If you're like most people who have recently purchased residential rental property, you're probably excited about watching your investment grow in value during the coming years. Like many others who've found themselves in your position, you're probably also considering handling the details of the rental yourself rather than outsourcing the work to a professional rental management company. However, many first time landlords land in hot water when trying to navigate the often complex and time-consuming details involved in managing a rental property, and they often find that the rookie mistakes they make result in loss of income. Following are three mistakes new residential landlords make in their first year and how you can avoid them:
Renting to Friends or Family
Renting to friends or family can result in bruised relationships and financial loss for the property owner. For instance, some landlords are simply more reluctant to take necessary legal action against destructive or nonpaying tenants if there is a family relationship or social connection, so avoid this situation by telling interested friends and family members that you prefer to keep things between you and your tenants purely on a professional level.
Depending Too Much on the Rental Income
Even if your first tenant has signed a year-long lease or you live in an area with such a low vacancy rate that you're sure your property will always be rented out, it's always a mistake to depend too much on your rental income. This places you in a situation where you might not have the ready cash to pay for repairs in case something goes wrong or a tenant simply stops paying rent. Also, keep in mind that finding the right tenant may take a bit of time even in a tight rental market, so there may be longer gaps between occupancies than you planned for.
Handling Maintenance and Repair Tasks Yourself
Most new landlords have obligations other than managing their rental property, such as a full-time job or family responsibilities, and trying to squeeze maintenance and repair tasks into an already hectic schedule short changes everyone. You probably won't be able to leave work on a moment's notice when a water fixture in your rental springs an unexpected leak — it's best to use a local professional repair service that can deal with both emergency situations and routine maintenance tasks. A good way to avoid these mistakes is to hire a property management company — they'll know who to call to get things done quickly and correctly. Many repair and maintenance contractors often provide professional property management services with discounts. Contact a rental property management company for more information.