As a first-time landlord, there’s a good chance you’ll end up facing a number of growing pains and problems that you won’t have an immediate solution for. While it’s impossible to prepare for everything that property ownership can throw at you, having a plan can definitely make things significantly easier.
Your property’s turnover rate is the percentage of people who do not renew their rental contract with you at the end of the old one. The turnover rate in April 2020 was 42.1%. Though this is the lowest rate in over 20 years, it is still a high percentage.
Any turnover in your property means that you need to advertise and show your apartment again and run background checks to confirm that you have the right tenants. Depending on the housing market in your location, this can take a significant amount of time.
This makes it essential to reduce tenant turnover. While some amount of turnover is normal, make sure to speak to your tenants to understand why they aren’t renewing their contract and what you can do better.
2. Management Issues
Being a landlord doesn’t just involve collecting rent from tenants every month – you also have to manage your property and ensure all your current residents are happy. You will need to fix any issues that arise, mediate interpersonal conflicts between renters, and you may even be forced to evict certain tenants for issues including non-payment of rent and violation of property rules and regulations.
All of this can take a significant toll on your stress levels and affect your ability to properly manage your property as time goes on. Instead of trying to do it all yourself, one option you should consider is to go now and hire a local property management company. These companies handle all the daily ins and outs of property ownership for you, making things significantly less stressful and allowing you to be the best landlord possible when there is a situation you do need to intervene in.
3. Legal Issues
Legal issues that you, as a landlord, will have to deal with include everything from illegal subleases and property damage claims to a refusal of tenants to acknowledge evictions, liability disputes, and more. As with tenant turnover, it’s impossible to avoid legal concerns, especially if you own more than one property.
However, you can mitigate this issue by getting a better understanding of what laws apply to you as a landlord and what your legal requirements (city, state, and federal) are. Additionally, it can be helpful to have a lawyer on hand so you don’t waste time settling issues that do arise.
4. Late Rent Payments
While most tenants are good at paying on time, it can be highly difficult to navigate situations in which rent is significantly delayed, especially if it’s a frequent concern. According to the NMHC tracker, only about 5.4% of renters were late on rent in May 2021. While it is a small number, it can be significant if you’re living on a tight budget or you have to deal with multiple tenants who are late on rent.
For first-time violators, you may find that speaking to them and understanding their reasons for paying late can be more helpful. However, if someone is a repeat offender, make sure to enforce rent collection rules strictly and follow up as much as possible. If necessary, consult with your lawyer about starting the eviction process.
5. Overcoming Property Vacancies
If apartments and units in your property are vacant for a significant amount of time, you will likely find yourself experiencing a financial hit. Not only will you lose out on potential rent, but you also have to pay to stage and advertise the property until you find a tenant.
In such situations, it’s important to reevaluate your offerings. Are you charging a higher rent than average for your property’s location and amenities? Are you offering too few amenities, or are they substandard enough that potential tenants are having second thoughts? Does your property, and you as the landlord, have a negative reputation among tenants? Once you pinpoint the issue, you can then come up with a plan to overcome it.
6. Deciding the Price of Rent
When setting the price of rent, you shouldn’t just look at rent prices in your city, but also your local area. Additionally, you will need to take the value of your property, as well as your monthly mortgage (if any), into account. Finally, check your local rent laws – some states and cities limit how much you can charge for rent.
While being a first-time landlord can be challenging, it doesn’t have to be overwhelming. If you choose to handle the maintenance yourself, you’ll find that – after the first few months – things will seem less stressful and more routine. Should you choose to go down the property management company route, you won’t have to worry about excess stress, as the company will handle it all for you.
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