Your property is your most important asset; it can serve as an investment and return massive capital. Investing in real estate is a very smart move, and though it may seem easy to become a landlord, there are risks and challenges involved.
Owning a property is not all about collecting rent; this is why some landlords are prone to make certain mistakes. With this guide, you will know the first mistake and many other ones most property owners make, enabling you to prevent making the same mistake.
The First Mistake Most Property Owners Make | Common Mistakes Most Property Owners Make
Here, we will not only be highlighting, but we will be discussing the common mistakes most property owners make.
#1 Not Having the Property Insured
This is the first and most common mistake most property owners make; not insuring the property. When most landlords think of the cost of insuring their property, they withdraw from it.
Even if you are getting your property insured, you must ensure you get the right insurance plan.
When doing this, try as much as possible to get suitable coverage of property and liability insurance for your property. If you are new to this, you should contact a licensed insurance company.
#2 Believing the Property Will Always Be Rented
This one is a very popular mistake most property owners make. Before finalizing the deal, make sure you do an accurate estimate to make sure you can cover the mortgage in case there are no renters for months. It is best to prepare for the worst; in this case, if you are prepared, you won’t be too bothered about foreclosure and bankruptcy.
#3 Failing to Appropriately Screen Potential Tenants
No matter how anxious you may be, even if it is your first time and your first tenant, take the due process and properly screen the tenant. Check and crosscheck all your tenant’s credentials. One method to acquire the required information from your tenant is through a rental application form.
After acquiring the needed information and details, you should verify them. It is also important you verify their references too; employers, colleagues, and previous landlords.
Don’t feel pressured even if the tenant claims he is so eager to make payment and move in. Make sure you properly and adequately screen them.
#4 Not Creating and Implementing Solid Terms of Lease or Rental
Most property owners are fond of this. Though some of them list out these terms of lease or rental, they fail to implement them. This is common in cases where the landlord is familiar with the renter. If you believe you trust the renter, then having them sign the terms of the lease should be quite easy.
After signing the agreement, they are left to live by the terms, or they face the penalty for violation. If the terms state that there must be no pets or animals on the property, then the tenant mustn’t bring one onto the property, and if they do, they should be penalized.
#5 Failing to Meet Up with the Standard Housing Codes
You must make sure your property is met with the federal, state, and local housing laws set by the government. This is most especially in terms of the safety of the property. This is where preventive maintenance comes in. It is normal for a property to deteriorate or diminish, but some measures can be taken to keep it up to standard.
Mistakes are unavoidable. But when you are informed or aware of certain mistakes, they are very easy to avoid. Here, you have seen the top 5 common mistakes most property owners make. If you are a first-time landlord or an aspiring one, you are very liable to make such mistakes, but be sure to avoid them with this guide.