5 Landlording Mistakes You Need To Avoid
By Paul Esajian on June 25, 2018
There is no question that the right rental property can instantly change your portfolio for the better. You will have money coming in every month, with a tenant paying down your mortgage. There will be long stretches when you won’t even hear from your tenants and things will almost seem too easy. In the drop of a hat though everything can change. Your tenants will stop paying, your furnace will stop working or you will see a dramatic decline in demand. Fortunately, most of these issues are preventable with a little due diligence and foresight on your end. Most mistakes you will make will be brought about either by a lack of spending or a lack of enforcement. As the landlord and owner of the property it is up to you to treat your rental like the long-term investment it is. Here are five common landlording mistakes you need to avoid.
- Not having tenants pay utilities. You always want to try to make your rental as attractive as possible, especially in high demand markets. The more subtle perks and add-ons you can throw in the more likely you will find a tenant. It is important to remember that the goal isn’t to simply find a tenant, but to make money on the property. Adding the utilities to the rent, even at a slight increase, often creates more problems. Unless you cap the utility payment you are at the mercy of your tenants. You can expect them to crank up the heat in the winter and let the air flow in the summer. TV’s will be left on all night and you can see the house light up from down the street. When you get the bill, you will be disappointed with what you see, with little legal recourse. Always have your tenants pay their utilities or limit what you will pay for them.
- Not adding a washer/dryer. There are certain amenities that almost every tenant looks for. You don’t need fancy finishes and expensive countertops to keep your rental occupied. Something as seemingly minor, like a washing machine can often make all the difference. Nobody likes lugging laundry to and from the laundromat. Not only is this time consuming it can be a long day if you have young children. If you own a rental property one of the best long-term investments you can make is adding a washing machine and dryer somewhere in the house. Even if you throw it somewhere in the basement as long as it is in the house it is a definite bonus. It is not a stretch to say that a tenant can love everything else about your rental, but if it doesn’t have a washing machine they will look elsewhere. When you take ownership of the property one of the first things you should do is find a spot for a washing machine, if none is present.
- Not getting seasonal maintenance. Just because you don’t have to spend money on your property doesn’t mean you shouldn’t. You need to treat your house like anything else of value you own. If you own a car you probably get the oil changed every 10,000 miles or so. You don’t necessarily need to get it done, but you know you should. The same is the case with your rental property. There are plenty of items in your property that need seasonal maintenance. Your furnace, HVAC and sewer line should all be checked out every year. They may not be showing any signs of wear and tear, but it doesn’t mean you can ignore them. Just by the sheer nature of tenants they are going to cause more wear and tear to your property. Spending a few bucks every year to clean the gutters or replace a filter in a furnace tends to go a long way. If you ignore your rental eventually you will be hit with a big-ticket repair that could have been prevented.
- Not having people you can call. Regardless if you own a lone single-family property or a portfolio of seven, you need to have people you can call in a pinch. For starters, every landlord should have a handy person, or two, that can handle most household tasks. You may plan on doing everything yourself, but you never know when you will get tied up with something and can’t make it to the house. Without people to call it starts a negative snowball effect that impacts the property and your tenants. Not handling a clogged toilet may not seem like much to you but is critical to your tenants. Always have a plumber, electrician, handyman and snow removal company you can call in a pinch.
- Not enforcing rules. If you take the time to make a lease it is important you enforce it. No landlord likes calling tenants on the 6th of the month looking for rent. However, the more you let things slide the more tenants will begin to take advantage of you. At the end of the lease you will be left with a house that isn’t in the condition you want and a fight with your tenants on your hands. You don’t have to run the property with an iron fist, but you can’t let your tenants run the property either. If they break the terms of the lease you need to enforce it with whatever penalty you decided on.
Owning a rental property can be filled with bumps in the road, but these bumps can be avoided. Always avoid these five common landlording mistakes.