When you’ve started investing in real estate, there are several things you want to make sure that you do as a landlord. For example, you want to make sure that you find the right tenants and that you buy in an area with appreciating real estate values. Paying your expenses on time is another big one that you need to make sure that you do.
However, there is less attention on the things that you shouldn’t be doing when you own investment properties. There are certain mistakes that a lot of landlords make that prevent them from making the full potential of their investment property.
In this article, we will go over some of the most common mistakes landlords make that you should try to avoid.
1. Not Understanding The Market
The biggest factor in making the most you can make from your property comes down to understanding the rental market in the area where your property is located. Without knowing the market, you risk losing money on the table by not charging enough for rent. On the flip side, if you overcharge then you will have an empty property not bringing in income.
You have to do research on the market by understanding how many rental units there are in an area, how many are occupied, and what the average rental price is. For instance, if you are buying real estate In Toronto then you want to make sure that your rental prices are in line with what is happening in that area.
There are many real estate companies out there that will do an evaluation for you and come back with a report. This will give you all the information you need to set the right amount for your property.
2. Not Screening Tenants
Getting stuck with a nightmare tenant that doesn’t pay rent or abuses the property can happen to any landlord. However, those that don’t do a thorough screening of the tenant beforehand are far more likely to have this problem. When you do end up with this problem, it is a costly and time-consuming mistake.
Take the time to invest in some programs that will help you screen your tenant so you can see if they have a criminal background and what their credit history is like.
3. Ignoring Maintenance Issues
Staying on top of repairs and maintenance is part of being a good landlord but it is also wise to do it from a financial perspective. Small problems only get bigger when they are left alone. This will cost you more in the long run to fix. Not only because the repair itself will be more costly, but you may have trouble finding tenants if you develop a reputation of not taking care of your property.
4. Not Flipping Quickly
The less time between occupancies, the more money you will make. Make sure to get the apartment ready to live in by being proactive when the lease is coming to an end. Have all the right paperwork ready and have a clean-up crew reserved for the day the tenants move out.