Being a landlord looks like a pretty easy job. Show some apartments, charge some rent, and collect the money. Beneath the surface, there’s a lot more going on. There are nine unexpected challenges of being a landlord that you need to know about before you take the plunge.
1. Professional Tenants
A professional tenant is someone who understands the laws and loopholes surrounding renting a place and has learned how to use them. On paper, everybody seems to be a good match before they come in. Will you have a plan in place if your new roommate is a jerk? Many tenants refuse to fix problems right away, so if you don’t, you may have a troublesome tenant on your side. One rotten egg will cost you tens of thousands of dollars in intentional penalties and legal costs. A professional tenant will:
- Have a history of evictions or lawsuits with former landlords.
- Know federal and state rental law inside and out.
- Ask you not to contact former landlords or just not list them at all.
Be on the lookout for these behaviors, not spotting a professional tenant can lead to major trouble down the road.
2. Failing to Treat the Rental As A Business
A rental property is a business investment, and it must be treated as one.
- Like most businesses, you can get a loan specifically for rental properties from companies like Visio Lending to help you. A rental loan gives you the funds to buy a property and then you pay them back, generally from the rent you collect.
- You have to remain practical about who you rent to. It’s great to help someone out, but make sure you won’t end up losing money.
- Businesses need a budget and so do you. Keep track of your expenses.
Don’t forget that a rental property is a huge investment. A lot of time and money are on the line.
3. The Property Having A Bad Reputation
This situation can be totally out of your control and difficult to fix. Make sure you look into the reputation of a property before buying. Some issues that might cause problems include:
- The property having a history of crime or violence.
- High turnover among previous renters/owners.
- Being within a close distance of a building or business that worries renters. For example a prison or a bar.
Reputations are hard to change. The best thing you can do if a property has a bad reputation is to not purchase it.
4. High Turnover
High tenant turnover takes up time and energy. While vacancies can’t be completely prevented, turnover can be reduced. Here’s how.
Take your time screening candidates.
- Offer perks for signing a longer-term lease.
- Don’t make big changes in the rent.
Following these strategies can help reduce the risk of high turnover, saving you time and money.
5. Misunderstanding Your Legal Responsibilities
The home-sharing program has caused legal complications in a number of cities across the United States, and it has also been unconstitutional in a few. Investing in a typical property will come with its own collection of legal complexities. Keeping up with all of the municipal, provincial, and federal rules that apply to homeowners can be moment and confusing. However, staying up to date is important if you wish to prevent a court battle with a troublesome tenant. Zoning rules, lending, landlord-tenant arrangements, and eviction are only a few examples. Landlords have certain legal responsibilities they must meet, including:
- Following fair housing laws.
- Respecting a tenant’s privacy. You can’t enter the building without formal notice unless it’s an emergency situation.
- Not retaliating against tenants. You can’t shut off utilities to speed up an eviction.
Make sure you fully understand your rights and responsibilities before you rent out a property.
6. Misunderstanding Tenant Rights And Obligations
Just as you have certain rights and obligations, so do your tenants. These include:
- A tenant can’t be rejected based on any characteristic covered under the federal Fair Housing Act.
- Tenants have the right to a safe place to live with access to their utilities.
- Tenants have an obligation to live up to the terms they agreed to in their lease.
You and your tenant both have rights and obligations that need to be understood for a rental to be successful.
7. Unexpected Court Fees
If you end up in court with one of your tenants and are found guilty, or lose the case, you could end up with some hefty fees. Common court cases include:
- Eviction disputes
- Property damage disputes
- Unsafe living conditions disputes.
It’s always best to avoid the courtroom when you aren’t completely sure you’re right.
8. Tenants who stop paying rent
Unfortunately, there is no way to absolutely remove the possibility of renting to someone who is struggling to pay their rent. Also the most financially stable individuals will get into financial difficulties and struggle to pay their bills.
Fortunately, there are several steps you might take to help reduce the chance of losing money on your rental house. Many people describe it as a poor experience. Most people want to stop them at all costs. Brokers are notoriously difficult to work with. Not only do they want one month’s rent as a commission, but they are frequently uninterested in finding you a place to live.
9. Property Damage
Any landlord’s income property will experience physical harm at some stage. Property loss is virtually inevitable, whether incurred by a resident, adverse weather conditions, or any such unexpected situation. If you’re handy and secure in your abilities to make fixes, so coping with property loss might not be a big problem worth expecting. When a tenant vacates your house, you will need to do some cleaning and redecorating before renting it out again. If you have the opportunity, you can clean and repaint the property yourself, which will save you money.
Property management is an important aspect of being a landlord, but it is far from easy. You must screen renters, collect rent, handle grievances, and keep the tenants comfortable, among other things.
Be aware of these seven challenges of being a landlord so they don’t become unexpected surprises.