Risk is always involved in renting out a home, and you don’t want to be so afraid of failure and mistakes that you’re unable to make decisions or take action as a Golden landlord. But, it helps to be aware of the mistakes that can easily be made if you’re not experienced with leasing or rental management. Learning from the mistakes that other landlords have made is a great way to avoid them yourself.
Small mistakes are often just as disruptive as big ones. Let’s take a look at the common mistakes that Golden landlords often make.
If you network with enough people in the real estate and property management industries, you’ll soon learn that everyone has their own stories about what went wrong and how they recovered.
Renting Out the Wrong Property
Not every home makes a great rental. Whether you’re investing in a property or you’re thinking about putting a home you once lived in yourself on the rental market, make sure it will be attractive to tenants.
It’s easy to get excited about an investment property, but before you buy, make sure you get a good idea of what you’ll earn in rent and how much it will cost to make the repairs and upgrades that will make the property rent-ready.
When you’ve decided you don’t want to sell a home that you have and you’d like to rent it out instead, make sure you’re going to earn the money you need every month in rent to make it a worthwhile investment home.
You also need to evaluate if this is your family home, how much you love the house, and if you are okay with renting it out to someone you don’t know. If you absolutely love your home and wouldn’t want someone damaging it in any way, then it may not make a good rental property.
Renting out the right property is crucial if you want to be a successful landlord. Don’t try to make every property a rental property. Sometimes the location will be wrong or it will be an older home that requires a lot of renovation resources. Look at it objectively and consider talking to Golden property managers and local experts about what you should expect in rental amounts, vacancy costs, and maintenance expenses. This will help you avoid the mistake of renting a property that no one really wants.
Incorrectly Pricing Your Golden, Colorado Rental Home
Your home’s rental value will depend largely on the strength of the Golden rental market and the competing properties you find there.
This is sometimes difficult for landlords to accept, especially if you’re hoping to earn a certain amount in order to cover your mortgage and expenses. But, if the local rental market doesn’t support the rental value you’re hoping for, there’s no point in pricing it that high. It won’t rent, and the vacancy will cost you a lot of money.
Take a look at what homes similar to yours are renting for in your neighborhood. You don’t want to underprice your home, certainly. That’s only going to result in a loss from the beginning. But you do have to price your home competitively, otherwise it will sit vacant, and that vacancy cost will be far more damaging than bringing the asking price down by $150 or $200 per month.
There are other factors that impact your rental value, and you have to consider them when pricing your home. These things include:
- Property size and layout
- Property condition
- Property location
- Season/time of year
Once you have an idea of what other properties are renting for, compare your own home to those. If you have more to offer, you can charge a bit more. If you’re going to have a hard time attracting tenants and convincing them to choose your property over the others, you might want to lower your price just a bit.
Placing the Wrong Tenant in Your Golden Rental Property
Landlords are sometimes in a hurry to fill their vacancy. Or, they aren’t sure about how to properly screen an application, and they’ll place the wrong tenant. This can be the worst mistake you make because if you’re stuck with a tenant who isn’t paying rent, who is violating the lease agreement, or who is damaging your property, you’re going to find yourself in a lot of trouble.
If you don’t have a great resident, a lot can go wrong really fast. You want to avoid that mistake with a solid marketing and screening process. Make sure you’re using a thorough and consistent application, and check every applicant’s credit history and eviction history.
Talk to the previous landlord about their rental experience with the applicant, and make sure you verify employment and income. You don’t want to rely on a pay stub that anyone can print. Call the employers and make sure the applicants are still working there and earning the income they say they’re earning.
Look for felonies and a history of violent crimes. You want to judge their character as well as their financials; an applicant who has been convicted of assault or had physical fights with former neighbors is probably not going to be a great resident.
Think carefully about who you place in your property. With the wrong tenant living in your investment home, you’re going to be paying for that mistake for a long time.
Avoiding Routine or Preventative Maintenance
Landlords who do not respond to routine and emergency maintenance issues with a sense of urgency are making a big mistake.
Emergencies obviously require immediate action. When a tenant calls because the property is flooding or the heat is out in the middle of a snowy winter, you need to take action right away to keep the property habitable.
A lot of landlords make the mistake of not being responsive when routine repair requests are made. Quick response times will show your tenants that you care, and that will increase your retention rates. Immediate maintenance responses also lead to a property that’s better maintained. Preventative maintenance can help you avoid those expensive emergencies.
Don’t avoid maintenance.
While not responding to maintenance issues is a big mistake, working with unlicensed and uninsured vendors is an even bigger mistake. Don’t try to make cheap fixes. There is a way to complete maintenance work cost-effectively. A big part of that is trusting the people you hire to do it.
Working with professional vendors and contractors who are licensed, insured, and bonded has to be non-negotiable when you’re renting out a Golden property. Don’t make the mistake of seeking out the cheapest possible workers or using substandard materials when you’re attending to routine maintenance. Don’t let tenants do their own work, and don’t do it yourself unless you have the time to get over there right away. Use good, qualified vendors who stand by their work. Otherwise, you’re putting your entire investment at risk.
Lack of Lease Agreement Enforcement
Your lease agreement is a written contract between you and your tenants. Your job as a landlord is to enforce it and hold both yourself and your renters accountable to it.
For example, if there are late fees for rent that isn’t paid on time, make sure you charge them. If the lease agreement says there’s no smoking on the property and your maintenance vendors report that your tenants are smoking, address the issue right away and bring them into compliance.
The lease contains important information about who is responsible for what at the property. There are expectations and responsibilities clearly spelled out. But, it means nothing if you don’t follow the lease. Make sure you pay attention to it, and make sure your tenants know that they are accountable to it as well.
Following the local, state, and federal laws is also a requirement for you and your tenant. It’s a huge mistake not to stay up to date on fair housing laws. For example, do you know the difference between a pet, a service animal, and a support animal? You need to know the difference if you’re going to lawfully screen tenants who have disabilities and set pet policies. Mistakes are easy to make and legal mistakes are especially onerous and expensive. Stay current on the laws and requirements that pertain to your property.
Trying to DIY Golden Property Management
Perhaps the biggest mistake you can make is trying to do everything yourself. If you really want to succeed as a landlord without worrying about errors, you need to work with a Golden, CO property management partner. You can benefit from your property manager’s advice on what to do and what not to do.
The right property manager helps you avoid costly and common mistakes. You’ll find you’re earning more and spending less on your rental home. You’re not worried about legal issues or tenant conflicts or disputes about security deposits and pets and property conditions. Having the right management team at your side will ensure your property is leased, managed, and maintained correctly.
We love working with landlords who are looking for support and resources. We’d be happy to tell you more about our own management services. Contact us at Laurel Property Services, Inc. In addition to providing property management in Golden, we also serve Wheatridge, Morrison, Lakewood, Arvada, and Genesee, CO.
