5 Rookie Mistakes Most Landlords Make (And How to Avoid Them)
Mistake #1: The Price is Wrong
Pricing your rental isn't an exact science. There's no Goldilocks number that will be exactly right. That said, one thing is that it's not always smart to squeeze every last dollar out of your rental. Landlords should consider lowering prices a little to make the rental competitive. That way renters will see it as a good value, and it'll rent quicker, which means less vacancy and more income.
Mistake #2: Poor Legal Homework
There are many housing laws, from national to state to local, that apply to a rental. Not knowing these can get landlords into a lot of trouble, so education is key. Many community colleges offer landlording classes that can help get new property owners up to speed.
Some common legal missteps people make are related to fair housing. It's very important not to discriminate. For example, if a rental property does not allow pets, be clear that seeing eye dogs and emotional support animals are permitted. It's also illegal to rent only to people without children or to state that college students need not apply.
A good way to avoid running afoul of equal housing laws is to have written criteria for renters, such as:
- Income must be three times the monthly rent
- No criminal background
- No prior evictions
Mistake #3: Pulling the Trigger Too Quickly
Sometimes landlords are afraid to let their properties sit for too long. While it's important to keep an eye on price if interest is lacking, it's okay to take some time to find the right tenant. Frankly, the right tenant can make being a landlord really easy; the wrong tenant can turn it into a nightmare. Hold out for someone who fits a decided upon (fair, nondiscriminatory) criteria and it'll save a lot of headaches.
Mistake #4: The Listing Isn't Cool Enough
Marketing matters when it comes to rentals. The more information shared in a listing, the better. It's recommended to use lots of pictures and a strong description. Mention features of the home or location that will help people imagine themselves living there. For example: “Great deck for barbecues in the summertime" or “Hip coffee shop in walking distance." If people can envision what it's like to live in the rental, it'll move a lot faster.
Mistake #5: Jumping into the Deep End
Finally, it's easy to get excited about the possibilities of real estate investment, but landlords shouldn't jump head-first into the deep end before dipping a toe in the water. It's recommended to start with just one rental property. After the process is comfortable and landlording comes easier, expand from there.