Running a rental property management business is a challenging job for every landlord. Investing in real estate and leasing property to make a living or earn extra income can be quite rewarding when done carefully. So, landlords need to avoid certain common mistakes to keep out of legal issues and run their property management business safely and smoothly.
Here are some common mistakes that landlords should avoid to run their rental property management business successfully.
Avoid raising the rent
Many landlords hesitate to hike the rent with fear that good tenants may move out. However, you need to raise the rent whenever your maintenance costs and other expenses follows an upward trend. Most landlords raise the rent of their properties at regular intervals to cover the increased property taxes and maintenance rates. Some raise the rent annually, while some raise it when the lease is up for renewal.
Distinguishing the tenants
Make sure you treat all tenants equally without any discrimination. If tenant A pays $700 per month, so should tenant B for residing in a property of same area. If you have enforced no smoking rule, it must be applicable to all tenants without any discrimination. Failure to be equitable and fair with all tenants could make you vulnerable to a fair housing complaint.
Failure to carry out tenant screening
Often, landlords avoid conducting tenant screening and end up renting out their property to bad tenants. Never rent out your property considering mere appearance or high-standard lifestyle of a prospective tenant. Check the tenant’s employment history and record with previous landlords. Run a credit check and background check on every prospective tenant.
Asking wrong questions
Another potential harmful mistake that landlords make is asking wrong questions which can hamper their business. For instance, if you ask prospective tenants whether they plan to have kids soon then you could be breaking the law. Keep things completely professional and avoid asking personal questions to your tenants.
Being ambiguous on policies and procedures
Make sure all your policies and procedures are clear without any ambiguity. Clarify each policy including security deposits, rent payments, maintenance schedule, pets, parking, smoking, garbage pick-up, common areas, and other aspects that help you maintain property clean and safe. Explain your tenants how security deposits work. Let your tenants know clearly how you manage deductions when the tenants move out. Being clear with your policies will help you avoid confusion and issues, which otherwise may crop up later on.
Allowing tenants to pay rent late
Many landlords act leniently with their tenants by allowing them to pay rent late every month. Some bad tenants don’t pay the rent for months making it difficult for landlords to run their business smoothly and efficiently. So avoid being a lenient landlord. If the rent is due on the first, ensure your tenants are aware of it. Also, don’t allow partial rent payments. If your tenants are late in rent payment, follow through all the consequences that are laid out in your lease. Allow online rent payments or automatic payments to make it easier for everyone to pay and check the rent payment.
If you avoid these six mistakes when renting out your property, you can manage your rental property management business successfully and safely without any legal concerns.