Whether or not you’re new to the real estate business, it’s easy for any landlord to get overwhelmed and commit mistakes.
Here are the common landlord mistakes you should avoid.
The Importance of Proper Planning
My motto has always been the 5Ps: prior planning prevents poor performance. I say this because proper planning is also key to finding good tenants.
As a property manager, I want to ensure you get a good tenant in the unit. That means avoiding tenants who don’t pay rent, break stuff, or cause other tenants to complain.
As a property manager and fellow property owner, I want to help you minimize your mistakes and, more importantly, avoid making them. And you can do this by having plans on managing your tenants, your property, and your financials.
Top 3 Landlord Mistakes to Avoid
Experience is the best teacher, but we can also learn from the experience of other people. I share the common landlord mistakes I have encountered over the years.
1. Skipping on the screening process
I put a premium on screening tenant applications, so I interview every applicant. To ensure their credibility, they must meet the following qualifications:
- a stable income, at least three times the monthly rent
- a credit score of at least 640
- a positive landlord reference
I also put in place a formal pet screening process. You need to stick to these standards and not just approve tenants based on their personality.
Remember that these tenants will live in your property for at least a year. If you discover they are awful tenants, it would be impossible to get them out.
2. Putting off maintenance
It can be easy for a landlord to defer repairs and not pay attention to the nooks and crannies of their property. Landlords usually have little to no free time to conduct maintenance checks as they juggle new tenants moving in, emergencies, and due dates on rent payments.
With so much going on day-to-day, it can be inevitable to ignore necessary maintenance issues until the damage is already apparent and begging to be repaired.
For example, a minor leak can turn into full-blown water damage that will eventually cause mold. This can lead to health hazards that make the residents sick or involve the city in mold remediation.
Make sure you or your property manager conduct regular preventive maintenance walkthroughs on your property. You would want to start with the key areas that are usually prone to cause you liabilities (or worse, lawsuits), such as handrails, steps, and staircases.
3. Mismanaging security deposits
While we are on the topic of liabilities and lawsuits, your financials must be in place. In Massachusetts, the number one cause of landlords getting sued is mismanaged security deposits.
Security deposits must be held in escrow, in an independent interest-bearing account that is unrelated to you. The interest that accumulates each year goes into that account, which must be opened under the tenant’s name and on their ID.
You have 30 days to start the account, and if the tenants move out, you have another 30 days to build a return on the security deposit.
The Landlord Tutor Promise
You can avoid mistakes with proper planning. To know more about the common landlord mistakes to avoid, join the Landlord Tutor community and sign up here.
