Choosing to become a landlord isn’t a decision you should make lightly. It comes with a lot of monetary potential. It also comes with the potential for failure. Here are five of the most common mistakes I see landlords make and how you can avoid them if becoming a landlord is in your future.
1. Skipping out on the screening process. This is one area where you don’t want to trust your instincts. Don’t go off of a referral and don’t get emotionally attached after getting drawn in by personal stories. You need to do a full background check, credit check, and verify their income.
2. Not having the property ready for new tenants and overpricing. These two go hand in hand. The home should be clean, repaired, freshly painted, and move-in ready. You should also be careful about overpricing because prospective tenants will just move on to the next property if your rent is too high.
3. Breaking the law. No landlord intentionally breaks the law, but a lot of them do it inadvertently. If you give your tenants a 30-day notice to vacate the home when their lease is up, guess what? You just broke the law! You have to give them a 60-day notice. I know a landlord who insists on only having female tenants. He’s breaking the law too. You can’t discriminate based on gender. That’s a fair housing violation. The punishment can be severe, as damages could reach $100,000.
Remembering these things will keep you out of hot water.“
4. Not requiring renter’s insurance. If there is damage that could have been insurable but the tenant doesn’t have insurance, they will likely come after you for damages. We avoid this problem by requiring all of our tenants to have renter’s insurance. If they don’t get it themselves, we purchase it for them and bill them for it.
5. Not handling the security deposit properly. This is the most contentious area of property law and the one situation where you might find yourself in small claims court. When the tenant moves in, make sure you do a complete walkthrough with photos and video, have the tenant sign off on the condition, and repeat the process when they move out.
If you remember these five things, you should keep yourself out of hot water. If you have any additional questions, don’t hesitate to reach out via phone or email. I would be happy to hear from you.