top-mistakes-new-landlords-make
Here’s a list of the top mistakes new mistakes landlords make. And as they say, if you haven’t learned from your mistakes, you’re likely to make them again! While owning a rental property is a good way to generate passive income, and capital gains over time, mistakes can be costly. By understanding the most common (and costly) mistakes to avoid, you can put yourself in a good position to avoid unnecessary losses and maximize gains.
Top mistake #1 new landlords make: Not screening tenants
Many new landlords just run an ad for their rental property. And expect to rent it to the first person who knocks on the door, without basic tenant screening. Running a credit check on potential tenants is always a good idea. It helps to check their credit history and to see if they pay bills on time. You should also check out references from former landlords, and employers. Sometimes, it’s better to let your property sit vacant for a week than to rent to the wrong person. So, if things don’t check out, it is better to extend your search for another week or two.
Top mistake #2: Not inspecting a property
Inspecting the condition of your investment rental property is always a good idea. Of course, you can’t just show up at your tenant-occupied property, as there are legal angles to visiting. Do check the local Florida requirements, and fix an appointment in advance. Infact, you should make it a habit to conduct proper and detailed inspections at least once a year. And more so, after the hurricane season, to check for fallen trees or damaged windows.
Here in Florida, the humid weather only adds to it. Common problems like loose roof tiles, leaking gutters, and overgrown landscaping, can go unnoticed. And sometimes, tenants don’t report them, especially if they feel intimidated by the cost of repairs, they may be asked to bear. Minor problems like leaks under the kitchen sink, and dripping faucets, can turn into bigger (costly) issues if left unattended.
Top mistake #3: Underestimating the cost of repair and maintenance
It is a common mistake to underestimate the budget needed for repairs and maintenance. Some inexperienced new landlords fail to budget for this completely, assuming they can come up with DIY fixes. But also because repair costs can be unpredictable, they prefer to delay things. Others simply lack experience and budgeting knowledge. As many experienced landlords will tell you, allocating 10% of the monthly rent is one way to plan for these expenses. And that number could go higher, depending on the age and condition of a property, Plan and establish your budget, with this in mind.
Mistake #4: Not budgeting for your property being vacant
Despite best intentions, new landlords need to accept that a rental property, at some point, it’s going to be vacant. Repairs, vacancies between tenants, and heavy-duty property maintenance can all be contributing factors. As a rule of thumb, it’s a good idea to anticipate your properties being vacant for a month out of every year. Therefore, it is recommended to budget your cashflow, by putting aside 10% of your rental income towards vacancies.
Mistake #5: Not getting a written lease agreement in place
Whether renting a room in your house or condo, you should formalize the rental. Without a formal (legal) lease agreement that covers all the essential aspects of renting out the property, you can expose yourself to costly financial and legal liabilities. A legal Florida lease can offer valuable protection in the event of disputes with tenants, throughout the occupancy, and is a worthwhile investment. It must include property-specific rules and policies such as pet policy, noise restrictions, and parking rules. Verbal agreements, or other handshake agreements, can land landlords in costly eviction battles and lawsuits, as nothing was agreed upon upfront.
How we can help?
DIY property management can be very appealing to many first-time landlords as a way of maximizing their rental income. However, DIY property management isn’t for everyone. For starters, landlords need to be able to take time out from their busy schedules. Then, they should possess the necessary handyman skills, local knowledge, and legal knowledge. And most importantly, the willingness to take a hands-on approach.
But if you don’t see yourself finding and screening tenants, conducting periodic property inspections, collecting rent, handling maintenance, and dealing with many other property issues, we can help. On average, we charge 10% of the rent, and in return, you benefit from total peace of mind in property management.
Call us today at (954) 800-4433 and see how we can help with your rental property in South Florida.
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