Common Mistakes Landlords Make
Northern Colorado is a hot spot for renters of all kinds. Tenants can be anyone from college kids renting for the first time to single families who have lived here for years. This ready market makes property investment a popular venture. Owning and leasing property isn’t always easy though. Whether you’re a first-time landlord or someone with years of experience, here are some common mistakes landlords make. The one constant in property investment is there’s always an opportunity to learn.
Being a Landlord Is Not a Pastime or Hobby
Being a landlord isn’t an easy job, and it certainly isn’t a pastime. One of the biggest mistakes landlords make is thinking that renting out a property will be close to effortless. It isn’t as simple as listing a house for rent online and collecting that rent payment.
Leasing property is a business, which means you now have to operate like a business. You need to pay the right taxes, manage separate bank accounts for deposits and expenses, and maintain bookkeeping. There’s the inevitable maintenance calls which can happen at any time of day. Not to mention, tenant issues and legal compliance, like Fort Collins’ U+2 and 24-hour noise ordinance.
Being a landlord might be your side hustle, but it demands full-time effort.
Assuming a Property Will Always Be Rented
Like we said, renting out a property isn’t as simple as listing it online and getting a check every month. Colorado is a beautiful place with a high occupancy rate. It’s easy to assume a rental will have dozens of applicants within the first few days it’s listed. But you know what they say about assuming, and landlords are no exception to the rule.
One of the common mistakes landlords make is not erring on the side of caution when it comes to tenant gaps. If your property is habitable and reasonably priced, someone will submit an application. Competition or seasonality, however, can stretch out vacancies. Proper planning is key to any business. It’s important to have the funds to cover gaps in residence.
Not Being Up to Code
Of all the common mistakes landlords make, this one can have major impacts. Be aware of local codes and ordinances. Landlords must keep their properties up to date and well-maintained. You will have to meet building codes and safety standards as well. If the building doesn’t meet state and/or local codes, your tenant has every right to pursue legal action. Your tenant can break the terms of their lease, and can potentially sue you. If they get hurt due to negligence, you are legally required to provide compensation. Know your codes and keep your buildings safe!
Underestimating Maintenance Costs
Like budgeting for time without tenants, it’s also important to budget for repairs and maintenance. Appliances wear out and things build up in the pipes. When this happens it’s up to the landlord to solve the problem. Some maintenance needs can wait a few days. Other times will call for emergency repairs for which you will need to budget. Any landlords can attest to Murphy’s law: Anything that can go wrong will go wrong.
Sometimes these emergency repairs will happen at inconvenient times, like overnight or holidays. These repairs can be especially expensive.
Asking the Wrong Interview Questions
Asking the wrong questions during a tenant interview can lead you to some legal issues. Every landlord should know the ins and outs of the Fair Housing Act. A landlord cannot deny a tenant’s application based on race, religion, sex, etc,. Being intolerant and impolite—whether intentional or not—are mistakes landlords can make. The consequences can involve costly legal action.
That’s not to say you shouldn’t get to know your potential tenants or avoid screening interviews. Just be cautious and considerate. Research the Fair Housing Act and plan your questions carefully in advance.
Not Considering a Property Management Company
Being a landlord has a lot of perks, and we don’t want to take away from that. You get to work for yourself, mostly work on your own time, and more. One of the common mistakes landlords make, however, is not considering a property management company.
Property management companies aren’t for everyone, but there are benefits. We can take some of the responsibility from your shoulders, as the property owner. Property management companies allow room for collaboration. We have years of experience that you can use to your advantage. We also know how to leverage and market your property to make you more money. Especially for inexperienced landlords, you are likely not paying yourself enough. A property management company like Henderson can take care of everything for you.
Whether you’re a first-time landlord or a property investment tycoon, mistakes can always happen. While we’ve listed some common mistakes landlords make, we haven’t covered them all. If you have any questions or you’re interested in property management services, we’re here to help. Contact us today!