Renting property is a great and reliable source of income because housing needs will always exist. You can significantly increase your net worth with the right business moves.
However, being a landlord entails more than just filling in empty spaces. It requires your full attention instead of the status of a side job because it comes with many responsibilities that can easily bring you down if you do not take care of them correctly. These are only five of the many mistakes inexperienced landlords can make to hurt their business growth.
- Drafting a poor rental agreement. Review your contract with a lawyer to ensure it is thorough, detailed and clear. This is the best defense against disputes.
- Being too lenient. What is the point of having tenants sign the rental agreement if you are not going to hold them to it? Enforce rules, late fees and evictions, always in writing for potential use as evidence. Follow your end of the contract as well, such as by notifying tenants when you are coming.
- Choosing the wrong rental price. Research the market rate and go slightly below it to attract tenants. Vacancies and high turnover reduce profits.
- Not screening potential tenants. Do not let your desire to fill vacancies prevent you from doing proper background checks on applicants and turning away problematic people. Include the reason for rejection, making sure it is not a protected class in the Fair Housing Act.
- Relying on only one source of funding. Maintaining, renovating and building upon rental properties takes more money than you may expect. You need to use various financing tools to meet your real estate goals and stay out of the red.
By avoiding these common mistakes, you can also avoid many lawsuits or have a stronger case in the event of litigation. It is also wise to have constant legal guidance. For help with your property management issues, contact an attorney experienced in Florida commercial real estate law.