New landlords often struggle to make a profit because they’re making mistakes. These mistakes are common among new landlords. Sometimes all it takes is a few cor- rections to start making a profit. Here are a few of the biggest mis- takes landlords make.
Skipping The Numbers
When you buy a property as a rental, you have to get your num- bers right. One of the biggest mis- takes new landlords make is buying a property without calculating all the expenses. This can quickly eat into rental profits. So don’t skip this very important step.
Poor Rental Location
Some locations are prime areas for investing in a rental, while oth- ers are not. If you buy a property in the wrong location, you will have to charge less for rent and it could make it very hard to find a tenant. Make sure you’re choosing a rental property near a synagogue, pub- lic transportation, schools, dining, shopping, and other amenities that people need and want.
Lack of Screening
This is a big one! When you look for new tenants, you need to have a good screening process in place to ensure you get the most desirable tenant possible. Choosing tenants with good rental and financial history will allow you to profit more, without as much turnover. We happen to have the most in depth and reliable screening process to help you at no charge.
If you don’t properly screen applicants, you may need to find a new tenant before your current con- tract is up. You may let someome move in who can’t pay the rent, then you have to evict him/her. This puts a burden on the landlord as going through an eviction can cost time and money. With the proper screen- ing, you can avoid a high turnover rate and not have to resort to evic- tion.
Lack of Contract Enforcement
Some landlords have a good, strong lease with tenants, but they don’t enforce it. If you have built in late fees, make sure you charge them, whenever payment is late. If you don’t, you could be setting a precedent and your tenant may start paying rent two weeks late every month. Never accept partial payment, and never accept pay- ment outside the terms of the lease. By enforcing the lease the way it’s written, you will save yourself many headaches.
Putting Off Maintenance
It’s your duty as the landlord to handle maintenance issues quickly. If you don’t, you could be setting yourself up for failure. A small leak could become a huge issue if it’s not addressed.
Take the time to address main- tenance issues when the property is vacant, and take care of main- tenance requests from tenants as quickly as possible. This will not only help to build the relationship with your tenant but also ensure your property remains in good con- dition.
Not Collecting A Large Enough Security Deposit
The security deposit is vital to the lease and you should always collect enough to cover minor dam- ages. Landlords that don’t collect enough security end up paying for minor damages out of their own pocket, which kills profits.
As a landlord, you should know how much to collect, what the state laws are, and what the security deposit covers. Make sure it’s a reasonable amount of money, but collect enough to protect your prof- its.
As a landlord, the best thing you can do is have a real estate expert on your side. Using an educated broker goes a long way to help keep you from making mistakes and to protect your profits.