07 Sep The Biggest Mistakes a Landlord Can Make When Renting or Leasing a Property
Are you considering leasing out your home instead of selling? You’re not alone. What can happen to you as a landlord? What do you need to know?
With the cost of a sale transaction averaging about 8% of the value of the home, that’s a lot of cash you could spend elsewhere, namely toward your retirement. Let’s face it whether you sell or lease you’re going to have to properly make the home ready for the market. This typically means ensuring the home has good paint, good landscaping, good flooring, and having everything fully functional. Hide something at your own peril. It will come back to bite you no matter which route you go. Thus the make-ready cost isn’t optional.
Now you’re leaning toward leasing or renting out your home but concerned about what mistakes you might make.
If the possibility of having a tough time managing tenants has crossed your mind, you’re smarter than the average bear. So let’s talk about what you might run into.
PRICE IT RIGHT!
- Do not make the mistake that your fellow investors make every day thinking that your property is more valuable than others simply because it’s yours. Seek help from a professional, NOT ZILLOW! Texas, among others, is a non-disclosure state. In other words, 3rd party websites are likely guessing what the property rental rate should be. Realtors with databases of statistics are not. Property Managers know what to do beyond the basic stats. They live and breathe leasing. To them, it’s their bread and butter, not a side job they do as a favor. Time is money, so don’t waste time saving a couple of bucks. Hire someone to do this right or you’ll waste more than you could save.
DON’T OVERLOOK THE MAKE-READY
- Your tenants are going to look similar to your home. What do I mean? If you deliver to market a junky home, expect a not so great tenant. No one that pays their bills on time and cares for the family is going to lease a house that is dirty, has dirty carpet or paint, horrible landscaping, or other issues. Want tenants with no issues? Start by delivering a property with no issues.
MAKE REPAIRS BEFORE IT GOES TO MARKET
- Never fail to ensure everything is fully functional and in working order. You simply cannot wait to put off repairs. If something is broken it’s not going to fix itself. Deal with it today or pay more tomorrow. This is the same as the point above but specific to functionality than cosmetics. Get great tenants by giving them a great home.
ENSURE YOU HAVE THE CORRECT PAPERWORK AND LEGALITIES IN PLACE
- Leasing the property yourself and not knowing what to ask, where to get the data processed, and what to do if you counter or decline the tenant’s application could mean trouble for you. Did you know that if you run a credit check and then make a counteroffer on the pricing or any other term, you have to deliver a form with the information required by federal law? There’s a good chance that your real estate sales agent doesn’t know this very important step either. Hire a property manager to do your leasing even if it’s not us.
DO YOUR RESEARCH OR JUST LET THE PROS HANDLE IT FOR YOU
- Failure to know and understand what to expect can get you into a lot of trouble. This may refer to a number of things: property code, legal forms, state and local regulations, etc. The problem is you won’t know it until it’s too late and then you’ll be looking for a contractor and an attorney to help you out of the mess. We get calls from owners who self-manage all of the time that wants and needs help.
DOCUMENT EVERYTHING AND NEVER SKIP MAINTENANCE CALLS
- Lastly document, document, document and get ready for late-night calls and unusual circumstances. Life is really easy until you get people involved. Then all rules go out the window. Expect your tenants to wake up on a Sunday and want to talk to you about something that is opposite of what the lease permits. Get ready to say no, a lot.
We provide you with these points not to scare you out of becoming a real estate investor – because it really can do wonders for your financial future – but because you need to know the truth about all the small details that simply cannot be overlooked.
If we can help you find, manage, or provide support related to your Austin rental property, give us a call today. We’re ready to help!
Listen to a few words on the subject from 1836 Property Management founder, Matt Leschber!
By: Matt Leschber, 1836PM Founder and Kayla Gonzales, 1836PM Marketing Manager