There are different reasons why owners enter the landlord business. You might have earned the title of landlord by renting out your former residence or by inheritance. Or maybe your starting a real estate portfolio and you just purchased your first one. Being a landlord regardless how you became to be, can be very profitable – or you can lose your shirt by stumbling into some common landlord mistakes.
Here are the first 5 common landlord mistakes to avoid.
You don’t understand your market
Location, location, location are the keys to success in real estate. To attract more potential tenants the property needs to be in a desirable location. Do not fall for buying the cheapest home in a bad neighborhood. It might seem as a great price but rest assured it will come with great problems. Understand your neighborhood drive around and see what is around. Check out local schools, grocery stores, shopping malls, businesses, etc. Search for comparable rents in the area so you can determine your rental income after purchase and repairs.
You don’t understand fair housing laws
This is a BIG one, before you start searching for tenants you need to look over fair housing laws and discrimination laws. Avoid getting into legal trouble buy hiring a real estate agent and have them rent the property for you. But for you go getter investors that want to do it on your own it is illegal to discriminate against anyone on race, religion, color, origin, disability, sex, or familial status. Different local and state government have other protections that you should be aware of. In short you as the landlord needs to treat and speak with any potential renter all the same way.
You don’t understand marketing
Advertising a property is not as easy as it seems. First you must feature high quality photos of the property highlighting all the positives. With millennials using their phones to shop for everything, the more pictures you have the better. In some cases, it is worth to hire a photographer so they can capture the beauty of the property. A well written description of the property and amenities is necessary. Once you have a well written description and high quality photos it is time to place all that information on all the real estate websites. Some are free some are paid but the exposure is what is going to find those prospective tenants.
You don’t understand Tenant Screening
Selecting a highly qualified tenant to move into your property is priority one. Have the potential tenant fill an application and take some time to verify that information. Ask about previous employers and previous landlord. You must perform a background check for any adult that is over 18 years old and a tenant credit report. Confirm their financial by requesting monthly bank statements for the past 3 months. The more homework you do at the beginning the beter you will be off overall. Disclaimer: There is no formula to find the perfect tenant.
You don’t understand the leasing paperwork.
The lease is a governing document between the landlord and tenant. In the lease will stipulate the rules, regulation, fees, policies, and conflict resolution. Remember to write down everything a verbal agreement or handshake will not hold in court. There are generic leases that can be purchased online but you must ensure yourself that your legally protected. It is recommended to hire a legal professional to review the lease or hire a local realtor.
Hiring a professional management company will guide you and avoid these landlord mistakes that can cost you deeply. Call us today if you have any questions. All of our consultations are FREE as we are here to help. Local Miami property management company (786) 302-9454.