Buying a rental property and becoming a landlord is a great way to earn income. However, it’s not exactly a walk in the park. There are plenty of mistakes new landlords make that can be detrimental to their rental business and overall income. If you’re thinking of becoming a landlord, read along as we review some of the biggest mistakes new landlords make and how to avoid them to protect your bottom line.
Contents of This Article:
- Biggest Mistakes New Landlords Make
- How to Avoid Mistakes New Landlords Make
- Tips for First-Time Landlords
- Reduce Mistakes With Professional Property Management
Biggest Mistakes New Landlords Make
Property managers in Northern Virginia know best–even with the best intentions, first-time landlords can make mistakes that lead to unnecessary stress, financial loss, or legal trouble. Here are some of the biggest mistakes new landlords make and common missteps to watch out for.
- Skipping Tenant Screening
- Underestimating Maintenance Costs
- Not Understanding Landlord-Tenant Laws
- Neglecting Your Lease Agreement
- Setting the Wrong Rent Prices
- Trying to DIY Everything
- Not Treating It Like a Business
Skipping Tenant Screening
While you may want to fill a vacancy as fast as possible, failing to screen potential tenants properly can be a huge mistake. Allowing a tenant to live in your property without screening them first can lead to late payments, property damage, and evictions. As such, you’ll want to always check credit, income, rental history, and references before renting to someone.
Underestimating Maintenance Costs
Some new landlords underestimate the true cost of owning a rental property. Yes, your mortgage payment is a large expense. However, you also have to account for routine upkeep, emergency repairs, and unexpected replacements. Small issues can quickly spiral into expensive problems without a solid maintenance budget.
Not Underestimating Landlord-Tenant Laws
Each state has its own regulations, from how to handle security deposits to when and how you can evict a tenant for violating lease terms. That said, violating your state’s landlord-tenant laws, whether you do it knowingly or not, can land you in legal trouble. So, take the time to research or consult a legal professional before you start renting out properties.
Neglecting Your Lease Agreement
A vague or poorly written lease agreement can lead to misunderstandings and disputes between you and your tenants. Your lease should clearly outline rent terms, property rules, maintenance responsibilities, and consequences for violations. You’ll want to treat it as a legal contract that protects both you and your tenant.
Setting the Wrong Rent Prices
Finding the right price point for your rental is key. After all, overpricing your rental can lead to long vacancies, while underpricing can cut into your profits and may attract the wrong tenants. You’ll want to research local rental rates to find a competitive price point. Don’t forget to factor in expenses, neighborhood demand, and amenities.
Trying to DIY Everything
It can be tempting to try to save money by doing everything yourself.
However, doing certain tasks without the right knowledge or time can cause more harm than good. For instance, poor repairs, legal oversights, or delayed responses to tenant issues can damage your reputation as a landlord. So, it’s important to know your limits and outsource when necessary.
Not Treating It Like a Business
Some new landlords treat their rental property as a side job. However, renting out properties requires a professional approach. You’ll want to keep detailed financial records, enforce policies fairly, and maintain clear communication with tenants and property managers. The more experienced and business-minded you are, the smoother your operations will run.
How to Avoid Mistakes New Landlords Make
No landlord is perfect, and there are plenty of mistakes to make, especially if you’re just starting out in the rental business. However, it’s important to know where you can avoid mistakes so you can protect your reputation as a landlord and your profits.
- Have a Thorough Screening Process- Come up with a strong, thorough screening process where you look into each prospective tenant’s credit report, rental history, and references, and perform a background check.
- Learn Applicable Laws- Become very familiar with local, state, and federal rental laws before you even list your property. There is plenty to know, including fair housing laws, security deposit rules, and eviction procedures.
- Use a Strong, Detailed Lease Agreement- Remember, your lease is a legally binding agreement. Make sure you clearly outline important points like the rent amount, due dates, late fees, and rules for your property.
- Practice Good Communication- Communication is key–especially when it comes to your tenants. Set the tone early by being professional, responsible, and transparent.
Tips for First-Time Landlords
Getting into the rental business for the first time can feel overwhelming, but it doesn’t have to be. Here are a few tips to help you start strong and avoid unnecessary bumps in the road along the way.
- Document Everything- Keep records of all communication with tenants, including payments, lease agreements, and maintenance orders. Having this on hand can help you stay organized and avoid legal issues.
- Set Reminders for Important Dates- Use a calendar or property management software to track rent due dates, lease renewals, inspections, and maintenance schedules.
- Conduct Regular Inspections- Schedule periodic property checks to ensure your home is being maintained. However, remember to give tenants proper notice if you’re entering the property, usually 24 to 48 hours ahead of time.
- Don’t Underestimate Expenses- Vacancies, repairs, and legal costs can add up quickly. So, remember to keep a financial cushion to cover unexpected costs without additional stress.
- Consider Property Management- If you’re short on time or managing properties from a distance, hiring a property manager can help you stay compliant and stress-free.
Reduce Mistakes With Professional Property Management
Reducing mistakes wherever you can is crucial as a first-time landlord. While there are plenty of mistakes new landlords make, it’s important to recognize these potential downfalls and avoid them with best practices. For instance, if you don’t have the time to put toward property management, you might want to hire a professional company to help you.
Professional Property Management in Northern Virginia is here to help! Our team of qualified property management professionals can help ensure your properties and tenants are well taken care of 24/7. Contact PPM today to learn more about our services and how we can help your rental business succeed!