Key Takeaways
A rigorous screening process helps ensure on-time rent, proper care of the property, and fewer issues.
Clear, comprehensive leases prevent disputes and protect your investment.
Accurately forecasting cash flow is essential to ensuring your rental is profitable.
Staying on top of maintenance, or working with a property manager, can save time and money while improving ROI.
Being a landlord can be incredibly challenging. From choosing residents to maintenance, you need to be proactive.
But even with such challenges, you can still achieve success and reap all the associated benefits, including consistent cash flow, significant tax advantages, and long-term wealth building through property appreciation.
To be successful, you must do certain things early. For this post by SGI Property Management Dallas, you’ll learn 5 tips on what experienced investors regret not doing early.
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Not Screening Prospective Residents Thoroughly
As a landlord, you have the right to choose the kind of resident you want to live on your property. As long as the resident selection exercise is fair and equal for all.
The right kind of resident will do the following.
Pay rent on time, every month.
Care for their rented premises.
Report issues on time.
Abide by all terms of the lease agreement.
However, to land such a resident, you must have a rigorous resident screening process in place. The process must entail doing things like checking every prospective resident’s credit rating, employment status, monthly income, and criminal background.
Additionally, you should also call employers and prior landlords to ask them important questions regarding the prospective resident.
Not Having a Detailed Lease Agreement
This is another mistake that experienced investors fail to address early. Failing to create a detailed lease agreement can often lead to serious problems later down the road. It’s akin to setting off on a long road trip without a spare tire or a map. Everything may feel just fine until you hit a bump, and then realize you’re in trouble.
When the lease is vague, you’ll be putting yourself in a “he said, she said” trap. For example, if you fail to address who does what when it comes to repairs and maintenance, your investment can suffer the consequences.
Having a detailed lease agreement is a recipe for landlording success. Therefore, from day one, make sure to outline the following details in the lease.
Each party’s list of responsibilities.
Rent-related details, like due date, grace periods, and late fees.
The condition for the return of the resident’s security deposit.
The length of the term of the lease to avoid potential resident holdover issues.
With such details in the lease and with a great resident in the unit, you are better set-up to have a successful landlording journey.
Not Working with a Property Manager
This is another thing that experienced investors regret not doing early. When you’re getting started as a landlord, a couple of things may go wrong.
You may not be available full-time to handle residents’ concerns.
You may not know how to select the right residents.
You may not have relationships with reliable and experienced vendors and contractors.
You may not know how to determine the right rental amount.
Hiring a property manager can provide you with all the help you need to get started as a novice landlord. From marketing the property, to screening prospective residents, determining the right rental rate, enforcing the lease, and everything in between.
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Not Accurately Forecasting the Cash Flow
When starting out as a landlord, one of the first things to do is learn how to accurately forecast rental cash flow.
Why? Because, this way, you’ll get to learn whether the investment is going to be worthwhile or not.
Cash flow is simply the difference between the rental income and the operating expenses. The goal is to ensure that the former exceeds the latter for optimal return on investment (ROI).
To do that, first make sure that you’re charging the right rent amount. Next, calculate your operating expenses. Examples of common rental expenses include maintenance, vacancy rates, marketing costs, and repairs and maintenance.
Not Focusing on Repairs and Maintenance
If you fail to take a more proactive approach to property maintenance, you’re bound to fail as a landlord. The following are some of the things you should be doing when it comes to rental repairs and maintenance.
Inspecting the property on a regular basis.
Addressing required or reported issues promptly to prevent them from worsening and potentially making the unit uninhabitable.
Keeping all repairs and maintenance records.
Doing this can ensure you keep the resident happy and comfortable. Resulting in you being able to potentially enjoy optimal ROI through multiple lease renewals.
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Conclusion
These are some of the things that experienced investors regret not doing early on. If you follow this guide and avoid them, your journey as a landlord will feel more manageable early on.
For expert help in managing your Dallas rental property, look no further than SGI Property Management Dallas. We have the experience and knowledge to help you succeed. Get in touch to learn more!
