Landlords want to make a profit. But, landlord mistakes limit profits.
Avoid costly landlord mistakes. Read about them Here.
Successful landlords learn how to spend money wisely. Not to say they are cheap. But, rather cost conscious.
Making smart choices when spending money on rentals helps to maximize profits.
For instance, a $150 mistake doesn’t seem like a lot. But, making $150 mistakes every month on three rentals adds up to $450 a month or $5,400 a year! This results in cash flow problems preventing you from accomplishing your long term goals.
Spending money at the right time and places set yourself up for success. However, you can limit expenses to maximize revenues.
Here are some mistakes to avoid:
Wrong Property Investments
Profitability lost when landlords invest in the wrong properties. Or, overpaying for the right ones. Either of these mistakes makes it very difficult to earn a profit worth your energy and time.
Slim margins lurk in bad properties needing lots of work. Finding the perfect rental property may be difficult. But, practicing patience while seeking the best opportunities for greater gains creates bigger profits. Also, it provides you with a greater margin for errors.
Don’t Overpay Insurance
Patience also pays off when purchasing insurance for your rentals. Haste makes waste when landlords tend to accept whatever insurance product gets offered first.
Shop around to compare types of coverages and rates. The Balance allows people to analyze and compare landlord insurance companies in just minutes. They recently published: “The 8 Best Landlord Insurance Policies of 2019”. Source
Proper insurance coverage for landlords includes:
Property insurance – Protects you from damage or destruction to your properties like vandalism, wind, or fire. Include loss of income coverage to protect yours from long term property damage leading to vacancies.
Liability – You need liability insurance. It protects you and your property from lawsuits resulting from tenant or guest slip and falls, negligence, faulty repairs, or other events causing serious injuries. Many insurers recommend a minimum of $1 million in liability insurance per occurrence.
Saving money on landlord insurance increases your profits while protecting your properties.
Don’t Pick the Wrong Finishes
Be smart when picking finishes for your rental properties. Choose designs that look nice but don’t demand expensive replacements when each tenant moves out.
For example, carpets are cheap and easy to ruin. Snags, rips, and stains require you to replace them between tenants.
Spend a little more money by purchasing vinyl plank flooring. They look better and provide longevity and durability than carpets.
Lack of Knowing the Landlord-Tenant Laws
Too many landlords don’t know the federal, state, and local landlord-tenant laws. This could lead to big legal troubles. You must follow certain procedures and fulfill specific responsibilities.
Federal and state fair housing laws dictate how you treat prospective tenants regardless of age, race, color, national origin, disability, sex, or religion.
Not following these laws leads to large fines, lawsuits, or returning bad tenants’ deposits even if they damaged your rental.
Either retain a good real estate lawyer or use a professional property management company familiar with all laws affecting landlords.
Failing to Maintain the Rentals
It’s easy to neglect to maintain your rental properties. But, small problems become major problems over time requiring expensive repairs.
A small leak on the roof known by your tenant who doesn’t complain about it eventually results in a collapsed ceiling after a heavy rainstorm.
Or, the roof collapses because of gutters clogged with leaves and branches or other clutter for too long. Avoid interior property damage by inspecting the outside structure annually to spot potential problems and fix them before becoming serious.
The same goes for:
- the water heater;
- electrical system;
- A/C; and
- appliances included.
Inspect them and maintain them regularly so no problems occur.
Proper maintenance saves you money in the long run.
Trying to do Everything Yourself is another reason Landlords Mistakes Limit Profits.
Too many landlords fail to ask for help. They try to do everything themselves.
For example, just because you know how to fix an air conditioner doesn’t justify you driving a half hour to your rental to spend a couple of hours repairing the A/C and then driving back home. Three hours of your time lost when you could have called an A/C technician to fix it.
Knowing when to delegate tasks helps you to succeed as a landlord while keeping your sanity.
Keep a contact list of contractors, repairpersons, and other professionals to repair items. Or, use a property management company to do all that for you to save time and money.
Poor Tenant Screening Mistakes Limit Profits
Once you find the right property, low priced insurance, and select the right finishes, don’t blow it on screening prospective tenants.
Landlords tend to either not screen tenants thoroughly or set up a great screening process but over time get lazy about following the process.
Failure to maintain the right screening process in place seriously impacts your profits.
Bad tenants cost you in many ways like:
- Lack of care for your property requiring frequent maintenance;
- Late or missed rent payments;
- High turnover;
- Violating lease agreement terms;
- Leaving your property in poor condition when moving out; and
- Forcing you to file an eviction lawsuit leading to lost rents, lawyer’s fees, and vacancy costs.
These are just a few examples of what bad tenants do.
Landlords must have a proper tenant screening process from the beginning and follow the process for every applicant. For instance:
- You must create a good set of questions to ask every prospect.
- Use a sound application form.
- Verify all important information on the application.
- Run a credit check to verify the prospect’s debts and credit history.
Yes, tenant screening becomes a burden, but necessary to screen out bad tenants.
Renting to bad tenants with financial issues and no regard for your property hurts your profits. You lose thousands of dollars. Enhanced tenant screening minimizes bad tenants while maximizing your profits.
Renting to good tenants leads to longevity and enhanced profits.
Hire a Professional Property Management Company to Screen Your Tenants
Let an experienced property management company save you time and money by:
- Letting us screen all your tenant applicants.
- We understand Fair Housing laws.
- We can inspect, maintain, and send professional repair persons to fix anything needing repairs in your rentals.
- Let us handle the evictions of bad tenants.
Contact Us now to see what we can do to save you time and money.
As you learned here, landlord mistakes limit profits. That’s why hiring an experienced property management company makes sense.
Steven Rich, MBA – Guest Blogger
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