5 New Landlord Mistakes (and How to Avoid Them)
New to rental property management? It can seem overwhelming. There's a lot to learn, from how to list and find a good tenant to home maintenance and bookkeeping. The steep learning curve ultimately leads to new landlord mistakes.
While you're still learning the ropes, do yourself a favor and learn from other successful landlords. Here's a quick list of pointers we've heard over the years from experienced ones.
Mistake #1: Not getting commitments in writing
It's human nature to believe the best of people, but don't be too trusting. Even if a tenant gives you a verbal “yes" to renting, it's not a done deal until you have a signed lease and a deposit.
Far too many rookie landlords make the mistake of believing a prospect who verbally commits. They might take the property off the market or turn down other people interested in renting. The truth is, plans change. The prospect you think has already committed may change his or her mind.
Pro tip: Don't stop marketing the property until your new tenant has passed a background check, given you a deposit and signed the lease. You might even keep a list of back up tenants to contact if things don't work out. That way, you won't be caught with a vacancy.
Mistake #2: Skimping on quality carpeting
When choosing carpeting, it's a good idea to invest in high-quality materials that can stand up to neglect and a bit of abuse from tenants. It can pay off in the future with extra years of wear.
Labor and delivery costs are a major part of most improvements. Since installation and padding cost about the same for both low and high-end carpet, installing a higher grade, stain-resistant option means you'll get more value from your investment.
Pro tip: Invest in the best carpeting your budget allows. It provides extra insurance against staining, fraying and pet damage. Chances are, you won't have to replace it as often as a bargain basement carpet.
Mistake #3: Ignoring design trends
To ensure your property retains its value, keep an eye on rental rates and design trends. Try to incorporate small changes to keep the property appealing.
For instance, in recent years, the housing market has shifted toward cooler, more soothing wall colors like gray and blue tones. These provide a calm mood that renters appreciate in today's hectic society.
Pro tip: Incorporate popular neutral tones into your property with paint. Just rolling the walls in the main rooms of the home can update the décor. Short on time? Even a well-chosen accent wall can introduce a trendy color and set a more modern tone.
Mistake #4: Deferring maintenance
Ignoring routine maintenance can be dangerous and costly. Clogged gutters, for example, can cause water to pool around the foundation and even seep through and cause interior flooding. Dirty HVAC filters can strain the system or even cause the condenser to overwork.
Many maintenance tasks can be accomplished easily when the property is empty. Use that window of time to trim the bushes, give the refrigerator a good cleaning and vacuum the coils, clean the gutters, drain the water heater or anything else that needs doing. Check faucets and toilets to make sure nothing's leaking. Changing out a washer or tightening a pipe today could help you avoid bigger problems in the future.
Pro tip: Be proactive and keep your property well maintained. If you count on your renters to perform routine chores like changing the HVAC filter, provide a box of filters and check in verbally every so often to make sure they're doing it. Make yourself a maintenance schedule and stick to it. You'll be less likely to get blindsided by a maintenance emergency.
Mistake #5: Choosing high-end appliances
Keep in mind that the more complex an appliance, the more things can go wrong. Don't be seduced by the latest and greatest features with complicated programming instructions like time delay or remote activation.
Remember, you're not shopping for your own residence. Think like a landlord, not a homeowner.
Pro tip: Keep appliances simple and reliable. Choose fridges, dishwashers, ovens and microwaves that look nice and get the job done. Chances are, you'll be better off with more basic models. There are far fewer ways they can break and need expensive repairs.