Nobody said becoming a landlord would be easy; however, many newbies totally underestimate how a “what-if” situation could sink your otherwise profitable property.
Chances are you've already done your homework or perhaps are already scouting potential locations to play the role of landlord. Maybe you've already pursued your LLC for rental property to keep yourself covered from a legal perspective.
While getting down to business and doing your research is a great start, ask yourself: do you know the four biggest pitfalls that plague new property renters?
If you're not sure, consider the following three landlord issues and how to deal with them swiftly should they arise.
Your Property Isn't 100%
Purchasing the “perfect” property is easier said than done. In fact, the concept of perfection is something that you might want to remove from your vocabulary as a landlord.
Think about it: there will always be some sort of catch when it comes to a piece of property's potential. From nagging repairs to less-than-ideal locations, there will often be something to compromise on.
That said, make sure to keep an eye out on repairs that are going to potentially cost a fortune. It's easy to get fooled by a potential rental property with amazing aesthetics only to find that the AC is on its last leg or there's a lingering mold infestation beneath the walls. For this reason, hiring an independent third-party inspector is an absolute must-do: the time and cost are well worth it in the long-run.
Your Tenants Are Total Nightmares
Similar rules apply when it comes to your tenants, too. Rarely will you ever host the perfect tenants, but from time to time you might find renters that are pretty darn close. Some small repairs and concerns here and there are fair game, but you shouldn't tolerate anyone who...
· Is consistent in terms of payment: after all, their failure to pay up directly impacts your own pockets
· Doesn't respect your property: letting your rental property go to the wayside is not on option if you want to keep to rent-worthy for future tenants
· Fail to communicate with you: an inability to communicate or respond to messages is a surefire sign of trouble
You're Drowning in Hidden Fees
Between the volatility of the market and mortgage and insurance costs alone, becoming a landlord can be a potentially costly affair. This is especially true if your eventual goal is full-time income from rental property. As a result, don't leap into anything too quickly and understand the concept of risk to keep yourself in the black.
To bring this all full-circle, don't simply jump on a good property deal due to the price tag alone: the hidden fees related to bringing that property up to snuff could be massive. On a similar note, don't blindly accept tenants because you want to fill your property at the cost of trying to replace them could likewise hurt your wallet.
Again, knowing exactly what to look out for can help you avoid so many headaches as a new landlord. Keep these tips in the back of your mind and stay diligent in your quest for income via rental property.