Becoming a landlord can be a very lucrative decision. However, if you go about it the wrong way you could land yourself in a world of hurt. Besides the physical labor of repairing damages by a rowdy tenant, your wallet and reputation could also take a hit if you don’t quite know what you’re doing. It takes quite a bit of know-how to be a successful landlord, and the tips listed below will help put you on the right track.
1.) Using the wrong forms. If you think you’re safe using the “generic” form you’ve been using for years, think again. State laws are constantly changing, and that form may no longer be valid in your state. In addition, you may be omitting quite a few pages of paperwork without even knowing it. Your best bet is to hire a real estate lawyer to look over everything to make sure you’re in the clear right from the start. This may cost a couple hundred dollars, but it’s well worth the thousands you’ll be saving in the end.
2.) Renting to the wrong tenants. And how exactly do you ensure you rent to the right tenants? Simple: do your homework. Do a background check and call their references. If you find a blatant lie on their application (they claim to have been at their current job for 5 years when they actually started just two weeks ago), don’t rent to them. If they’re willing to lie about something on their application, they’re most likely willing to lie about larger issues once they’ve moved into the residence.
3.) Not knowing our tenant’s rights. Your tenants have a right to privacy, so as much as you think it’s okay of you to show up unannounced, it’s actually illegal. Most states require that you give your tenants 24 hour written notice before showing up at their premises, unless of course they need you right away, which brings us to our next mistake…
4.) Ignoring poor living conditions. If your tenant has a leaky basement, you need to get over there and do something about it; now. That means either stay until 2:30 in the morning fixing it yourself or pay for someone to come in and do it themselves. If it’s your tenant’s problem, it’s your problem, no matter how difficult or inconvenient. That means if they need their locks changed, get over there in a day or so and get the job done.
5.) Lying about the amenities. Promising your new tenant a parking space or free cable and internet service means they expect that to happen upon the first day of moving in. They might be willing to let you slide a week or two if something is in the process of being set up or repaired (they’re repaving your parking space), but that after that it’s basically a violation of your lease and they are 100% entitled to walk.