People enter the rental property business for various reasons.
Some aim to leverage multiple rental properties to draw a full-time income, while others may rent out a couple of homes to diversify their income streams.
Others still, may rent out their condo, townhome, or house to increase their revenue or offset their cost of ownership. Such costs may include mortgages, property taxes, etc.
Whether you plan to rent out one rental property or several, you should avoid some critical errors. A bad mistake can significantly impact your rental property business, costing you time, money, and peace of mind.
Mistake #1 Buying the Wrong Property
If you’re purchasing property solely to generate a rental income, please ensure it’s the right one. Consider purchasing costs, area rental rates, and location.
|Note: Do not be charmed by properties with low prices that need repairs. Underestimating repair bills is one of the most common mistakes new buyers make. It’s best to get professional advice before signing the dotted line.
Mistake #2 Not Educating Yourself on Local Laws
Landlords have many responsibilities and obligations that can vary from province to province.
For instance, many new rental property owners don’t realize that they must issue tenants proper notice in Ontario, Canada, before entering their homes.
|Note: Before starting your rental property business, educate yourself on these rules to avoid penalties and liability concerns.
Mistake #3 Ignoring Property Management Services
While the rental property business can be lucrative, it can also be time-consuming and stressful. Regular calls from tenants can impact anyone’s peace of mind while visiting the property for inspection or repairs can take precious hours.
That’s why many landlords are using property management services to optimize their business. Here are some advantages of hiring a top property management company:
|1. A good property management team usually offers real estate consulting services, helping you find the right investment property in a neighborhood that lets you generate a profit.
2. You’ll always be in the loop with regular financial reports on your investment.
3. An experienced property management company usually has excellent market reach, finding tenants through online marketplaces, social media networks, and other channels.
4. You don’t have to worry about relations with your tenants when your property manager collects rent on your behalf, supports your tenants when needed, and does the rest of the heavy lifting.
5. Some of the best property management companies offer around-the-clock support to ensure that you and your tenants have peace of mind.
Mistake #4 Selecting the Wrong Tenant
One of the biggest mistakes you can make in the rental property business is to select the wrong tenant. A nightmare tenant may damage your property, fail to report maintenance concerns, use your space for illegal activity, or simply refuse to leave.
The best way to avoid an undesirable tenant is to complete employment, criminal, and credit checks before the interview process.
|Note: Verified letters from previous landlords can also help you determine the quality of a potential renter. Of course, a top property management team can also assist with tenant selection.
These are four mistakes new rental property owners must avoid. Stay proactive and partner with professionals to give yourself a chance to succeed.