In writing, it may seem easy to be an owner and occupier of a property. It seems that you only need to buy a house and then rent it out. But when you get into the details, it is much more difficult. Leasing your property for residential or even commercial purposes has its own set of difficulties. If you want to minimize the potential problems, you need to be aware of the most common mistakes first-time property leasers do. When you’re starting, here are some things you can do wrong when managing your property.
Not Getting Insurance
One big mistake that many new landlords make is to forget to take out insurance. There are two types of insurance that you need to get. One is to protect you while the other is to protect your property. Protecting yourself means getting liability insurance. This helps defend you against lawsuits and damages for any accidents that happen on your property. Without you around, the chance of an accident happening can be pretty high. The other type f insurance is property insurance. It protects you from damage to your property like your tenant burning the walls or breaking the pipes.
Many landlords skip on the insurance because the premiums can be expensive. But it can be worth it to avoid the financial hit of lawsuits and emergency repairs. There are some things you can do to lower the premiums, but the higher premiums are very helpful. Higher coverage can mean that you are ready for whatever happens to your property.
Skipping On Background Checks
It is very tempting to get lax with tenant screening. Being strict can mean your property spends a long time vacant, but it also means you don’t have trouble with your tenants. To properly screen your potential tenants, you should have a thorough procedure for it starting with questionnaires on their application form. Your focus should be to figure out whether they will be able to pay their rent on time.
Never allow tenants to move in without vetting them completely. They might offer to pay a deposit immediately, but the risks far outweigh the benefits. Once you get references and info from your potential client, start contacting them. You will immediately be able to determine whether their references are legitimate. You might even run a credit check just to be sure.
This may seem like overkill, but getting good tenants can be worth the effort.
Depending On A Handshake
As a new landlord, you might feel that everything is going to be nice and simple. You just shake hands with your tenant and then expect them to pay their rents on time. But that is a bad approach. Renting out property is a business, and you should take it seriously. Even if your tenant is a good person, it is better to have a legal document binding everyone.
It might seem like an additional expense, but it can be worth it. Lease agreements allow you to go in front of a judge and come out on top of any legal dispute. Consult with a lawyer to get a decent contract form created for your property.
As a landlord, it is your job to ensure that your property is in great condition. One aspect of that is to do an inspection. But it is not a legal obligation, so quite a few landlords let it go. However, a regular inspection schedule can be very good for your property and tenants. One reason is that you will be able to detect problems before they become really bad.
The best option for inspection is to have an expert come in and do it. For example, an EICR for any property is much better than you coming in and taking a look around the property’s electrical system. For one, it is much more professional. This means it is very thorough and complete. This allows you to pinpoint what needs fixing and to do it immediately. Another bonus is the certificate that you get from it. If your property’s electrical system is in good condition, that should help show it to everyone involved. Professional inspections should be what you should get to ensure that you know the exact state of your property.
Property management is more complex than you think. But it can be rewarding once you learn the ropes. Learning how to do it properly can ensure that you will be earning good money for years to come. With the right approach, you progress from your first property and start getting more.