Becoming a landlord is an excellent way to become your own boss. It is, however, full of pitfalls. Every aspiring landlord should avoid each of these rookie mistakes. If you’re starting out as a landlord, make sure you avoid these
They Don’t Screen Tenants Properly
The tone of your apartment building will be determined by your tenants. Do you want to run a nice, quiet place, somewhere you can charge a little higher in rent? Then screen your tenants properly. You can start with an online rental application, but make sure you include a fee for background checks, and even require an employment verification. Call the tenant’s HR department at work. Check their criminal record. A tenant might seem great at the viewing, but you should never judge a tenant by your first impression.
They Get Taken Advantage Of
You might have an applicant pleading with you to ignore their credit score. You might have a tenant spinning you a long tale about why they can’t pay their rent this month. Hey, maybe that sob story is legitimate. But you’re in business, and it’s not personal. The grocery store doesn’t cut you a break when you forgot your wallet and give you food for free. Rent is due when rent is due. Period. The more leniency you give some tenants, the more they’ll take advantage of you.
They Forget They’re Running a Business
When a landlord starts a business on the side, with one or two small properties, it’s tempting to make that business a hobby. Where did that rent check go? I don’t need a receipt for that! If you forget that you’re running a business, you could make serious clerical or legal errors. Even if you only rent one property, keep a careful record of everything you do, and make sure your landlord business is shipshape.
They Don’t Get Everything in Writing
When you let your cousin rent apartment 201, the two of you might be excited about doing business together. And he’s a trustworthy guy? Right? Don’t close your deal with a smile and a handshake: get everything in writing. Unless you have it legally written down and signed, then you don’t have protection under the law. Better yet, don’t do business with your family. Tension runs high when you have to kick a cousin out.
They Don’t Know the Law
A rookie landlord might want to get revenge on a tenant by changing the lock on their unit, or turning off utilities until that tenant pays their rent. Tactics like this will leave you with an irate tenant, and they’ll also leave you in trouble with the law. Instead of using crazy tactics to get what you want, stick to the law. There are legal ways to protect your rights as a landlord: you can legally evict a tenant when they fail to pay their rent. As long as you stick to the law, you’ll be fun. Just make sure you know it.