Owning a rental property in Nigeria or anywhere else in the world doesn’t come easy, so if you are lucky enough to own one, you must guard your investment jealously. This article points out 5 common first-time landlord mistakes to avoid.
Managing a rental property requires experience, knowledge or expertise, perseverance and of course good inter-personal skills and people management skills. You also have to possess business acumen to manage your investment in terms of finance cause having a rental property is actually a business of your own.
If you’ve never had experience in real estate then you are prone to making these mistakes. Making damaging mistakes that can spell doom to a supposedly lucrative investment is common among first-time landlords. Hence it is essential, that the under-listed mistakes should not just be viewed as mere mistakes; they are actually errors that could cost you time, a lot of money and on a large scale, your sanity.
Here are 5 common first time landlord mistakes to avoid in the course of running your rental property business. They are mistakes some experienced landlords made and are probably still making…
1.Not Adequately Screening Potential Tenants
This is a common mistake among first time landlords who are yet to learn the ropes. These landlords are eager to recoup the money they spent on their investment. No matter what, it is essential you allow prospective tenant fill out rental or lease form which would contain their personal details.
Don’t go admitting just any tenant into your rental property without doing a background check, you may regret your decision to admit the tenant subsequently. It is also essential you put every agreement you reach with your tenant in writing to forestall any problem that may arise in the future.
You must never underestimate the importance of a lease agreement. This is a common landlord mistake to avoid as a first time landlord
2. Underestimating the Cost of Maintenance and Repairs
This is another frequently occurring landlord mistake to avoid if you have hopes of owning a rental property or becoming a landlord soon. It is quite easy to underestimate the cost of maintenance and repairs when entering into the business of rental property as a newbie.
This usually comes with experience, albeit you can do your homework beforehand so as to avoid making such mistake. The excitement of earning rental income makes most first time landlords prone to making the mistake of underestimating the cost of maintenance and repairs. So make hay while the sun shines.
3. Not Following the Law
Being a new landlord is not an excuse to go against the laws that governs rental properties. You must be quite acquainted with the laws that apply to leasing rental properties in your region. Top on the list of the laws that apply to rental property is that which involves the rights of a tenant where most landlord are fond of running foul of the law .
Starting an eviction process is never fun, especially if you are new to the rental property business; it is a common landlord mistake to avoid as a new entrant in the business. A wrongful eviction process can land you in troubled waters. So be sure to know your laws!
4. Asking Friends and Family for Advice
This is perhaps the biggest mistake people make. Everybody has an opinion and it seems like everybody has heard of some horrible tenant story.
Real estate has been responsible for a tremendous amount of wealth generation in the country. No, it’s not easy but it can be worthwhile when you structure your business correctly.
Don’t let a negative Uncle or friend deter you from your dream of building a real estate business.
5. Charging too Much Rent
Having spent so much in bringing your rental property investment to life, it is natural to imagine reaping the dividend of such investment as soon as possible. One of the ways new landlords adopt to recoup their money is charging too much rent for that new rental property to tackle financial setbacks that getting into that first property created.
No matter how high the amount of money that goes into your rental property is, it is advise-able that you know how to read the market and follow market trends before you put a figure or price tag to that rental property.
Expecting a cash flow as soon as possible is a common landlord mistake to avoid as a first time landlord. Do your research, fix a price that would fly yet won’t hurt