Don't Make These 5 Common Rookie Landlord Mistakes

June 1, 2016

For many people, renting out a property seems like an attractive way to make extra money or pay off a mortgage more quickly. The reality, however, is that it requires a lot of time and effort to succeed in the rental market. During our many years of working in property management in Christchurch, we’ve seen rookie landlords make the same mistakes over and over again. If you’re a new landlord, it’s important that you learn as much as possible to protect yourself and get the most from your investment. In this article, we’re going to tell you how you can avoid some of the most common mistakes made by rookie landlords. 

#1 - Thoroughly screen prospective tenants

Renting your property out to carefully screened tenants is the best way to protect your investment and ensure that you receive rental payments on time. While there are plenty of great tenants looking for rentals in Christchurch, there are also plenty of irresponsible tenants out there. The best way to find good tenants is to adhere to a strict tenant screening process that should include an application, reference check, and in-person interview. We also highly recommend that you conduct background and credit checks of prospective tenants. For a fee, service providers who have access to national databases can perform credit and background checks for you. It’s also a good idea to avoid renting to family or friends as you may find it difficult to be strict about the application process or following up on violations, if they occur.

#2 - Inspect rental properties and perform maintenance regularly

Before a tenancy commences, it’s important to conduct a detailed inspection of the property. During the inspection, many photographs should be taken and an inspection report should be completed – often referred to as an ‘Initial Inspection Report’. The tenants should be asked to review and sign the report before returning it to the landlord. A signed copy should be retained by both parties. This report provides an agreed condition of the property at the beginning of the tenancy and is then used as a benchmark for all other inspections throughout the tenancy.

 You should also plan to conduct routine property inspections, which are important for two reasons. First, they keep you in  control of your property and allow you to address any tenant concerns sooner rather than lately. Second, they give you the  opportunity to address maintenance issues promptly. By keeping your property in good condition, you’re more likely to  retain your tenants and avoid hefty maintenance work between tenancies, which can be costly and prevent you from  keeping your property constantly occupied.

 #3 - Address rent arrears immediately

 When tenants are late with their payments, it’s important that you follow a strict protocol on collecting payment. Many  rookie landlords feel uncomfortable addressing and enforcing rent arrears, but it’s better to be firm from the very beginning.  When tenants realise that their landlord won’t make them pay on time, they are more likely to fall behind on subsequent  payments. Remember that you are running a business and must treat it as such.

#4 - Document everything

Rookie landlords are more likely to rely on verbal agreements and handshakes when an agreement is made. If things go awry, you’ll need documentation to show what was agreed to. In addition to getting everything in writing, we recommend that landlords also take photographs to document repair work that has been done, the state of the house at move-in and during routine inspections, and to record any damage caused by tenants.

#5 - Be mindful of market changes

It’s very important that you stay aware of changes in your local rental market. Right now, for example, there is a surplus of rental properties in Christchurch. In the past, landlords would have a pool of applicants to choose from, but the surplus means that it’s getting harder to find good tenants this year. It’s also important to be aware of the market to ensure you are charging the appropriate rent. Experienced landlords tend to rent their units at just under the property’s actual rental value. This helps ensure that their units will enjoy high occupancy rates, which is better for their bottom line in the long run. Rental values fluctuate, so it’s important to stay abreast of these changes.

First Avenue Property Management can help

If you’re guilty of making some of these mistakes, it’s not too late to change the way you’re operating. For some rookie landlords, however, it can seem like a lot of work to properly rent out their units. In these instances, landlords may choose to work with a property management company like First Avenue. We follow industry best practices to ensure that our clients are getting the best return on their investment. To learn more about how we can work together, please contact us today.

 

Imagery:

House/Property Inspection by Mark Moz, CC BY 2.0

Pen and paper by Francois Schnell, CC BY 2.0

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Filed under Property management

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