Mistakes that Novice Landlords Tend to Make
Being a landlord does not mean sitting around and waiting for the monthly rent cheques to come in. The idea that being a landlord is relatively easy, the reality is that owning rental properties and managing tenants are like any other business. You have to take the time to create a detailed plan, do your research and learn from the mistakes of others. Here are a few common mistakes that novice landlords tend to make.
Not Being Realistic with Your Price
Some people try to make up for poor budget planning by pricing the property a little higher than they actually should. Now, okay, this can be a decent idea – in theory – however, it wont help you all that much if you cannot find a tenant due to an unrealistic price. A rental unit, like a house that’s for sale, should only be priced as high as the market will bear. Think about it if people can find comparable units nearby for less money, why would they choose yours? As a result, your unit might sit empty, and the financial consequences can be completely disastrous.
Not Taking the Time to Communicate with Your Tenants
A landlord who wants to have happy, clean and reliable tenants needs to be a good communicator. Not only does this mean keeping your tenants informed of anything that is going on with the property (landscaping, inspections, renovations, routine maintenance) but also answering their calls and emails when they come in – even if they see, to be unimportant or unnecessary. A tenant who feels ignored can quickly become difficult to deal with – and that’s the last thing you want.
Underestimating the Amount of Work that You as a Landlord have to Do and What You are Responsible for
Rental properties do not run themselves. Say it with me: rental properties do not run themselves! While a secondary suite in your home can certainly be considered passive income, you still have responsibilities to your tenants. Remember: even passive income requires doing some work. You need to keep the property safe and clean, be available when there’s a problem, and you need to get any issues resolved quickly – whether it is a broken appliance, or something more significant.
It is also important that you are knowledgeable and clear as to what your responsibilities as the landlord are, versus what your tenant is responsible for. If you are unaware, make sure that you read up on your local landlord-tenant act. Trust me, if a tenant believes that they are being held responsible for something that is not really their problem, they are going to become a problem.
Not Worrying About Having it in Writing and Signed
Any good business owner knows that you need to have things in writing. No matter what your business is, no matter who you are doing business with, friend, family member, stranger – GET IT IN WRITING! I highly recommend having them sign a lease that details all the rules regarding the unit, the property, and payment. It should also detail both of your responsibilities and the expectations of one another – that way everyone is on the same page. Remember that this is a business and you must protect your investment at all times. Unfortunately this means that a handshake deal is not enough sometimes.