Being a DIY (Do-It-Yourself) landlord means managing and maintaining rental properties independently. The benefits of being a DIY landlord include saving money on management fees and being more hands-on with your property and tenants.
However, being a DIY landlord also comes with challenges. Without a professional property management company to support you, you need to deal with maintenance and repair issues, legal responsibilities and difficult tenants on your own.
DIY landlords need to know the common mistakes that can lead to financial losses, legal problems and poor tenant relationships. In this article, we’ll discuss seven mistakes we suggest you avoid as a DIY landlord.
Mistake 1: Not Abiding by the Law
As a landlord, it’s important to understand the laws and regulations that apply to your rental properties. These laws vary by state and municipality but generally cover tenant rights, fair housing, security deposits, rent increases, and eviction procedures.
For example, federal fair housing laws prohibit discrimination against tenants based on race, religion, sex, and national origin. Most states also have specific laws that outline proper eviction procedures, such as how much notice must be given and what instances are grounds for eviction.
Consequences of Not Following the Law
Not following the law can result in serious consequences for landlords. These can include legal fines, court costs and even lawsuits from tenants. Violating fair housing laws can also result in significant financial penalties and damage a landlord's reputation.
Mistake 2: Screening Tenants Improperly
The tenant screening process helps you evaluate potential tenants to determine if they’re a good match for your rental property. Tenant screening is an important step in renting out a property, since it helps you select responsible, reliable tenants who will pay rent on time, take care of your property and follow the terms of the lease.
Risks of Poor Tenant Screening
If you don’t properly screen your tenants, you’ll likely create more problems down the line. For example, landlords can end up renting to tenants with a history of not paying rent or causing damage to properties.
This can lead to financial losses, legal problems, and the need to go through the eviction process. A landlord who fails to screen tenants properly might also be violating fair housing laws, which can result in significant penalties.
Mistake 3: Not Setting Clear Expectations
Setting clear expectations with tenants is important in creating a positive landlord-tenant relationship. This includes setting expectations around rent payments, property maintenance and lease terms.
By setting clear expectations, landlords can help tenants understand their responsibilities and ensure they fulfill them. This can lead to a smoother tenancy and reduce the risk of disputes and legal issues.
Risks of Unclear Expectations
Not setting clear expectations can lead to confusion and misunderstanding between landlords and tenants. This can result in tenants not paying rent on time, not taking proper care of the property or violating the terms of the lease.
If a landlord fails to set clear expectations, they might not be able to enforce lease terms or take legal action if the tenant violates the lease. This can lead to financial losses and legal problems for the landlord.
Mistake 4: Poor Property Maintenance
Maintaining your investment property is essential to ensure it remains safe, habitable and in good condition. This includes regular inspections, repairs, and updates.
Landlords who maintain their property well keep tenants satisfied with their living conditions, increasing the chances of lease renewal. Regular maintenance can also help to prevent costly repairs in the future.
Risks of Poor Property Maintenance
Not maintaining the property can lead to several problems. For example, if a landlord neglects repairs, it can result in unsafe living conditions for tenants and lead to legal issues.
Neglecting to make updates or renovations can also make the property less desirable to potential tenants, leading to vacancy and financial losses.
Mistake 5: Not Keeping Good Records
Keeping accurate and detailed records is essential for landlords to keep proper track of their income, expenses and tenant information. This includes rent payments, lease agreements, maintenance requests and inspection reports. Keeping records also includes keeping note of new addrsss in order to handle mail from previous tenants.
By keeping organized records, landlords can make informed decisions, resolve disputes and protect themselves in case of legal issues.
Risks of Not Keeping Good Records
Not keeping track of records or a paper trail can lead to several problems. If a landlord cannot provide accurate records of rent payments for example, it can be difficult to enforce lease terms or take legal action if a tenant doesn’t pay their rent.
If a landlord doesn’t have accurate maintenance requests or inspection reports records, it can be difficult to prove they have fulfilled their responsibilities. This can lead to tenant disputes and legal issues.
Mistake 6: Being Unprepared for the Unexpected
It’s important for landlords to be prepared for the unexpected. This includes preparing for emergencies, such as natural disasters, unexpected repairs, vacancies, scams and legal issues. By being prepared for the worst, landlords can minimize the impact of these events on their properties, tenants and finances.
Risks of Being Unprepared
Not being prepared for the unexpected can be detrimental to your property. If a landlord isn’t prepared for a natural disaster for instance, they might not be able to protect their properties and tenants.
If a landlord isn’t prepared for unexpected repairs or legal issues, they might be caught off guard and not have the resources to address the problem. This can lead to financial losses and legal problems for the landlord.
Mistake 7: Pricing Rent Incorrectly
Pricing rent correctly is crucial for landlords. It's important to set the rent at a competitive price with similar properties in the area but also at a price high enough to cover expenses and generate a profit.
By pricing rent correctly, landlords can attract and retain tenants, minimize vacancies and ensure their property generates a positive cash flow.
Risks of Incorrectly Pricing Rent
Setting rent too high can result in difficulty finding and retaining tenants, while setting it too low can result in financial losses.
Not regularly reviewing and adjusting rent prices to match the market rate can make the property less attractive to potential tenants and cause the landlord to lose out on potential revenue.
Bottom Line: Hire a Property Manager
Becoming a DIY landlord can be a rewarding experience, but it also comes with many challenges. Landlords need to be aware of common mistakes to avoid to ensure a successful tenancy.
If you understand the law well, properly screen tenants, set clear expectations, maintain your property well, keep your records organized, prepare for the unexpected and price your rent correctly, you can be a successful DIY landlord. If you’re not able to juggle all of these responsibilities, consider partnering with an experienced property manager.
If you still have questions or reservations about self-management, contact NFI Property Management Solutions today. You can reach us by dialing (850) 898-1230.