JAN 25, 2023
Regardless of what all the hype on social media makes it out to be, being a landlord isn't an easy job to begin with. It's incredibly rewarding, but comes with its own set of challenges. Continue reading below to see the top 5 mistakes we see most new landlords making.
Crunching numbers on a deal isn't hard, as a matter of fact it's probably the easiest thing to do when analyzing properties for investment. A lot of investors make the mistake of assuming that if they purchase a vacant property, they'll be able to rent it out right away. Even properties in desirable neighborhoods take due diligence and time before being filled with a tenant. You should account for a percentage of your overall monthly expenses to be attributed to vacancy when crunching your numbers.
Are you aware of what the Fair Housing Act (enforced federally) dictates? Most new landlords don't. A quick summary: There can be no discrimination in regards to race, skin color, sex, nationality, orientation, disability, or family status. We advise new landlords to be mindful of the rules around discrimination in order to avoid the risk giving any tenant grounds to sue you for discrimination.
Your property, regardless if it's a single family or a large apartment building, is a business. One of the mistakes we often see new landlords making is running their business like a hobby they do on the side. When you run a property like a business, you'll have separate systems, accounts, rules, and policies in place that make it easier to deal with unexpected scenarios. One of the symptoms of running your real estate business like a hobby is being too lenient with tenants and not enforcing the terms of the lease.
If your property is a business, your tenants are customers. And no customer will be satisfied with a business if they feel like they aren't taken care of after paying the price you're charging. Everything in the home is mainly going to be the landlord's responsibility to maintain (unless caused by tenants' recklessness) — it's a good idea to regularly check in with tenants, while being minimally invasive, to ensure the property meets everyone's standards of living.
New landlords often overlook a core aspect of real estate investing… you need to maintain your properties on a regular basis in order to keep everyone happy (and paying). You should expect to calculate a portion of your monthly revenue aside to put towards ongoing expenses and maintenance such as plumbing issues, heating tune-ups, etc. Often times, new landlords are surprised when they have to pull money out of their own personal funds in the first year or two of owning a property to maintain it — that's a sign that you were over-optimistic on what the ongoing costs of ownership would be.
This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
