subject: How To Avoid Making Mistakes As A New Landlord [print this page] Earning a passive income is everybodys dreamEarning a passive income is everybodys dream. This could probably be the reason why a large number of real estate investors are into rental properties. However, some of them make mistakes that could affect the profitability of their investment. Here are some of them:
Over-leveraging
While borrowing huge amounts of money when buying a rental property may be necessary, this could cause you trouble the moment a unit in your property is rented out or if you are faced with an emergency or unexpected maintenance. This is because borrowing as much money as you can means leveraging yourself out of a monthly cash flow.
Generic Rental Agreement Usage
Take note that using a generic rental agreement is not always recommended. Each state has its own special language and disclosures that should be included in the contract or lease agreement. To avoid problems with the lease agreement, you can use an online landlord form. On the other hand, you can also hire a consultant or attorney to help you with drafting the rental agreement. Take note that some jurisdictions require that an approved form be used for the rental agreement. Failure to use the required forms or include certain phrases mandated by state law in the agreement could render it null and void.
Failure to Screen Tenants
There are many bad tenants out there. This is especially common in low income rental properties. People can be financially responsible or irresponsible. To avoid those irresponsible ones, it is important that you do a thorough background checking first. Verifying their employment and rental history will help you keep away from those bad tenants. Remember that non-payment of rent is only one of the issues that bad tenants could cause. Damages to property could make you lose a lot more money than simply evicting a tenant that hasn't paid his rent for two months in a row.
Failure to Maintain the Property
It is important that you should take action on every tenants concerns. These concerns could include leaked roofing, non-working washer, and ants, among many others. Taking immediate action on tenant complaints will help you save time and money on maintenance as well as help keep you away from possible lawsuits. However, before doing the necessary maintenance work, make sure you have a trusted handyman check the property. Sometimes tenants may be overreacting. Proper maintenance is especially important if you own Boston Luxury Apartments, as tenants in luxury buildings will usually be a lot more demanding about the quality of their living conditions, which is to be expected as they are paying much more.
Renting apartments may seem like an easy, passive income stream, but there are a number of mistakes you could be making. Now that you are aware, avoid these mistakes as best you can.
