Being a landlord can be exciting and frightening at the same time. Many challenges come with owning a rental property, from delinquent tenants to busted pipes and high maintenance costs.
Therefore, it is vital that new landlords put systems in place to help them mitigate these challenges' financial impact.
Learning the must-knows of rental property management is an excellent place to start.
With that said, here are five things new landlords must know.
Most landlords make the mistake of managing rental properties without creating an information storage hub. They communicate with tenants via text or email, which often gets lost.
A property management system allows landlords to centralize all information and documents from the sourcing of tenants to the expiry of the lease agreement. This centralized hub assists in keeping track of rental payments, scheduled maintenance, and repairs.
Landlords can also use the system for tenant screenings, payment history background checks, and criminal checks.
Delsuites is a property management firm specializing in condominium rental property management Toronto. The company helps tenants and landlords with issues that may arise concerning the rental agreement.
Preventative maintenance is the act of scheduling maintenance checks before issues arise. It allows landlords to foresee potential threats and mitigate them accordingly. It also gives landlords enough time to prepare or save for unplanned equipment replacement or repairs.
Landlords can add preventative maintenance to their property management software. The system will automatically send reminders of scheduled maintenance checks to both the tenant and the owner.
Preventative maintenance is essentially being proactive instead of reactive.
Landlords who use preventative maintenance functions like testing smoke detectors, checking fire hydrant expiry dates, and checking for gas or water leaks, are more likely to decrease the costs of replacements and shorten the repair time.
One major thing that many first-time landlords typically ignore is renters insurance. Although landlords may have property liability insurance to cover any physical damage to the property, they fail to ensure that their tenants have renters insurance that covers their personal belongings.
This may be a problem when something like a fire or water damage occurs. The property-liability insurance only covers the cost to repair the structural damage and not the costs of replacing the damaged goods like furniture and clothing.
Renter's insurance is the full responsibility of the tenant, not the landlord.
Another big mistake that landlords make is miscalculating the monthly rental premium; landlords who have a mortgage focus too much on matching the rental premium to the monthly mortgage repayment.
Landlords often ignore the additional costs of owning a property, such as levies, rates, taxes, security upgrades, gardening costs, and other State costs like garbage removal.
Landlords must consider additional costs as they will cut into their profits. Sometimes they may lead to the landlord paying out-of-pocket expenses to cover the shortfall.
Landlords must know the State laws on rental property. These laws regulate the interaction between tenants and landlords. Many landlords believe that they have the right to evict delinquent tenants, which is not valid immediately.
There is a particular procedure to be followed when evicting a tenant, especially if the reason is the tenant did not pay rent. Some U.S states require that landlords send an eviction notice of no less than two to four weeks.
Owning a rental property can be an experience that is quite daunting for new homeowners. The excitement of owning a house depreciates as the challenges of being a landlord arise.
It is highly recommended that landlords do their due diligence and research things they should know before making an offer to purchase.