Pitfalls for New Landlords

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Sometimes, new landlords are way over their heads. The trick is to be prepared for whatever comes your way. And that comes from learning from others’ mistakes. Here are the most common pitfalls for new landlords.

Treating A Rental Poorly

This may be unintentional, but pay attention to your actions and the after effects of them. Failure to treat your rental as a business could lead to fines and legal trouble later. The IRS, authorities, and insurance companies are watching your behavior when it comes to collecting rent. Keep that in mind.

Doing Things Independently

You might want to think about hiring a property manager to assist you if you are just starting out. However, some property managers will not work with landlords who own only one property. To seek assistance, you could also view the National Association of Residential Property Managers, The National Apartment Association, or your state’s laws regarding rentals. The first two sources have directories dedicated to property managers and companies. Keep in mind that property managers sometimes do not advertise themselves, so you may have to dedicate time to find a good one.

Mixing Up “Rent” and “Mortgage”

New landlords often think that rent covers mortgage. This is false. Mortgage is an agreement made with the bank based on a loan, percentage put down, credit history, and market value at the time of sale. None of these factors affect rent. Mortgage is an investment and rent covers housing expenses.

Failing to Complete Background Checks

A nicely dressed person does not mean their background check is optional. Screen every possible tenant that comes your way. You’ll want to know whether a tenant has been evicted before, whether they have a criminal history, and whether they earn enough to stay in your rental. Property managers can be quite helpful with this. They work with background-investigation professionals that could benefit you – and save you headaches┬álater.

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