If you’re a landlord who is just starting out, there can be a lot of new tasks and responsibilities. As you invest and grow your business from 1 to 10 to more properties, there can also be some potential missteps.
Here are some of the most common mistakes first-time landlords make, and how to avoid them.
Asking Illegal Questions
Some landlords immediately run afoul of the law by asking the wrong questions on an application, like “Are you married?” In Canada, the landlord cannot ask questions that infringe on the potent tenant’s rights under the Human Rights Code for each province. In the US, the Fair Housing Act of the Civil Rights Act of 1968 requires that you cannot deny a tenant’s application based on race, colour, religion, marital status, handicap or family status.
A Lack of Proper Screening
First-time landlords want to ensure good cash flow, and may be a bit too eager to fill vacant properties. Especially if the prospect is keen to move in and can supply the deposit amount. Too often, this means skipping a full credit check, or relying on the references supplied by the potential renter. Ensure that your rental application form that will provide you with adequate information needed to run a credit check and then pay for the necessary screening. Don’t be rushed or pressured into making a potentially costly mistake. (FYI: Property Vista’s software includes integrated credit checks that are complete in just a few seconds.)
Not Starting the Eviction Process Soon Enough
No landlord enjoys having to go through the eviction process. However, knowing when to start and the proper, legal steps is necessary. First-time landlords are often more susceptible to claims of “I’ll have all the money I owe you by next (week, month, etc.)” To avoid hot water (and possible legal action for wrongful eviction), know your laws or consult with a lawyer.
Keep a record of all interactions with your tenants in the off-chance that you ever need to take them to court. To support any allegations, you will need to have detailed records of all back and forth with your renter.
Underestimating Maintenance Costs
Read this very carefully: Repairs will cost you more than you think they will. They will. Owning properties involves ongoing maintenance like landscaping, HVAC maintenance, painting and upkeep costs. But there are also unexpected one-time costs that will pop up, like foundation issues, concrete repairs to garages or roof repairs. Preventative maintenance will help, but there will always be unexpected costs.
Not Enough Insurance (Yours AND Theirs)
Never, ever, cut costs by low-balling on insurance. If something does happen you will have to pay for damages out of your own pocket. Better to make sure you have comprehensive insurance on each building that covers the property as well as liability. As well, as a landlord, you need to make sure that your tenants have adequate insurance. Ensure that there is a clause in your lease.
How Property Vista Helps
Property Vista offers web-based software designed to help landlords run their properties more efficiently and more effectively. We offer online resident applications and intelligent credit checks, communication and maintenance portals, as well as tenant insurance. To learn more about what we can do to help maximize your growing business, sign up for your free account today or give us a call.