re bound to encounter various challenges and make a few mistakes.
Being a landlord can be intimidating when you’re just starting. Fortunately, we’ll share tips in this article that will help you avoid major pitfalls landlords face. With proper preparation, you’ll be able to protect your property and have regular rental revenue.
1. Take Advantage of Earning Opportunities
Most investors think that once they buy a property, they can make earnings solely through rent. They fail to take advantage of other income opportunities to increase their return on investment. For example, they can install solar panels and sell the extra energy generated by it.
Or they can put up a billboard or telecommunications tower on the property’s vacant space. Another idea is to convert an unused shed to a storage area and lease it out.
2. Choose the Right Financing Strategy
Investors focus the majority of their time on finding the best real estate deals. Moreover, they only think about financing after finding a good deal.
As an investor, it’s not enough to focus only on the interest rate. You should also consider how long the amortization is and if there’s a balloon payment.
Many investors have lost good real estate deals because they weren’t equipped with the right financing strategy. Make sure you’re as proactive in financing as you are in looking for good deals.
3. Set the Right Rental Rate
Before you start looking for a tenant, you need to set the right rental rate. The price shouldn’t be based on your expenses or your estimate of your property’s value.
If you set your rental price too high, you might lose prospective tenants. Because of this, your property will remain vacant for a long period.
Conduct research to find out the fair market price in your area. Research online for the rates of similar properties in your neighborhood. Setting a reasonable rental price will help you attract more tenants and rent out your property faster.
4. Require a Rental Application
During the screening, you can require prospective tenants to fill out a rental application. This includes their basic information, employment history and reason for moving.
Additionally, it includes references from previous landlords. If you ask for the right information during the screening process, you will make the right decision.
5. Request for a Renter’s Insurance
If possible, you can require your tenant to get a renter’s insurance. This will help you avoid legal disputes if your tenant’s belongings get damaged. A renter’s insurance is not expensive, which is why most tenants agree to get one.
However, laws regarding mandatory renter’s insurance vary from state to state. Consult a legal professional before adding it to your lease agreement.
6. Keep Proper Record of Everything
One common mistake new landlords make is forgetting to keep proper records of rental property documents. All documents should be safely and digitally stored, as it can be used in legal tenant disputes.
Some of the documents that need to be safely kept are:
- Rental applications and agreements
- Property expenses and revenue
- Receipts of deposit and rent
- Maintenance receipts
- All landlord-tenant communication
- Property condition reports
7. Hire a Property Manager
It’s your legal responsibility as a landlord to keep your property habitable. If you want to experience less stress, you can hire a property manager.
A property manager can help find a tenant, collect rent and deal with tenant requests. You will also have peace of mind, knowing that your rental property is managed by a professional.
8. Become More Efficient
New landlords mistakenly tend to waste time on tasks that can be done quickly. Streamline processes so that you won’t get too exhausted.
Keep in mind that wasted time means wasted money, and will result in lower profit. Having a system in place will help you free up time to focus on other businesses.
9. Beware of Pets
If you have a pet-friendly property, you’ll attract more prospective tenants. Generally, a tenant with pets stays long-term. However, people don’t take of their pets in the same way.
A poorly-trained or neglected pet can damage the property’s screens, carpets and floors. Some pets can also leave an awful smell, which is hard to eliminate.
10. Hire a Reliable Repairman
As a landlord, it would be advantageous if you can handle simple maintenance by yourself. Having a reliable repairman on call, however, is better for you and your tenants. The repairman can handle major repairs and can quickly respond to tenant requests, even when you’re on vacation.
11. Prepare for Seasonal Maintenance
Maintaining a rental property can require a lot of time. Since you can’t do everything on your own, you can hire others to do seasonal maintenance.
Some of these tasks include mowing the lawn, cleaning the exterior, trimming trees and removing snow.
12. Retain Good Tenants
It’s a great achievement for landlords to find a reliable tenant. You’ve invested time to advertise the property, screen several prospective tenants and prepare the lease agreement. It would be exhausting for you to repeat the process when your tenant moves out.
The best way to save time and money is to retain good tenants long-term. Make sure to ask good tenants to renew their lease agreement 90 days before it expires. You will be able to avoid vacancy if you keep your tenants long-term.
It can be challenging to be a first-time landlord, but you can prepare for your new role. As you gain experience, you’ll learn how to adapt and overcome the challenges each day. By preparing in advance and having the right attitude, you’ll be able to be a successful landlord.
If you need any questions answered regarding this post or property management services, contact Haas Properties at (770) 928-4910.