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All Landlords Can Make Mistakes
Being a new landlord can be tough, and mistakes are bound to happen when starting something you’ve never done before. There are many in’s and out’s to learn, but once you fix what’s wrong, your property will be successful and your tenant will be happy.
Our job is to give you the best advice to help you avoid making these few mistakes and how to make a better decision in the future.
1. Failing to Get a Security Deposit
A security deposit is money that a tenant gives to a landlord as proof of their intent to move in and care for the property. This deposit is not just extra money taken from the renter. It can help lessen the damage if a tenant terminates their lease early or fails to pay their rent on time.
Where many landlords go wrong, other than not getting a security deposit, is failing to properly save them. You want the money to be on hand in case something goes wrong and if nothing does, the tenant can get their deposit back at the end of their lease.
Don’t spend the deposit immediately or misplace the money in other funds if you want to avoid negative consequences.
2. Making Rent Too Much
You want to set the rent at a fair price that won’t over charge your renter but still make a profit for yourself. First, research and understand the Mesa and Phoenix area market, the neighborhood, and the property’s value before deciding on the rent.
The crucial mistake that is made here is not properly selling your property. You don’t want to undersell but be weary of overselling it as well. Not doing this correctly could potentially lessen the amount of people interested in your property.
3. Shortcutting Maintenance Work
Initially ignoring maintenance can end up costing more in the long run if the issue escalates. This can potentially cost you more in property damage and can lead to tenants being unhappy and unsatisfied. You also need insurance for this work, which we will discuss next.
The parts of a rental home in the Phoenix area that require the most maintenance are as follows:
- Plumbing
- Heating and Cooling Systems
- Electrical Systems
- Roof and Gutters
- Appliances
- Bathrooms
- Kitchen Surfaces and Cabinets
- Exterior and Landscaping
- Doors, Windows, and Locks
- Interior Finishes
If keeping up with maintenance is something you are unable to do, consider hiring a person or team to help manage it for you.
4. Failing to Get Proper Insurance
With life being unexpected, you never know what may happen to or in your rental property. Having the extra support of insurance, even if it feels like a lot now, will save you more in the future if something does go wrong. It’s not worth the risk and will relieve you of any anxiety about possible future problems.
5. Failing to Enforce the Lease Agreement
Every new landlord should draft a lease agreement at the beginning. This lease should include rent amount, the security deposit, any added fees, how the amenities are charged, and who is financially responsible for any damages or other costs.
Once you have this document, uphold your side of the agreement. Enforce the requests and boundaries stated in the agreement. Always keep in mind that this is a non-negotiable agreement. The more things that you let go or push aside the values of it will only hurt you later on.
On the other hand, you must also honor your part of the agreement such as repairing certain damage, creating a comfortable home, and returning their deposit once the lease has finished.
6. Failing to Meet Property Requirements
Just like keeping up with maintenance issues, you should make sure that you meet the code requirements of your residency, according to the Mesa area standards. Not getting these requirements may result in costly fines, repair expenses, and even set you in a position where legal action can be taken. The most common violations include:
- Kitchen appliances are broken
- Plumbing is clogged (such as toilets and sinks)
- No electricity for appliances
- Water leaks
- Broken windows or entryways
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7. Failing to Screen Potential Tenants
In Arizona, one of the most important steps before signing a lease with a tenant is doing a thorough screening. Check the tenant’s history and credit score to ensure that they can be reliable and can fulfil their agreements. They also need to have a trustworthy, constant, and legal income. This will guarantee that they can pay their rent through to the end of their lease.
8. Not Understanding Arizona Landlord-Tenant Law
In Arizona, an important thing to understand is the laws surrounding being a landlord. The main framework for this is the Arizona Residential Landlord and Tenant Act. This act encompasses areas such as entry rules, repairs and habitability, security deposit rules, evictions, and retaliation rights.
Failing to review some of the finer details in this law can get a new landlord in trouble. Making sure you follow the process and regulations set in this law will make your residency successful.
9. Failing to Treat Landlording like a Business
New landlords often think that they will own a property and collect rent off of it. This becomes an issue because it leads to “accidental landlords” and an unorganized system. Instead, treat landlording like a business, where it is run by you, not your tenant.This includes:
- Having systems for rent collection
- Be aware of your financial tracking
- Have written policies not controlled by emotion
- Having a vendor network
- Being smart about your time
10. Trying to do Everything Yourself (DIY Landlord)
Similar to not treating landlording like a business, being a DIY landlord can lead to many mistakes in the Mesa area. Being unaware of the difficulties of tenant management, time sensitivity of maintenance, and mistakes in marketing and pricing are just a few. Having a clear plan will help you avoid these mistakes. If keeping up with your property becomes too much, consider hiring a property manager to run your rental home.
Landlording Shouldn’t Be Hard
By being aware of common mistakes, you can learn from the mishaps of others and avoid them with your own property. Having a thought out plan, the right agreements between you and your tenant, and having the correct requirements in place will make your residency successful and profitable.
At Stone Rent – Real Estate Property Management LLC, it is our job to educate new landlords and shed light on frequent mistakes to ensure that new business owners can achieve the best version of their rental property.
