If you are thinking of renting your property for the first time, you have come to the right place, because this article will discuss the top mistakes that you need to avoid. Let’s have a look at some of them:
1. You Overestimate the Rent Rates
It is seen that most of the landlords, buy a property, do some renovation work and increase the rent more than the given market price. Yes, renovations help a lot but you may not end up getting the price that you have anticipated. One good way to go about is to compare your property to similar ones before you get the renovations done. Once you the price as well as the response rate, you can set the rent accordingly.
2. You Don’t Start the Eviction Immediately
If your tenant starts paying late, you need to charge the late fee in the lease. Make sure that you don’t accept partial payments.
3. You Don’t Treat It Like a Business
When you rent your own property, it is a business, so make sure that you treat it that way. What landlords don’t realize is that it takes a lot of hours to deal with rental properties, especially if you are just getting started.
Similarly, furnishing a property can be quite expensive, when renting furnishings and appliances to deliver a fully furnished property may be more enticing and generate a higher occupancy rate. There are businesses like Renta Centre who provide a full range of furnishings and appliances for rent, that could also then be written off as a “business expense”.
4. Underestimating the Expenses
There are a lot of expenses that you will have to bear as a landlord. Sometimes, animals can destroy the property more than you can think. Some of the unforeseen expenses include water damage and replacement costs. One great way to deal with these issues is to create a budget and have a financial plan for expenses that you would be paying out of your own pocket.
5. You Don’t have Multiple Funding Sources
Most of the rental landlords put 20% down on their investment properties and then use the additional cash to improve the property. This strategy is good but it generally only benefits the bank. It is recommended that you use different types of financing like private loans, hard-money loans, bank financing, and equity joint loans.
6. Inadequate Insurance
It is important that you have an insurance policy so that it can protect you from a number of risks. It is recommended that you read the fine print carefully before entering the contract. It is a good idea to work with a specialist who will help you get the right kind of plan.
7. Asking People for Advice
One of the biggest mistakes that rental landlords can make is that they ask their friends and family for advice. The thing is that most of the people will have a horrible story to tell you. If you do want advice, get it from other professionals who know how the market works.
Renting real estate is a great business, but if you are just starting out you will make a few mistakes. The mistakes listed in the article are some of the most common ones that landlords make. So now that you know about them, you should avoid them in order to have a flourishing rental business.