It doesn’t matter if you’ve owned rental properties for years, or you’re just getting started, there are rental property “pitfalls” that you want to avoid making.
In this article we will cover we will provide you with a list of rental property pitfalls that you don’t want to make.
Skipping Tenant Background Checks
Don’t base your decision whether or not to rent an apartment to someone solely on your impression of them when you’re showing the apartment, or whether the person can come up with the initial funds for the rental. Take the time to call at least two prior landlords, and pay for a credit and background check. In an hour or less, you’ll be removing a lot of potential risk.
Collecting Rent By Check
If you want consistent cash flow from your rental properties, the best thing you can do is automate your tenants’ rent payments. The days of one-off payments are numbered. Think about it: Do you still pay your cell phone bill or car loan with a check?
By automating, you’ll avoid any issues with well-intentioned tenants simply forgetting to put their rent check in the mail on time. If one of your tenants is having financial issues and misses their rent, you will know the moment their bank fails to send the automated payment, and will be able to follow up accordingly. And, you’ll collect rent on the day it’s due, not up to 30 days later.
Mismanaging Security Deposits
Many banks and merchant service providers have great solutions for landlords to help set up automated rent collection. While you’re setting this up, you can also look into systems that automate security deposit management. The compliance laws connected to security deposits are built to protect tenants, not property owners. This will save you a lot of headaches in paying interest on tenants’ deposits every year, bookkeeping and returning deposits to tenants when they move out. It’ll also make claims against the deposits easier to make and defend.
Going Off-Lease
As a landlord, stable tenants are your greatest asset. That said, just because you have a tenant who pays the rent on time, gets along well with neighbors and even does some maintenance themselves doesn’t mean you should be lax when it comes to renewing their lease.
Some landlords fear that making a tenant sign a new lease every year, and even issuing a rent increase, could make them rethink whether they want to stay in the unit. While this might be true to some degree, the alternative is far less favorable for you as a landlord.
While tenant law differs by state, generally, when a tenant goes off-lease they only have to give you 30 days’ notice before they leave. This could mean longer vacancies for you, especially if a tenant leaves during a time of year when people in your area don’t move as much. Also, you’re likely missing out on an opportunity to increase rent, which means your investment is underperforming.
Contact 36 North Property Management
Do you own rental properties in the area that need property management? If so, contact 36 North Property Management by calling us at (831) 484-4604 or click here to connect with us online.