It’s easy to get enthusiastic when you discover ways to earn a passive income. However, like all businesses, operating a rental property unit does not come without its set of challenges.
Investing in a rental property is a great way to earn additional income and grow your finances. It’s still a good idea, though, to arm yourself with sufficient knowledge and learn if property management is for you. These tips can also benefit you if you’re looking for long-term tenants.
You can benefit greatly from avoiding these common mistakes property owners make:
1. Spreading Yourself Too Thin
Trying to self-manage every aspect of your rental property is a quick way to suffer from stress and burnout.
Even if you own only one property, doing everything on your own can run the risk of losses. This problem is even more likely if you own multiple properties, though, as the responsibilities can get overwhelming.
These responsibilities include marketing, screening tenants, property upkeep and rent collection. If you fail to focus on a specific management task, it could have a snowball effect.
For example: If you don’t repair a leaking roof, it could lead to a tenant breaking their lease or not paying their rent. This would lead to a loss of income, and keep you from being able to pay the mortgage, insurance premium or utilities.
It’s always best to hire the services of a professional to learn the ropes of property management.
2. Having an Unprofessional Relationship with Tenants
Since you’re operating a rental business, it’s important that tenants respect your boundaries as the property owner. Boundaries and leasing policies should be firmly followed.
Cultivating a good relationship with tenants is encouraged. But this should be professional and fair. You risk losing the respect of other tenants if they find out you’re bending certain rules for a particular tenant you’re close to.
Avoid being too strict, but also don’t be too accommodating. Maintain proper distance as a landlord. You can also hire a property manager who will act as a middleman to avoid this problem.
3. Unclear Policies and Rules
A leasing agreement is the legal document that both the landlord and tenant reference. This means it should be free of any confusion, and state specific terms.
If your policies are unclear, you could end up wasting valuable time and energy arguing with your tenants over minor details.
The leasing agreement should cover consequences in terms of rent collection. A tenant may then be aware of what will happen if they’re unable to pay the rent on time.
It’s best to describe the amount to be paid, the due date, late charges that will be incurred and the grace period, if any.
4. Not Buying an Insurance Policy
Like all assets, a rental property is vulnerable to disasters like floods and fire. It’s essential to buy an insurance policy for your protection.
It may not feel urgent now, but when disaster strikes, you’ll be glad to have an insurance policy. Not having one means more losses for you if something unpredictable happens.
5. Setting the Wrong Rent Price
If you set a rent price that’s too high, you might find yourself with frequent tenant turnovers or a vacant unit. A property manager knows how to assign proper rent based on the market.
6. Not Screening Applicants
In your rush to fill your vacant property, you might skip over certain background checks. It’s never a good idea to allow someone in your property without extensively verifying who they are.
A good property manager has the resources and skill to screen the applicants.
7. Having a Lack of Knowledge on Landlord-Tenant Laws
If you don’t have sufficient knowledge of Florida’s laws, you could find yourself being sued. An example of an important law to know is the Fair Housing Act, which says you can’t discriminate prospective renters based on race, sex, or disability.
Your investment property is there to earn revenue, not put you in a situation where you have to pay penalty fines. That’s why knowing about Florida housing laws is crucial.
8. Doing Repairs Yourself
It’s understandable to want to lower your costs as a landlord. As tempting as it may be to fix property damages on your own, it could have a negative effect.
This could lead to escalating maintenance issues. Tenants might move out because a repair has gone bad, which means doing repairs on your own can end up costing you more money than hiring a licensed contractor in the first place.
This can also take up so much time that it would present more problems, and cause even more hassle to your tenant.
As a landlord, it’s your obligation to keep your property in great condition. If you conduct low-quality repairs to the home, it can be a hazard. It can lead to more damage and an unhappy tenant.
The Bottom Line
Managing a rental property comes with plenty of duties. You also need to be a great decision-maker.
If you like investing in properties more than managing them, there’s a cost-effective solution: Let a property management company with an excellent reputation handle the finer details of managing your rental property.
Hiring their services means avoiding costly mistakes and protecting yourself from legal problems. It also means escaping the stress that comes with self-managing your rental unit.