- Do your homework
when it comes to liabilities and responsibilities of being a landlord. It’s important you know what you need to provide in order to avoid lawsuits that can turn your positive cash flow into NO cashflow.
- Don’t create your own lease. Make sure the lease you provide to prospective tenants is accurate. If it isn’t it will likely be harder to litigate should a tenant violate the terms.
- Do hire a property management company if you feel managing the responsibilities might be more than you can handle. If you also have a full time job besides your landlord responsibilities, chances are you are going to need a property management company to ease the burdens that come with managing a property. It’s not as easy as simply collecting rent every month. Depending on the tenants and/or the property, this can be a bigger responsibility than you may think.
- Don’t get greedy by expecting to turn huge profits especially in the first year of ownership. This will tempt you to raise rents and push out good tenants. The biggest expense of a rental property is vacancy.
- Do show appreciation for good tenants. Sometimes it’s hard to understand how costly bad tenants are, until you have them. They can and almost always do turn any potential revenue into a loss. Evictions and/or lawsuits can be costly, not to mention a hassle. Avoid them at all costs.
- Don’t forego having the property inspected before buying it. An inspection will shed light on repairs that may need future attention so you can plan accordingly and/or negotiate the purchase more fairly. This is especially important for rental properties. If emergency repairs are necessary while tenants are occupying the property, this will create additional expenses if you have to pay for alternate living arrangements during the repair period.
- Do encourage tenants to provide their own rental insurance while occupying the property. Make sure they are aware of their own responsibilities as it relates to their personal property while renting your property.
- Don’t skip the walk-through both when the tenant moves in and when they move it. Do your own walk-through of the property and fix any minor things prior to the tenants moving in. Provide a walk-through inspection list and mark on it any items that you either plan to fix in the near future or that you are aware of that need attention. Ask them to walk-through the property and notate any issues they may find.
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