Investing can be a tricky business. Investing in property can be even trickier – it’s not simply about buying a property, you have tenants, maintenance and many other things to deal with. We’ve listed some of the common mistakes that landlords can make that end up costing them money:
- Poor Tenant Screening
Failing to thoroughly screen tenants can lead to unpaid rent, property damage and eviction costs. Always check rental history, references and tenancy databases.
- Neglecting Maintenance
Avoiding necessary repairs or maintenance can lead to more significant and expensive problems down the road. Regular upkeep is essential to preserve the property’s value.
- Setting the Wrong Rent
Overpricing can lead to extended vacancies, while underpricing can result in lost income. Research the local market and set competitive rents.
- No Written Lease
Verbal agreements or incomplete leases can lead to disputes and financial losses. A written lease should outline all terms and responsibilities.
- Ignoring Legal Requirements
Failing to comply with local, state and federal rental laws can lead to fines, lawsuits and financial penalties. Stay informed about your legal obligations as a landlord.
- Failure to Conduct Inspections
Not inspecting the property regularly can result in damages going unnoticed until it becomes costly to repair. It also enables you to get a better idea of whether your tenant is keeping up with their responsibilities with regards to the lease. Conduct routine inspections and address issues promptly.
- Inadequate Insurance
Not having the property insurance coverage can leave you vulnerable to significant financial losses. Ensure you have landlord insurance to protect your investment.
- Neglecting Security
Inadequate security measures can lead to theft, vandalism and property damage. It is also a requirement of the recently introduced Minimum Housing Standards that all windows and doors that are accessible without a ladder should have working locks. Invest in security features such as proper locks, alarms and lighting to protect your property.
- Ineffective Communication
Poor communication with tenants can lead to misunderstandings, disputes and legal issues. Maintain clear and professional communication with your tenants.
- Not Budgeting for Vacancies
Failing to budget for periods when the property is vacant can strain your finances. Plan for vacancies and have a financial cushion to cover expenses during such times.
- Discrimination
Discriminating against tenants based on factors such as race, religion, gender or disability can result in costly discrimination lawsuits.
- Inadequate Documentation
Failing to keep records of all financial transactions and communication with tenants can make it challenging to prove your case in disputes or legal matters.
- Emotional Decision Making
Making decisions based on emotions rather than sound business judgement can lead to poor choices and financial losses.
- Not planning for taxes
Failing to account for property taxes and income taxes can lead to unexpected financial burdens.
- Inadequate Marketing
Poor marketing can lead to longer vacancy periods and reduced rental income. Use effective advertising strategies to attract potential tenants.
- Lack of Property Management
Trying to manage properties on your own, especially if you have multiple investments, can be overwhelming and lead to mistakes. Considering hiring a professional property management company who can alleviate the burden of many of the items above.
Avoiding these common mistakes, staying educated and informed about landlord-tenant laws and seeking professional advice when needed can significantly help protect your investment and maximise your rental property’s profitability.
Errigal Property is a unique Brisbane-based property management agency that has blended property management with an experienced, licensed in-house maintenance team to save you on maintenance and repair costs. Brisbane’s most qualified Property Managers! Get in touch now to see the difference.