There is a common misconception that being a landlord is an easy way to easy money and make profits on a routine basis. However, understanding and implementing the duties and responsibilities of a landlord is no cakewalk. You have to constantly indulge in quick decision-making and take care of more than a few tasks at all times. You are not only responsible for finding the right tenant, but also for taking care of your property and finances.
Every landlord has a different reason for taking up this profession. For some, it is a source of extra income, and for some, it is their passion for the real estate market. No matter what your reason is, being a landlord can be an extremely tedious and exhausting job. If you do it right, it can do wonders for you and your future but if you face setbacks, it might cost you in the long run as well. To avoid constant challenges and obstacles, all you have to do is find the strategy that works best for you and acquire the skill of managing all your tasks well and with ease.
Most of the time when landlords struggle to stay afloat, it is because they are making small mistakes that they may not even be aware of. Sometimes, we get so caught up in our daily tasks as a landlord, that we fail to notice the things we might be doing wrong. This blog is not only to make you realize the mistakes that you might be making, but it is also to help you get more efficient and better as a landlord.
Even if everything is going well at the moment, it is a good idea to be aware of the common mistakes that landlords might end up making at some point in their profession. Even if you are not a tenant but someone who is leasing a property, you should not just be aware of the pros and cons of leasing, but also the mistakes your landlord might be committing. You never know, these might end up costing you in the future too.
Common Mistakes Landlords Make
1. Expecting a Consistent Income
A rule of thumb when you are a landlord is simply to never make assumptions. It often happens that when you initially start making profits or leasing to a lot of tenants, you automatically assume that you are going to get a steady cash flow in the future. When this happens, you start planning all your future expenses and needs around this. This assumption can be misleading because you never know when the trends and preferences in the market will change. There may be times when you hit a rough patch and your property stays vacant for more than a few months. Be thorough with your cash flow assessment and put away some funds in case of exceptional emergency circumstances.
2. Treating Landlordship as a Hobby
You cannot just stop focusing on your profession as a landlord as and when you feel like, expecting to pick up right where you left off. Landlordship is a business that requires your full attention and effort. You might end up being miserable both financially and mentally if you end up treating landlordship as something that you can just do on the side. Having a plan and course of action to achieve your goals and objectives is essential. Even if it is a task as small as setting up a separate bank account that takes care of all your earnings as a landlord, take out time and make sure you get everything in place. If you want to be successful, treat this as a business and give it the attention that it requires.
3. Not Running Adequate Check on a Potential Tenant
Just because you think running checks on the tenant or asking for verification documents will take up extra money and time does not mean you will drop the idea altogether. Do not rush the process only to end up regretting it later. Check your tenant credentials before you decide to lease your property to them. Even if the tenant says they are in a hurry to shift and settle, take time to verify references and run a background check. Spend some money to get a hold of the individuals' credit report that will tell you all about their financial history, late payments if any, source accounts, job history, and much more. You are trusting a stranger with your property, make sure you do it right.
4. Neglecting Tenants
Tenants are your biggest asset, and you know it. Even though they are obligated to take care of your property and other utilities, in the end, it is on you to keep a check and be vigilant. If your tenant seems to be facing an issue and he/she reaches out to you, you cannot just keep delaying the maintenance/repair process. This will only ruin your reputation as an owner and might end up becoming a bigger problem than what it started as initially. Being responsible and responsive are two of the most important qualities of a good landlord.
5. Waiting Too Long to Evict
For a landlord, it is always better to have a tenant rather than an empty property with no profits. However, if you have been thinking about evicting the tenant due to whatever reason and are hesitating, consider this a sign. Do not stay in denial hoping that the tenant will either stop creating problems or will leave soon. Sometimes, you are left with no choice, and evicting is the only wise solution. Think about it this way - evicting will do nothing but help you in the longer run. The faster you evict the tenant, the sooner you can continue your search for a tenant that is responsible, respectful, and financially stable.
6. Not Knowing When to Seek Professional Help
It is a fact that you are not superhuman, and you cannot possibly handle every small detail all on your own without sometimes falling apart. If you live nearby the rental property and have the kind of time to respond to requests, then you might just be fine on your own. However, if you travel a lot of the rental property is in another city altogether, you need to get professional help. Taking help does not mean you are not good enough or are doing something wrong. Even the best of landlords need a helping hand!
You can hire a property manager to help you out with proper listing and reach out to more people. You can also hire a contractor in case the property needs repairing or maintenance once the ex-tenants leave.
7. Failing to Enforce Leasing Terms
Just because you are worried that your current tenant will not renew their lease or give you good reviews in the market, does not mean you will keep giving them leverage time and again. Remember that before you finalized the arrangement, both of you mutually agreed to it with complete awareness of all terms and conditions. Whether it is the prohibition of pets or delay in monthly rents, never hesitate to voice out your concerns.
8. Relying on Promises
Do you think a handshake between you and the tenant is enough to seal the deal? Most definitely not. No one in the real estate business can be trusted. You need to make sure both parties draw up a lease agreement and include all the elements that make it legally binding. Research the laws of your state and recheck all your contracts to make sure all clauses are in place. Written binding documentation for the agreement will help you in conflict resolution in case you end up having issues with your tenant in the future. Also keep a record of phone conversations, voicemails, emails, or text messages for your benefit.
9. Inadequate Marketing of Property
Advertising your property is a very important prerequisite as a landlord. Even after you start receiving offers and queries, keep up the pace when it comes to marketing. It is a lot like building your brand. If you are inconsistent or not creative, it might hamper your growth. Put up quality photos of your rental on the internet and social media platforms. You can also spend a little extra money and get a professional to take pictures. Along with photos, write an interesting, short, and straight-to-the-point description of the property. Describe its interiors, the number of bedrooms that it has, and the utilities and extra amenities that you are willing to offer. Try and utilize the services of online real estate providers like Clicbrics to reach a wide target audience.
10. Failing to Manage Your Time Efficiently
Time management is a skill you need to possess to be a successful landlord. Property investment is a big commitment and a full-time job. From maintaining accounts to hunting for tenants, it is you who has to manage everything and make sure they are no delays or blunders on your part. Some pre planning and brainstorming as to what your priorities are and how you plan to multitask is a good idea. This is also where your connections and networks come to the rescue. If ever you are not available or want to simply take some time out for yourself, you should always have a backup plan and trusted people who can help you out when the need arises.
Start networking more and familiarize yourself with the functioning of the real estate industry. A successful landlord acquires skills and qualities from a variety of disciplines - marketing, negotiation, home repair, conflict resolution, effective communication, and much more. You have our word on the fact that you will never be out of information or tips to learn about the real estate industry.
Now that you have been blessed with the knowledge of all possible mistakes a landlord can make, you have already taken one step forward to getting better! Having information not just what it takes to be a landlord, but also knowing the mistakes that you can avoid has already given you an added advantage in the real estate industry.
Feel free to lend a helping hand and share this blog with your fellow landlord friends, or anyone you think needs to be informed about this for the well-being of their career. Even better, if you have any other common mistakes in mind, let us know so that we can spread the word!