If you are new to being a landlord, there are a lot of things that you should be careful about. There are mistakes that you can make that can actually cause you to have issues and go into financial ruin. Below are five mistakes that new landlords make so that you can be aware of them and avoid making them yourself.
Thinking Your Property Always Will Be Rented
Before you close on any property, make sure you’re doing due diligence on your finances and make sure that you’re able to pay your mortgage if you take out a lone if there are dry months. You shouldn’t risk going into financial ruin and foreclosure simply because you didn’t analyze your cash flow and maintain enough funds to cover payments when you don’t have a renter.
Underestimating Repair or Property maintenance Costs
To keep your tenants interested in your property, you have to make sure it’s maintained. You should charge enough for rent to help with covering some of the regular maintenance costs, such as cleaning, carpet cleaning and painting. You also should either plan to pull money from your business or your pocket if you don’ have enough cash for making big one-time repairs, like repairing damage to the structure, replacing the appliances, etc.
Thinking of It Like a Hobby
Owning a rental property, or properties, is like any other business. To make a profit, you have to treat it as a business. You should establish different bank accounts for expenses and deposits, using a good system for bookkeeping and talking to someone who knows taxes to make sure you correctly handle and pay the taxes on the business. If you aren’t using the right relationships and resources, chances are that you are going to lose money.
Not Meeting Local & State Housing Codes
When you have a rental property, you have to make sure your property’s meeting safety and health codes. If you aren’t taking care of these, there could be grounds for the tenants to break your lease. They could also sue you and you might have to compensate them for injury or damages due to the neglect.
Delaying Evictions
Not starting the eviction proceedings when you can often be very costly. If you have issues with one of your tenants and you aren’t sure about the way you should proceed or your rights, you should speak with an attorney who specializes in evictions quickly.
These are five mistakes that you want to be aware of as a new landlord. The biggest one is that you shouldn’t ever take things for granted. There may be times when your property isn’t rented. So be ready for those times and make sure that you have the money to cover it.
Thank you for reading our blog. Please keep coming back because we are always adding new tips. If you have any questions or you want a property manager, give us a call.