Being a landlord and managing properties can be a lucrative business, provided that you know your way through it.
Once you have everything set up, you’re going to practically be earning passive income, which means that you won’t have to do a lot of work. However, this doesn’t mean that it isn’t going to give you some challenges.
In fact, a lot of first-time landlords make a lot of common mistakes when it comes to managing their real estate properties. So in this article, we’ll give you seven of the most common property management mistakes and how you can avoid them:
First things first, you should make sure that your rental rates are appropriate. If your rental rates are too low, you won’t be getting the profit that is worth your property.
However, the mistake on the flipside that a lot of first-time landlords will do is that they overestimate their rental rates. Then, they wonder why they aren’t getting many tenants.
Overestimating your rent rates mean that the people who can afford the type of property that you have won’t be able to afford to rent your property. Plus, your competition will have a lot more people wanting to rent to them instead.
Make sure that you look at other properties within your area that offer the same type of property that you have and check out their rental rates.
Since rental properties are usually passive income once you have everything set up, people might get lenient and forget about maintaining the property.
If you think that you’ve got a property for cheap and that it’ll be a cash cow for you, then you have to remember all of the maintenance that you need to do first before you consider how much profit you can make.
If you plan on expanding the number of rental properties you have, make sure that you also consider the maintenance you might need to put into a property. A property that might be cheap and will give you a big profit at first look might end up costing you an arm and a leg in maintenance alone.
Instead of biting off of a premade lease online and presenting it to your tenants, it’s better if you structure and write the lease yourself.
Although you would have to pay for a lawyer to help you craft one, the initial investment is going to save you from a lot of headaches once you get issues with your tenants.
What you should think about when writing your lease are mainly two things:
By setting these rules ahead of time and really taking the time to work on it, you’ll likely not have to worry in the future about problems with your tenants.
For a lot of landlords, especially those just starting out, they tend to just accept the first possible tenant that shows interest in their property. After all, a tenant means you have an income, right?
However, you should first consider whether or not the tenants are going to be a problem for you in the future.
By thoroughly screening your potential tenants, you can figure out which ones you’re fine dealing with. Aside from that, you’re going to be sure that you get your rental fees on time by making sure your tenants are reputable.
Another thing that first-time landlords might not know about is the importance of having a property manager.
Property managers from reputable companies are an expert and know the ins-and-outs of property management. Thus, hiring them will give one many benefits.
At Pedersens Property Management NZ, we emphasize the importance of saving time and helping property owners deal with their tenants. These are just some of the benefits of hiring a property manager. Not to mention that a property manager can help you handle the maintenance issues of your real estate property.
When it comes to managing your property, you have to make sure that you get the right kind of property insurance.
Often, people would choose the coverage that costs the least. Instead, what you should do is consider the type of coverage that best suits your property particulars so that you get the most protection possible.
Before you sign onto any insurance coverage, make sure that you figure out what it does first and not just sign up on the first thing you see.
For any first-time landlord, avoiding the mistakes listed above will ensure that you start your business off on the right foot. You skip the rough part of starting out as a landlord and can get to smooth sailing in a jiffy if you actively avoid them. Good luck!