If you are considering investing in commercial or residential property, you’ll no doubt learning all you can about life as a landlord. Becoming a landlord can indeed be an extremely profitable move to take, but if you’re new to the game then it also requires a lot of hard work and research.
It’s easy to get things wrong in the early days and fall into some of the pitfalls that can sap both your time, resources and money. So to help you avoid this situation, here are 6 common mistakes new landlords make which you should try to avoid.
Underestimating how much it will cost you
One word: budget. You’ll need a strict one if you’re going to invest successfully, and it will need to account for insurance, taxes, utilities, repairs, maintenance and fees. That’s without even taking into consideration the immediate deposit you will have to pay to secure a property in the first place, which is always a significant chunk of your budget. Thankfully, useful tools like bridging loans can provide quick financial support to ensure you don’t miss an opportunity. Just make sure you use a trusted provider like Glenhawk and do your research beforehand.
Not sticking to the law
Tenant and landlord laws are extremely important to property purchase proceedings, but they do change over time and it’s important to be aware of what the current laws are at the time when you are looking to invest. When real estate site Zillow quizzed landlords on basic rental laws, the average respondent only scored around 50%. So make sure you’re one of the landlords who stands above the rest.
Winging the taxes
Property taxes can be complex, especially when you’re renting out a property for income. It’s essential to stay updated on changing laws and have a good grasp of the basics of landlord tax. Make sure to file your taxes before the deadline and consider seeking help from a financial adviser if needed. They can provide guidance and ensure you navigate the tax process smoothly.
Ignoring tenant insurance policies
While your policies probably cover the property itself, any appliances included and liability in case of injuries or property damage, the tenant’s own belongings will need to be covered by them if they so wish. This might make you think that this isn’t your problem, but if something does happen, tenants have been known to get angry when they discover their items aren’t covered under your lease. Make this clear to them and advise them to take out a policy if they want to.
Failing to undertake regular property checks
You shouldn’t rely on your tenant to tell you when something is wrong with the property, because depending on who they are they may just learn to live with certain breakages. They will likely complain about a broken shower or faulty plumbing, but not necessarily about a broken gutter. Be sure to inspect the property regularly and see for yourself whether anything needs repairing or updating. Huge losses to your pocket can be cut down with the help of maintenance that could be done on time. If not, you would have to call in qualified professionals such as the ones’ at Ellicot City Property Damage Restoration and alike, incurring a hefty bill.
Though, the damage repair expenses can also be avoided by taking an insurance policy for the property and a tenant, as well. Another alternative could be to hire an attorney to take legal action against the tenant. You can explore multiple civil lawyers near your location and choose one that suits your requirements.
Not checking out your tenants
If you put a lot of time, effort and cost into securing the ideal property and doing it up to a standard that you are happy with, the last thing you want to do is rent it out to tenants who are not going to respect both your property or your position as a landlord. That’s why it’s important to have a strict screening process in place when choosing prospective tenants. Look at factors like income and credit score, as well as possibly interviewing them informally to see if they would fit well with your property.
