If you have a property and are considering making it a rental this year, here’s…
Always keep in mind why you’re doing this landlord thing; you want to make money! You need to cover your mortgage, taxes, or earn money with the home you’ve inherited. Whatever the reason you started, being a landlord should be treated as a business, and making mistakes as a business owner means you lose money. If the mistake is really bad, you could lose time and energy, sleep, even face legal penalties. Let us help you avoid some of the most common landlord mistakes that we see investors make when they try to do it on their own.
Possibly the most important step, and the one you never want to cut corners with. This is the biggest fear most new and seasoned landlords have – finding the right tenant. Not conducting enough screening, not doing background checks, credit checks, and checking references leads to tenants that cause more problems down the road. Screening for specific warning signs during your face-to-face meetings and background details is key.
When you’ve properly screened a tenant you can work to ensure they’re someone who cares about the space they’re living in, and will take care of it as if it were their own.
This one is a doozy. Legal requirements for landlords in California are vast, and are often created to protect tenants. You should be aware of your legal responsibilities and laws as they relate to fair housing, responding quickly to requests, preventative maintenance, and more!
Just a quick example of some laws that might lead to landlord mistakes: are your advertisements for the property violating any fair housing laws? Did you know that you’re not allowed to state “no children” in your listing? Did you know that you have to give a potential tenant “adverse action notice” if you’ve denied their application specifically for something in their credit report?
Not to mention, laws change every year – as soon as you thought you had it down, some new law, proposition, or suit will adjust how landlords can interact with tenants.
DO THEM! Do them before, after, during. Do them regularly and thoroughly! When tenants are moving out or in, the property should always be thoroughly inspected. Not only that, but detailed reports with plenty of photos will ensure all aspects of the property’s condition are documented. We can’t stress enough how many headaches this will save you in the future if needed.
Regular inspections during the lease are key was well. A tenant who anticipates possible inspections and knows they’re held accountable works harder to keep their rental space free from hazards and in good repair. Partying, destructive tenants should be weeded out by your screening process, but you always want to make sure that your investment is being maintained. It’s easier to fix a leak than repair from a flood!
Maintenance costs, marketing costs, posting the listing, gas and travel to and from the property, all these are costs that add up that you may not be considering for your bottom line. Businesses don’t thrive unless they have data to prove return on investment. If you’re not tracking your costs, you could be missing the most expensive part of your rental property.
In addition, make sure you’re allowing for financial flexibility if your property is not rented out. Don’t risk financial chaos if you can’t cover your mortgage or property costs, because their will always be times when a tenant doesn’t renew, or breaks a lease, or the market becomes more competitive in favor of renters.
Being a landlord can be a full time job, especially if you’re just starting out, aren’t sure where to turn, and run into problems. As a landlord, you’re forced to utilize skills from a wide range of areas: customer service, accounting, marketing, handyman, etc. Educate yourself online (you found this blog didn’t you! Go you!), watch videos, join groups, but most importantly, ask for help when you need it!
Ferguson Property Management is an experienced company devoted solely to managing properties. We’ve dialed in exactly what works most efficiently to get the best possible tenants, keep them, and maximize your investments. Working with a management company might be less than you think once you’ve calculated all of your costs. Check out our simple pricing structure or contact our team to get a personalized quote today, and we’ll set you up for success.