These are 5 Rookie Mistakes Every New Landlord Has to Avoid
It is possible to become a successful landlord, even in the current economic atmosphere. However, it is also possible to lose hard-earned money. There are no guarantees (otherwise we’d all be landlords!). The steps to success, especially as a beginner, lies in not making killer mistakes while reviewing your investment plan from time to time. Here are top mistakes to avoid.
Buying A Property with Your Preferences in Mind
This is a common mistake made by rookie landlords. That beautiful property that looks like a dream home to you may not attract any tenants. It looks like a home to YOU and not your target audience. You need to keep in mind your targets as tenants and then make sure you buy properties that will appeal to them, in the right areas. A tenant in their twenties will not be interested in a cottage in a rural area regardless of how beautiful it might be.
Although we’d all wish for it to be true, you can never tell good tenants by simply looking at them. Even if they look great or are known within the area by people close to you, it is important to thoroughly vet your tenants or your career as a landlord might be over before it has even begun. When your tenants default on payments, you still have to meet up with mortgage repayments or you could be facing repossession. Credit checks, bank statements, proof of income a reference from a previous landlord and more are all ways to ensure you are getting a good tenant.
Ignoring the Paper Work
Becoming a landlord comes with its fair share of red tapes that must be negotiated. If you neglect them, you could be dealt a big blow in your journey to becoming a profitable landlord. You need to know your tax obligations, get your multiple occupation license, understand electric and fire safety obligations and a lot more. The process is time-consuming but it is an integral part of becoming a landlord.
Not Working With a Good Managing Agent
Some landlords employ unqualified managing agents or do not use any agents at all. You can get away with this if your property has a one or two tenants in them. With multi-occupant properties, you need a more robust management process in place especially if you are living far away from the property. Your property needs to be looked after, with all problems solved in a timely manner. The best management agents know how to schedule regular inspections and will help you to keep tabs with your legal obligations. Your management agent will also know the right notices to serve at any point in time and the best way possible to do it and remain within the law.
The process of becoming a successful landlord sometimes feels as though you are negotiating a landmine. However, if you can avoid these rookie mistakes in the early days, you will be well on your way to succeeding where others have failed.