First-Time Landlords: 7 Common Mistakes to Avoid
If you have a living space you are not using; you may have thought about renting it out. This something more and more people are doing, with 36.6% of households renting their homes in 2020. And while being a landlord can have many benefits, like a steady income and use of unused space, it isn't always easy.
To help you avoid really struggling as a landlord, here are 7 common mistakes you should try to avoid.
1. Not Knowing Your Responsibilities
Becoming a landlord sounds like fun, right? You get to rent out space and collect money, simple as that. Only, it's not -- landlords have a lot of responsibilities. When you have tenants staying in your property, you need to hold up your end of the lease agreement. You need to check in on the property, keep in contact with tenants, and respond to maintenance requests or other concerns on time. Otherwise, your tenants are not going to be happy with you.
2. Inefficiently Managing Your Time
If you're renting out multiple areas, or even just one, you must manage your time properly. Being a landlord can often become a full-time job, which can be hard to balance with other jobs. And because of this, you should ensure you give yourself plenty of time to complete your landlord tasks. It's important to remember that asking for help never hurts, and hiring professionals to make repairs or do maintenance may be beneficial.
3. Know Your Rights as a Landlord
You may think that you can enter it at any time or without permission because you own the property. This is not the case. Each state has a landlord-tenant law that must be followed. You'll want to become familiar with at least the basics of the landlord-tenant law as you can be sure some professional tenants know it inside and out.
4. Have Your Paperwork Ready
There are documents you'll use daily, weekly, or monthly to manage your property. Have a template of these documents available on your computer so you can easily access them when you need them. This will save you time, money, and possibly keep you from missing an important timeframe when paperwork must be filed.
5. Screen Your Tenants
You want to screen your tenants, always, even if it's your cousin's friend's sister. You want to verify they are employed, and the income covers rent but isn't more than 30% of their gross monthly income. If your rent is more, they do not qualify unless they find a roommate or a better paying job. Call their previous landlord. There is a reason the potential tenant is looking for a new place to live. Make sure the reason is a good one, and they were not evicted or removed from the property for lease violations. Pull a credit check to make sure they pay their bills on time. This will be a good indicator or as much of one as you can have as a landlord, that they will also pay their rent on time.
6. Charging Too Much For Rent
While it's essential to charge enough for rent to pay the bills, it's also important not to overcharge. You may consider increasing rent rates if you make repairs and upgrades to increase the rental space appeal. However, it's essential to keep average neighborhood rent rates in mind. If you're charging way over the reasonable rate, then you may not get any tenant applications. So before you post rent rates, use a rent estimator tool to look up rent statistics and do some research on property reports.
7. Know When to Hire a Professional
Instead of getting frustrated dealing with tenants, leases, eviction, or repairs, interview a few property management companies to help you. As a property owner, you've gone through the hard work of acquiring the rental property; now, you'll want to make sure it's managed properly. If you find you don't have the time or the patience, turning management over to a professional can be the best way to run your rental.
Starting out as a landlord can seem overwhelming. But if you keep up with average neighborhood rent rates, manage your time, and keep up with your responsibilities, you can be a great landlord in no time.