Becoming A Landlord - Some Common Mistakes For Beginners
By Joel Teo
Many people invest in rental property with the expectation of having an income every month. However, being a landlord is about more than just collecting money every month. Many new landlords make some common mistakes that may end up costing them money on their real estate investment. By knowing what these mistakes are ahead of time can help you avoid making them.
The first mistake that many real estate investors make when they purchase rental property and become landlords is that they do not become knowledgeable of landlord tenant law in their specific area. Three of the biggest problems in this area are late fees, tenants rights to privacy, and evictions. Some landlords may charge excessive late fees, and courts generally take a dim view of late fees that they consider too high. A landlord may charge a late fee, but they must show where the damages are from to validate the amount of the fee if it is steep. Another common legal mistake new landlords make is violating the rights of their tenants. Normally forty eight hour advance notice is required for a landlord to come into an occupied rental unit, whether the reason for the visit is for repairs, maintenance, or to show prospective tenants the rental unit. If a landlord violates this by repeatedly showing up without notice then a tenant may get money damages for the violations.
A big mistake that new landlords make is that they do not maintain and improve their rental property. By keeping the maintenance up on your rental units the value of your investment does not decline. By improving your investment property, you increase the amount that tenants will pay to rent your units. As the landlord you can charge higher rates and get better tenants if your units are clean, nicely done, and well kept. Even a simple spring cleaning, minor repairs, and cosmetic work between tenants will improve the class of people who want to rent your unit.
A very common mistake that new rental real estate investors make is that they do not treat their investment property like it is a business. You invested money to make money, not to lose it or give it away. It is important to remember that you are not a charity, and that tenants need to live up to their side of the contract. If doing business with a person cost you money instead of made you money, you probably would stop doing business with that person. If a tenant is repeatedly late with the rent, they are costing your business money and it is best to cut your losses and find a new tenant who will pay their rent on time.
To maximize your real estate investment income it is important to remember these tips. Know the laws in your areas concerning the rights of landlords and tenants, charge reasonable fees that are not excessive, and value the privacy rights of your tenant. It is also a good investment strategy to maintain and improve your investment property to keep or increase the value of your investment. Remember that your investments are a business, and keep this in mind when you are dealing with your tenants.
Joel Teo writes on various financial topics including
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