Have you just bought an investment property and are thinking of managing it on your own? This can be a very rewarding endeavor!
Keep in mind that managing a rental property is no small feat. From finding tenants and screening tenants to responding to maintenance complaints and dealing with tenant issues, managing a property can be stressful and time-consuming. That said, you can still manage it successfully if you implement the right strategies. In today’s article, we’ll share with you 7 mistakes to avoid as a new landlord.
1. Not Requiring Tenants to Sign a Lease
This can be a grave mistake. A rental agreement is a legally binding contract between a landlord and a tenant. It highlights the rights and obligations each party has for the duration of the leasing period. It also outlines important policies that both parties must abide by.
Without having a written legal contract with your tenant, it’d be nearly impossible to enforce any rules. You’ll want to for instance include policies on rent collection and what happens if a payment is late or missed. Create a lease agreement that clearly states your expectations of the tenant. This will go a long way in minimizing potential conflicts and misunderstandings during the tenancy.
2. Not Inspecting the Property Periodically
Even after finding a tenant, your property’s habitability is still your responsibility. While tenants have certain maintenance responsibilities including reporting issues, you, as the landlord, must ensure that the property meets building, health, and safety codes.
Routine rental inspections will help you know whether or not your property is in great shape. You’ll also know whether or not your tenant is caring for it as required in the lease agreement. What’s more, with frequent inspections you’ll be able to spot issues early before they become more costly. Keeping up with the property’s maintenance and inspections will result in significantly fewer calls and a happier tenant.
3. Not Beginning the Marketing Process Early
Vacancies are profit killers. Every day your property sits vacant, its money down the drain. As a savvy landlord, your goal should be to keep vacancy periods between tenants as minimal as possible. Usually, tenants must provide notice prior to moving out. In the state of California, for instance, month-to-month tenants must provide their landlords with a 30-day advance notice prior to moving out.
Once your tenant serves you such a notice, begin making plans on how you’re going to find a replacement tenant. Create a rental ad and advertise it extensively. Then, begin the tenant screening process to choose a qualified long-term tenant. This will ensure you have an as little downtime as possible, thereby minimizing potential losses resulting from vacancies.
4. Not Evicting a Tenant According to the Law
The California landlord-tenant law is clear on this matter. The only way to evict a tenant from your rental property is through a court order.
You cannot try to evict a tenant in any other way, such as trying to remove them by:
- Shutting down their utilities
- Locking them out
- Removing their personal belongings from the unit
To start eviction proceedings against a tenant, you must first and foremost have a valid reason such as nonpayment of rent or violation of the terms of the lease agreement. Next, you must serve them a proper eviction notice. Depending on how they answer the eviction notice, you can choose either to continue or stop further eviction actions.
5. Not Screening Prospective Tenants
As a landlord, your ultimate goal is to see a steady return on your investment. But, you are only going to achieve this if you’re able to get the right tenant. The following are the qualities of a great tenant:
- Pays rent on time
- Cares for the unit
- Notifies you when maintenance issues occur
- Honor all terms of the lease agreement
To land such a tenant, you need to have all prospective tenants undergo a meticulous tenant screening process. Among other things, do credit and background checks to ascertain whether a tenant is going to be reliable.
6. Not Responding to Maintenance Issues on Time
As previously mentioned, you are responsible for providing your tenant with a habitable rental property. In California, the following are a couple of things that make a property habitable:
- Running cold and hot water
- A working HVAC system
- Properly operating windows and doors
- Adequate garbage receptacles
- Proper stairs and railings
- Fire exits, alarms, and smoke detectors
You must also respond to maintenance requests from your tenant within a “reasonable” amount of time. Failure to do so gives your tenant the option to withhold rent payments or make the repairs themselves and then deduct the cost from future rent payments.
7. Not Providing Your Tenant with the Required Disclosures
Landlords are required by both federal and state law to provide their tenants with certain disclosures prior to them moving into the property. In California, the following are just some of the disclosures you’re obligated to provide a tenant:
- Disclosure on the use of lead-based paint. This is required of landlords who rent out properties built prior to 1978
- Disclosure on bed bugs. Be sure to follow the specific language as specified under state law as well
- Documentation about any known mold
- Disclosure of knowledge of asbestos
- Disclosure of how utility fees are going to be applied and how they will be divided up
- Failure to provide these disclosures could result in financial and/or legal repercussions.
Becoming a successful landlord is based on skill, experience, market knowledge, and hard work. If you find it daunting, the team at Home Choice Property Management can help. We help property owners in Southern California take care of their investments in a worry-free way thanks to our ten years of experience and quality rental management services. Get in touch to get started today!