Just getting started with owning rental properties? Don’t make these “rookie” mistakes
Are you just getting started with owning rental properties in the Central Valley? If so, you’re not alone!
Many people have purchased their first rental properties over the last year thanks to low mortgage interest rates and affordable home values in the Central Valley but they will also make rooking mistakes.
If you’re serious about generating long term income from your rental properties, this article will provide you with valuable tips that you can use to avoid making rooking mistakes.
Landlord Mistake #1:
Undercapitalization
It’s extremely common for enthusiastic new property investors to overextend themselves to acquire property. However, this leaves them without adequate cash reserves to tackle emergency maintenance or survive vacancies. Many landlord mistakes, such as a failure to invest in preemptive repairs, sufficient insurance, or marketing efforts, stem from this basic problem.
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Landlord Mistake #2:
Being a Soft Touch
“I let the marginally qualified tenant in because they seemed so sincere and needed someone to give them a chance.” My advice is to get the best tenant you can for the area (even if you have to drop the rent a bit to do it). Run their credit, call their references, and don’t be afraid to say ‘no.’
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Landlord Mistake #3:
Missing Move-In Season
Statistically speaking, apartments that are vacant in October could be vacant for months. In most areas, the best time to lease is the summer. People don’t move much during the holidays; so once September comes, it might make more financial sense to cut your rates than to risk a vacancy. If you have a current tenant, don’t let your lease go month-to-month in the fall.
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Landlord Mistake #4:
Being Too Lenient
You can generally cut some slack to a tenant who’s already proven him- or herself. However, many landlords report that when their expectations are too lenient early in the lease, tenants come to expect that kind of flexibility in the future.
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Landlord Mistake #5:
Going Without a Lease
No veteran landlord will advise you to rent a property on a handshake. Get a professional lease agreement. Have an attorney look it over and identify potential trouble spots, or hire one to write it for you.
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Landlord Mistake #6:
Failing to Treat Your Rentals as a Business
This problematic mindset can take many forms. The most dangerous is probably the failure to use entities to protect yourself from potential liability. You’re taking a big risk when you own the property directly, in your own name, instead of via a corporation or limited liability company (LLC). Other dangerous landlord mistakes include commingling personal and real estate operating funds, poor bookkeeping, renting to friends and family, and failing to invest in expert legal and accounting advice when needed. Learn more here!
Get Property Management Here
For professional property management contact RPM Central Valley today by calling us at (209) 572-2222 or click here to connect with us online.
