With the media bombarding the general public airing tv shows on fixing up and flipping properties, many people are considering the idea of buying a house or condo that needs a little bit of TLC, making some minor to moderate upgrades and then putting that property into their local rental market. 

While this venture is often lucrative, it is important to know what you are signing up for, especially if you are new to being a landlord or the owner of a rental property. There are many different aspects to this venture and you want to make sure that you have all of your bases covered and know what to expect. Last minute surprises are the last thing you want. 

Some aspects of the rental market can be easy to overlook. Check out this list of common landlord mistakes to avoid and help save yourself a few headaches in the future.

An Over-Extended Budget

Before you sign any paperwork on the purchase of a new property, consider this. Do you have the finances to cover the mortgage and upkeep of the property if you have to? Many times investment property owners have tunnel vision and can only see the potential money they will be making when their new tenant starts making rent payments. But it is inevitable that there will be periods of time when there may not be a tenant in your unit. There are a variety of reasons this may occur; the local rental market, the vacancy period between your old tenant and your new tenant, or even a tenant’s unexpected departure due to a job transfer or their inability to pay due to a job loss. 

Make sure that you don’t get in over your head and that you have enough money to cover your own regular expenses plus all of the costs associated with the rental.

Not Properly Screening 

Even though an applicant may seem like the nicest person in the world, that doesn’t necessarily mean that they will make the best tenant in the world. While it may be easier to rent to the first person that inquires and applies, thorough screening practices are extremely important to ensure that you get a quality tenant in your unit. 

Take the time to do a background check, get references, and pay to have a credit check done. You will be glad you did.

Discriminating During The Screening Process

You may be the owner of the unit, but The Fair Housing Act requires that you cannot discriminate against anyone due to race, sex, nationality, handicap, religion or marital status. Be careful during the screening interview not to ask any questions that would violate this law.

Relying on Verbal Contracts

It is never a good idea to allow a renter to move into your property without a written contract. Having a signed lease in place is important to protect yourself from the unknown. People often remember a series of events differently and some of the details, such as rent amount or lease length could be misunderstood. Having everything in the legal lease will help protect you from a he said she said situation, where no one knows what the truth is.

Not Getting It In Writing

Make sure all communication with your tenant is documented. Having a per trail to follow will be imperative should you need to evict due to non-payment or it may protect you in cases of liability.

Keep detailed track of all rent payments, security deposits and other fees, so there will never be any question regarding what monies have been paid to each account. 

Underestimating The Maintenance Needs

Another common landlord mistake to avoid is underestimating the maintenance needs and cost that may arise. There are maintenance costs associated with owning any property, but as the owner of a rental property you are under contract to provide your tenants with proper upkeep of the unit or home. Be sure your operating budget is large enough to take care of installing a new water heater, roof repairs, or any plumbing issues that come up unexpectedly.

Not enforcing Your Rules

You may want to be the “nice guy”, but that is not the best way to operate the business of running a rental property. You must enforce the rules you set, such as when rent is due, if pets are allowed, designated parking, etc.  If you allow your tenants to bend the rules on some things, they will most likely try to test the limits in other areas as well. 

These common landlord mistakes to avoid are just a few to get started. Do the research to make sure that you are within all housing guidelines and that you are ready for the actual physical and financial responsibilities of managing this home, before you jump in.

If you have a property in Hollister, MO that you would like guidance on managing, call Thousand Hills Realty today. We are the premier property manager in the Branson and Hollister area and we would be happy to assist you. Call Today! (417) 337-8081