Rental Mistakes to Avoid
The real estate market is coming back to life after a sharp increase in rates brought it to a halt last quarter. The exception being people who locked in their loans at historically low rates. Instead of selling, many are opting to turn their home into a rental. While that is a fantastic way to build equity and cash flow, landlords beware, there are a few mistakes you may want to avoid.
Becoming a landlord isn’t always sunshine and rainbows. Many are plagued with expensive repairs, legal issues, and financial stress. Most real estate investors agree if you are going to manage your rental property, you need to treat it like a business. Too many new landlords make the mistake of treating it like a hobby. If you haven’t planned out rental policies, contractors for regular maintenance or budgets for repairs, you could end up in the red, faster than you think.
Keeping up with rental laws is also an important part of being a landlord. Fair-housing laws can be complex and time consuming, especially if you’re renting an older property that may have lead paint or other harmful materials. Not complying can result in heavy fines. These laws don’t only vary by state, but by city as well.
One of the most important and costly mistakes new landlords make is not having a reliable screening process. Many newbies rely on friends and referrals to get their property rented, and fail to do a proper screening. A recent survey reported that the mistake most new landlords and seasoned veterans regret is not properly screening renters. At the very least, you should be collecting a credit report, criminal check, and background check. If you have any concerns, don’t be afraid to ask the questions. It could save you a lot of time and money.