Becoming a landlord sounds like a very good idea. You buy a property which then becomes an asset. Then you rent out that property to somebody else and hopefully make a return on your investment. It all sounds so simple; you might think there was a catch.
Well, you’d be right. The problem is that people are involved. And when people are involved, things can quickly go pear-shaped, and you can start losing a lot of money. That’s when things start to get stressful, and you begin to wonder why you ever became a landlord.
By the end of this article, you’ll be much more informed about the common pitfalls of new landlords. And hopefully, you’re a lot less likely to suffer than those that have come before you.
Failing To Account For Your Time
Being a landlord is time-consuming. You’ll spend hours each month dealing with the rental agency or the tenants. And you may find that you have to sort out broken down boilers and dishwashers that have stopped working.
The question that you have to ask yourself is is the return on renting out a property worth your time? Often you’ll find that you could have made more money if you’d done something more productive, like work an extra day in your day job.
Failing To Run Background Checks
We’ve all seen those nightmare tenants who don’t pay, refuse to leave until the last minute, and then take all your fixtures when they leave. It’s why so many landlords opt for guaranteed rent through a third party company.
If only landlords ran comprehensive background checks on their tenants. Things like looking at their most recent pay stub can help you decide if they have the capacity to pay. Furthermore, you can look into their credit rating and ask questions about why it may have dipped in the past.
Neglecting The Property Regularly
It’s not just the tenants that are the problem when it comes to renting. Often the landlords themselves neglect their properties.
This, however, is not a good idea. For one, you’re going to end up with a lot of phone calls complaining about the quality of the flat. You’re going to get called up at unsociable hours to come and fix the shower or the boiler.
But there is a solution. Before putting the property on the market, make sure that everything works. In other words, would you be happy to live in your own property for a week? If you wouldn’t, sort out the problem today. It’ll only get worse once the tenants move in.
Not Creating A Legal Contract
Long gone are the days when a simple handshake and trust would seal rental agreements. Now it’s essential that landlords have a formal, legal document that sets out the rental agreement.
Amazingly, some landlords still don’t do this. And so when they don’t get their rent, there is little they can do to recover it. Without a contract signed by the tenants, you’ll have a hard time enforcing the terms in court. So get a contract drawn up and signed so that both parties know what is expected of them.