4 Common Mistakes for Property Owners to Avoid
Owning a rental property can be a great way to generate income and build wealth. However, property owners often feel alone, especially if they aren’t working with a management company or just starting out. Here are four common mistakes property owners make and how to avoid them.
What are the Most Common Property Owner Mistakes to Avoid?
- Failure to Understand Your Legal Obligations
Here are some of the legal obligations of being a landlord that landlords often disregard:
- Providing a habitable dwelling: Landlords are legally obligated to provide tenants with a safe, sanitary property that meets all applicable building codes.
- Making repairs: You’re also legally obligated to repair the property promptly. This includes repairs to the roof, plumbing, and electrical systems.
- Providing notice before entering the property: Property owners are required to give tenants reasonable notice before entering the property. This notice must be in writing and state the entry’s reason.
- Be responsive to tenant complaints: Landlords should be responsive to tenant complaints and make repairs promptly.
- Not retaliating against tenants: Retaliation against tenants exercising their legal rights is forbidden. This includes things like requesting repairs or filing a lawsuit.
Property owners who disregard these obligations may be subject to legal action by tenants. In some cases, tenants may be able to recover damages for their losses, including rent, moving expenses, and emotional distress. You should know the laws that apply to your locality and state landlords.
Furthermore, you should understand that landlords cannot discriminate against their tenants based on certain protected classes. As a rule of thumb, get everything in writing to prevent any issues from coming up later on.
Screening tenants is imperative to ensure your rental will be cared for and that your tenants will pay their rent. It is also the key to finding long-term renters if that’s your goal.
To screen tenants effectively, landlords should verify the following:
- Identity: Check the tenant’s Social Security number, date of birth, and driver’s license.
- Employment: Call the tenant’s employer to verify their employment status and salary.
- Rental history and creditworthiness: Check the tenant’s credit report and rental history reports. Ask potential tenants for at least five years of rental history.
To run a credit check on a tenant, you will need the following information:
- The tenant’s full name
- The tenant’s Social Security number
- The tenant’s date of birth
- The tenant’s current address
- The tenant’s previous address
You can use a credit reporting agency to run a credit check on a tenant. When choosing an agency, make sure it is reputable and reliable so you don’t get hit with surprise clients.
The agency will run a credit check and provide you with a report that includes information about the tenant’s credit history, payment history, outstanding debts, and any negative marks on their credit report.
Once you get this information, you can decide whether or not to rent to the tenant. It’s important to remember that a credit check is just one part of the tenant screening process. When deciding, it’s best to consider the tenant’s income, employment, and rental history.
Another mistake property owners make is not doing their due diligence before setting rent prices. There are quite a few negative impacts of neglecting research. Both can quickly lead to financial issues and rental tenant issues.
- Costly repairs can be hard to cover
- It might attract tenants with poor financial history
- You might not generate enough to cover overhead
- You may have problems filling units
- It will be more difficult for tenants to pay
- You get a bad reputation from tenants
The best way to determine the right rent prices is to research the rental market in the area. Effective and thorough research will help you set a rent that is fair to you and the tenants.
Here are some tips for landlords to avoid charging rent that is too high or too low:
- Research the rental market: Landlords should research the rental market in the area to determine the fair market rent for their property. You can do this by looking at comparable properties currently for rent.
- Consider the cost of ownership: Landlords should also consider the cost of ownership when setting rent. This includes the mortgage payment, property taxes, insurance, and maintenance costs.
- Be flexible: Landlords should be willing to negotiate rent with tenants. This may be necessary if the property is vacant or if the tenant is having financial difficulty.
Even if you have a great property in a desirable location, preparing for vacancies is important. This means having a good tenant screening process and backup plan for finding new tenants. It’s equally imperative to budget for property maintenance and repairs. This will help you to avoid costly surprises down the road.
Additionally, you must be attentive to your property and your tenants. This means being responsive to their needs and addressing any maintenance issues promptly. Owning a rental property is a business, not a hobby. If you don’t have the time or expertise to manage your property yourself, hiring a property manager is important.
How to Avoid Mistakes as a Property Owner in Central Texas
In conclusion, there are a number of blunders that property owners can make. By being aware of these mistakes and taking steps to avoid them, you can help ensure your rental properties are profitable and hassle-free.
Here are some of the key takeaways from this blog post:
- Do your research: Before buying a rental property, be sure to research and understand the local market. This will help you decide where to buy and what type of property to buy.
- Screen your tenants carefully: Once you find a property, it is important to screen tenants carefully. That way, you can avoid problems with late payments, evictions, and damage to your property.
- Be responsive to tenant requests: Once you have tenants in place, be responsive to their requests. This will help build a good relationship with your occupants and make them more likely to stay in your property long-term.
- Maintain your property: Maintaining your property will help attract good tenants and avoid costly repairs.
- Know your rights and responsibilities: As a property owner, it’s important to know your rights and responsibilities. This will help you to avoid legal problems and ensure you’re treating your tenants fairly.
Contact Our Experienced Central Texas Property Managers Today!
If you are a property owner in central Texas and need help avoiding mistakes, contact 512-Society Property Management today! We can help you with all aspects of property management, from finding tenants to handling repairs.
Call 512-990-3551 for more information!
About the Author: Jessica Duncan is the 512 Society Property Management Broker. She and her family opened the business in 2005 and has assisted more than 12,000 clients with professional and reliable management services. Call 512-990-3551 for more information.