Rental properties generate additional income, appreciate over time, and generally serve as a great investment. Some property owners consider self-managing their units due to the high expense of purchasing them in the first place. Landlords that do it themselves are known as DIY Landlords.
Someone may decide to manage their property for a variety of reasons. However, just because you've become a landlord doesn't mean you're an expert in the field. As they deal with repairs, legal requirements, and varied requests from their tenants, DIY landlords are prone to mistakes.
Gifford Properties & Management team is here to help new DIY landlords avoid some common mistakes. Here are some of the most common mistakes DIY landlords make and how to avoid them!
1. Not Having a Written Lease Agreement
A family member, friend, or acquaintance may approach you and want to rent your property at some point. You may have an oral agreement with this individual because you already have a relationship with them; this is something we strongly warn against.
A lease agreement is a legal contract that details the landlord and tenant's rights and responsibilities during the tenancy period. It's an enforceable contract that includes terms and provisions based on state and federal law.
An oral deal makes it difficult to refer to and enforce. If a property dispute is taken to court, you may find yourself in a financial or legal bind. To protect yourself and your tenant, it’s best to have everything in writing.
2. Not Regularly Inspecting the Project
It’s your responsibility to keep your rental safe and habitable for the length of the lease. This guideline applies to the property's interior and exterior.
Regular property inspections can help you avoid long-term property difficulties. You can lessen the frequency and cost of repairs in the long run by being proactive. Another advantage of inspections is that they allow you to ensure that your renter is abiding by the lease terms.
3. Dealing with Long Vacancy Periods
It’s normal for a landlord to experience periods of vacancy between tenants. While this is expected, vacancies can be costly for a DIY landlord. Preparing, repairing, marketing, and showing the property takes time. To cover these costs, make sure you have at least three months' worth of savings.
Opening a separate account for your rental transactions is an excellent approach to planning for vacancies. When a tenancy is about to expire, approach the tenant and suggest that the lease be renewed. If they intend to leave, begin marketing the property as soon as possible to guarantee you don't lose any rental income.
4. Not Handling Evictions Properly
Evictions should always be a last resort. That said, you could find yourself in a position where it becomes necessary. It could even happen after years of renting to the same tenant. In this case, you could find it difficult to evict them when the time comes.
However, as a landlord, you must enforce the lease term equally to all renters. You should not be scared to take legal action if a renter becomes problematic, regardless of how long they've been renting.
Enforce deadlines otherwise, you'll be dealing with late payments all of the time. Find a local lawyer specializing in evictions if you need to file an eviction.
The legal eviction process can be confusing therefore it’s not recommended that DIY landlords pursue it alone. Seek professional advice and aid when an issue arises.
5. Not Being Acquainted with the Current Rental Market
Before putting your house on the market, complete your homework. Most DIY landlords research-active listings in their area to estimate their pricing before renting their property. Be sure to look at properties that are similar to yours. In other words, if you have a one-bedroom, one-bathroom apartment, don't compare it to a 3-bedroom, 2-bathroom single-family home.
Another issue that most do-it-yourself landlords overlook is raising the rent every year. Most landlords are aware that they should increase rent to cover rising taxes, repairs, insurance, and other costs. But the question is by how much? Consult a property management company to ensure that you increase a fair and steady rate.
6. Making Concessions on Tenant Screenings
A good screening process can save you lots of time and money in the long run. Prospective tenants should be screened to see whether they're a suitable fit for your property and to spot potential red flags.
To begin, do a credit check to learn about their financial situation. You can also check an applicant's income by asking for pay stubs or other forms of proof of payment. Most crucial, reach out to prior landlords to learn more about the prospect.
If you have a lot of applicants, it's a good idea to come up with a set of selection criteria based on their application date, financial security, and other factors. If your prospective tenants meet your standards, you can move to the next level.
7. Not Settling Disputes with Tenants Before they Escalate
It's natural for a landlord to have problems with their renters from time to time. Maintaining a positive relationship with your tenants, on the other hand, can help you avoid issues and lead to a long-term tenancy.
It’s in your best interests to resolve any disagreements outside of the courtroom. Litigation can drag on for a long time, and it can cost you a lot of money. Rather than going down this path, attempt to settle issues with your tenants when they first occur.
As a landlord, you have many responsibilities and if you fail to keep up with them you risk making costly mistakes. If you need help managing your properties contact an expert property manager.
Gifford Properties & Management is a full-service property management firm dedicated to providing exceptional customer service. We want to relieve you of the rental management tasks, allowing you to work on other essential initiatives in your life with more time and flexibility.