Even landlords can make mistakes, and it’s not exactly uncommon. However, like in many situations, these are best avoided to improve efficiency and reduce costs. In fact, some mistakes might cost you more than others. Whether you’re a new landlord or not, learning what practices you need to avoid can benefit you greatly.
Key Highlights:
- Delaying repairs can turn minor issues into major, costly damage, making prompt maintenance essential for protecting your property.
- Skipping tenant screening increases the risk of unreliable renters who may cause property damage, violate lease terms, or miss rent payments.
- Failing to enforce lease rules sets a negative precedent and can lead to ongoing tenant disputes and property issues.
- Hiring unqualified contractors and keeping outdated appliances can result in higher expenses, inefficient operations, and avoidable future repairs.
- Landlords can prevent expensive mistakes by maintaining cash reserves, conducting preventive maintenance, consulting professionals, and enforcing rules consistently.
Delaying Repairs
Small issues like leaks and electrical problems need to be addressed as fast as you can, while they are still relatively small issues. Neglecting them won’t make them go away, and they can even get significantly worse.
Small leaks can lead to flooding, which can erode the foundation of your property. Wiring issues can result in electrical fires that could reach a large portion of your rental property. There are a great number of problems that can worsen if you don’t choose to fix them once you find them.
Skipping Tenant Screening
Tenant screening is not as expensive as one might expect. It can typically cost you around $25 to $60 for credit, criminal, and eviction history checks. Some landlords skip this step, especially if they have a multi-unit rental property.
That’s where everything can start going wrong. Without screening potential tenants, you won’t know which ones are reliable. You could end up getting renters who won’t follow your lease rules, fail to pay rent, and cause property damage.
Not Enforcing Lease Terms
Lease rules are established for a reason. They help create a peaceful living environment for landlords and tenants alike. When one breaks the rules, that peace can easily be disrupted. Failing to enforce these rules when someone breaks them will only make it worse.
For one, the problem will continue to cause tenant and property issues when you ignore them. Second, it sets a bad precedent for other tenants, who may think that breaking rules won’t result in any consequences.
Hiring Unqualified Contractors
Just because a contractor is licensed or known in their trade doesn’t mean they are reliable. Some contractors do just a good enough job to appear resolved, but the fix won’t hold for long. Do your due diligence and research the professional you’re hiring.
When an unreliable contractor does the job, you’ll end up having to hire someone else, doubling your expenses. You’ll also have to account for downtimes while the repairs are ongoing, which will impact your rental income.
Keeping Outdated Appliances
Outdated appliances are money pits in more ways than one. They consume more electricity due to the wear and tear on the components, outdated technology, and inefficient insulation. In general, the appliance will have to work harder to maintain its level of functionality.
Newer appliances, on the other hand, are more efficient simply because they were built that way. Some models even have automation features, where it can automatically reduce energy usage when not in use, and users can remotely turn them off.
Self-Managing Without Experience
Efficient property management is the key to smooth operations. Every aspect is affected by how you handle your rental business, and even the smallest mistake can snowball into bigger problems. Without experience, it’s easy to make these missteps.
Many real estate investors recognize their potential shortcomings early on, so they either consult or hire professionals in their respective fields, such as real estate agents, tax professionals, lawyers, and property managers.
Bad Marketing
You need rental income to keep the business running, and that comes from tenants paying rent. Without proper marketing, your rental units can stay vacant for long periods of time, and your expenses will catch up to you.
The right marketing strategy can help your rental listings gain visibility as you reach your target market. This can be achieved by utilizing readily available tools and platforms, as well as conducting rental market research. If you’re unsure how to do those things, you can always hire a professional to market your property for you.
Preparing for Expensive Mistakes
While risks can be mitigated, it’s still important to be prepared for anything. Many landlords do the safe thing and keep cash reserves for a rainy day, which can cover matters like emergency repairs, vacancy periods, and natural disaster-caused damages.
As a rule of thumb, your cash reserve should sustain your rental business for at least three months, meaning it can cover operating expenses, vacancies, large repairs, unexpected property damage, and eviction costs. You can also allot $5,000 of repair reserve per door to leave more breathing room for other expenses in your rental property.
How You Can Prevent Making Expensive Mistakes
Preventive measures can be implemented to avoid costly mistakes, and they are always advised, whether you’re in a good business position or not. For starters, you need to:
- Consult professionals. There are many experts in the field who can help you with certain aspects of property management. A contractor, for example, can recommend efficient ways to maintain room temperatures without overworking your HVAC system.
- Conduct preventive maintenance. Your rental property can effectively reduce potential instances of damage and mishaps when you tackle the issues before they happen.
- Do your research. There are plenty of blogs and forums that can give you the information you need to run an efficient rental business. You’ll learn from mistakes others have already experienced for you.
- Enforce lease rules. Being lenient may make you seem like a friendly landlord, but your property will suffer as a result. Always enforce lease rules, as it will also show other tenants that you are not tolerant of misbehavior.
Common Landlord Mistakes FAQs
Why is delaying repairs such a costly mistake for landlords?
- Small issues like leaks, wiring problems, or minor structural concerns can quickly escalate into major damage if left unaddressed, resulting in expensive repairs and potential safety hazards.
What happens if I don’t enforce lease terms?
- Ignoring violations encourages repeated behavior and sets a bad example for other tenants. This can lead to disputes, property damage, and a decline in the overall living environment.
How can hiring unqualified contractors impact my rental business?
- Unqualified or unreliable contractors may perform poor-quality work, forcing you to pay for repairs twice and causing longer downtimes that affect rental income.
What are the risks of managing my rental property without experience?
- Self-managing without knowledge of laws, maintenance, or operations increases the likelihood of mistakes that can lead to financial loss. Many landlords rely on professionals like property managers, lawyers, and tax experts for support.
What steps can landlords take to prevent costly mistakes?
- You can prevent expensive issues by consulting professionals, performing regular preventive maintenance, researching best practices, and enforcing lease rules consistently.
Let Us Help You Avoid Risks
Yellow Keys Realty can offer you expert property management to reduce or even completely prevent costly mistakes. With vigilant property management and industry expertise, your rental business will be in safe hands.
We want the same thing as you do. Our company aims to make your investment property as profitable as possible. Whether you’re a seasoned landlord or not, a helping hand can greatly benefit your property.
Contact us, and we can discuss how we can help your rental property thrive.