For those who have an interest in investing in property or who are already owners, it's critical you avoid making common mistakes made by DIY landlords. We all know part of property investing is learning from mistakes. It's easy to believe managing property won't be challenging. However, many landlords discover it's more difficult than they anticipated.
Being a good landlord means understanding the legal requirements put forth by the state of Florida to protect both tenants and landlords. While some investors opt to use a property management company to handle things, many decide to rent their properties without help. It’s for that reason we’re going to discuss the most common mistakes made by DIY landlords and how to avoid them.
Mistake #1: Failure to Complete Background Checks
A significant issue is a failure to check references and perform background checks. Finding the right tenant means ensuring you're attending to these details because you want to:
- Check their credit
- Verify their previous addresses
- Speak with their past employers
- See if they're currently working and for how long
- Find out why they vacated their past residences
Mistake #2: Not Collecting Rent Promptly
When you fail to address unpaid rent or waive rental agreement breaches, you're too passive. As this occurs more often, tenants will begin walking all over you. Because tenants believe they can get away with this behavior, attempting to collect rents becomes frustrating and time-consuming.
The main reason is that you've set a dangerous precedent. In doing so, you may be unable to receive back payments.
Instead, you should:
- Be clear in your lease agreements regarding when rents are due
- Do not waive rental agreement breaches
- Always assess late fees to discourage late rent in the future
- Evict as stated in your lease
Mistake #3: Using "Cookie-Cutter" Rental Agreements
Generic rental agreements are available throughout the Internet. However, they don't provide a comprehensive set of conditions. They're also not specific for the property you're renting, and they also may not comply with Florida state tenant laws. Instead, you should:
- Use the generic rental agreement as a guideline
- Look up Florida tenant-landlord law to ensure you're in compliance
- Develop a rental agreement that is specific to your property
- Include clauses that are appropriate for your units, buildings, property, and the surrounding community.
Mistake #4: Not Researching Rental Fees
Landlords who over-estimate rental fees will have vacant units. Those who underestimate are losing money. Under most circumstances, landlords invest in properties as passive or a second income. However, after renovations and performing tenant searches, some landlords have an enormous amount of debt.
While improvements are a must when properties are deteriorating, they're expensive. The same is true for performing timely maintenance tasks. However, landlords must know what to charge their tenants and leverage that fee against their debt. Instead of guessing, they should research the market:
- Look at ads on Craigslist for units similar to what they're renting.
- Find listings in the local paper for competing units.
- Call real estate agents and ask them what the rents are for similar units.
- Contact a property manager and ask them for help with this detail.
Mistake #5: Avoiding Maintenance Tasks
If landlords aren't performing maintenance tasks promptly, they're going to lose tenants, or they're not going to pay their rent. Keeping tenants happy is the primary goal. Under some circumstances, landlords believe they can perform every maintenance task themselves. They make a list, start working, and it starts overwhelming them.
The jobs become difficult, or they don't have enough time to get to everything. Instead of hiring someone to help, they put things off. Renters want to know they can trust their landlord. However, if they believe things aren't going to be completed, they're going to leave. Instead of working in this capacity, landlords should:
- Complete small jobs themselves
- Hire contractors for tasks that will take longer than fifteen minutes
- Hire contractors when more than two calls come in per month for significant jobs
- Work with a property manager so they can help them work with tenants and contractors
Should You be a DIY Landlord?
While many landlords would like to handle their properties without help, it can quickly become overwhelming. As owners obtain additional rental properties, this is especially true. If you own one property, being a DIY landlord could be feasible.
However, if you’re an investor with multiple rental units or your properties are outside of your geographic area, it’s ideal to work with a property management company. They can help you avoid making common DIY mistakes, ensure you comply with Florida state law and will work with your tenants to keep them happy.
Green River Property Management can handle any issues that might arise related to your properties or tenants. With more than 15 years of experience, we've got the experience and knowledge to deal with a variety of problems. Click here to learn more about the services we offer today.
Do you need help managing a property? Schedule a call with Green River Property Management to see if our services are a good fit for you.