Being a landlord is not always a simple pursuit, especially if you are new to the real estate investing and renting properties.
The key to keep your head in the game — and knowing how to avoid rookie mistakes.
Here are five of the biggest blunders that have put other first-time investments in jeopardy and nearly sunk careers.
- Underestimating Costs
Underestimating the costs of working full-time as a landlord is one of the most common rookie mistakes. It is always important to keep property taxes, repairs, and potential updates or upgrades you need to make in mind anytime you are searching for new properties or thinking of renting them out.
- Not Working With a Property Management Company
Landlords who choose not to hire a property management company are at a much higher risk of becoming too stressed and overwhelmed to continue with their responsibilities. SMART can help landlords find the right tenants while managing rent, late payments, and evictions if necessary. Having us by your side is essential as you continue to grow your investment portfolio.
- No Insurance Policies
Personal property coverage, and requiring renters insurance from tenants is highly advisable if you want to ensure the protection of any homes or apartment buildings you have invested in. Insurance protects you, as a landlord, and tenants in the case of an accident, fire, or other serious damage that is done to the overall structure, foundation, and the building you own itself while it is being rented out.
- Poorly Screening Prospective Tenants
Allowing just any individual to move into one of your rentals is one of the biggest mistakes you can make as a new landlord. Always ensure to conduct a thorough background check in addition to verifying the income of prospective tenants with their current and past employers to avoid problem renters and individuals who simply stop paying their rent altogether.
- Unknowingly Breaking the Law
Even once you invest in a property to rent out, there are landlord laws to learn about and to keep in mind when you want to work as a professional landlord full-time. Brush up on landlord laws to avoid breaking any privacy or tenant rights once you begin renting out your locations, which can lead to financial strain and lawsuits if you are unaware of potential consequences.
While you are likely to run into a potential issue at some point when working as a professional landlord, understanding the biggest rookie mistakes a landlord can make is a way to avoid serious hangups and letdowns. The more familiar you become with the real estate industry and market, the easier it is to prevent situations that are most likely to have a negative impact on your future and your ability to keep working as a landlord for years to come.