There are over 10 million landlords in the U.S., many of whom are first-timers learning the ropes.
Learning the top mistakes will prevent you from risking your investment and losing profit. Sure, it may sound overwhelming, but once you know the basics, it'll steer you in the right direction.
Sounds like you? Don't worry, we've got you covered. Read on to find out which mistakes to avoid.
Not Screening Tenants
A major mistake new landlords make is not tenant screening. Remember, you're giving your keys to a stranger, so you want to trust them. Don't make the mistake of not running a background check, including a credit report; otherwise, you could end up with a bad tenant.
As it's time-consuming, landlords should outsource their tenant screening needs instead. The beauty is that property management companies know what to look for and avoid.
Neglecting Your Property
Another huge problem is property neglect, especially with maintenance. Aside from keeping occupants safe, regular maintenance will preserve the home's resale value, which benefits you in the long run.
If you haven't already, hire a property manager to inspect the property and conduct regular maintenance. For instance, they will test smoke detectors and fix or replace broken appliances.
Not Budgeting for Vacancies
Like any business venture, you must be financially prepared for setbacks. You never know when there is a vacancy, whether you've had an abrupt eviction or you're struggling to attract quality tenants. For peace of mind, it's wise to budget for vacancies, so you don't dip into your savings.
Delaying Necessary Evictions
One of the hardest aspects of being a landlord is eviction, but sometimes they are necessary. Don't make the mistake of holding onto tenants who are not paying rent or damaging your property. Regardless of how difficult, find a property manager who will be emphatic, but focused on removing disruptive tenants.
Not Recording Rent Collection
A common problem first-time landlords have is not recording rent collection.
Get in the habit of noting the payment as it's essential for your yearly bookkeeping reports. It also acts as an insurance. For instance, if you need to evict a tenant for missed payments, you can use the rental collection records as evidence.
Not Outsourcing Your Needs
New landlords underestimate how much work goes into managing properties. This explains why most landlords outsource their needs, such as hiring a property management company. These professionals handle every aspect of renting out properties, from screening tenants to maintaining the property, so landlords can focus on other areas.
Additionally, landlords should outsource their property accounting needs, especially if they have little bookkeeping experience. As there are different tax laws to consider, you don't want to file the wrong one and face penalties.
Never Make These Landlords' Mistakes
Now that you know the mistakes landlords should avoid, it will be easier to navigate.
At Kerr Properties Inc., we've helped landlords since the '80s and know everything that goes into managing properties. If you're in Gresham and Portland, OR, and need guidance, we'd love to help. Contact us today to chat with a member of our team.
