Rental property remains one of the safest investments - even in times of economic uncertainty. However, as with any investment, landlords can make mistakes that end up being quite costly in the long run.
This is through no fault of their own, but instead a consequence of inexperience and a lack of guidance from agents. Even experienced landlords can fall into traps that can be difficult to get out of.
Here are the most costly and common mistakes landlords make, and how you can avoid them:
Screen tenants properly
Don’t rush to fill in a vacancy. Problematic tenants can cause property damage and miss rent payments, which can lead to significant costs for landlords.
As a result, it’s always better to screen your prospective tenants thoroughly before making a decision to lease to them. This will save you in the long run, and you might find yourself fantastic tenants that will stay for years.
Don’t underestimate maintenance costs
Always put aside a good amount in your budget for maintenance and repairs. If you do not fix issues that arise promptly, this could lead to much bigger costs down the line and unhappy tenants.
To be safe, set aside at least 1-2% of the property value annually for maintenance and schedule regular inspections so you can address small mistakes before they become large problems.
Secure your lease agreement
Use a detailed, legally compliant lease tailored to the latest legislation. Make sure you include all important clauses such as rent due dates, maintenance responsibilities, pet policies and penalties for late payment.
This is where you might want to get in touch with a lawyer so you can draft a lease agreement that protects both parties. It will save you from many headaches in future.
Plan for vacancy and turnover
There are many reasons why it can be difficult to find a tenant - or have one renew your lease agreement. This will inevitably lead to periods where you’ll need to cover the costs of the property yourself.
Tenant turnover also comes with maintenance costs, cleaning, and marketing expenses. If you don’t budget accordingly, even just one month of vacancy can significantly reduce your cash flow.
Owning property is a powerful wealth-building tool, but only if you follow the correct tips to stop yourself from incurring unnecessary costs.
