It has been my experience as a Northern Virginia - Washington D.C. metro area property manager that there are 6 common and costly mistakes that Landlords and Real Estate investors make with their rental properties. Pay attention and don’t fall into any of these traps if you are in the process of/thinking about renting your rental home.
Mistake #1: Not running the numbers prior to purchasing your rental home. Real Estate rentals and investments should be treated as such. All investments require a proper amount of due diligence and homework to ensure it will be a good investment. Many landlords and investors purchase a rental property without running the numbers and ensuring a good return on their cash and time investments. When running the numbers, you will want to make sure you find out the following: market rent for that property, typical time to fill vacancy, the mortgage payment amount, property taxes, HOA fees, cost of small and capital expenditures, etc. These numbers will give you a good idea if you will cash flow positive prior to actually purchasing the property.
Mistake #2: Not running the numbers when deciding to rent or sell the home. Many of our Northern Virginia Landlord clients didn’t purchase the home we manage for them with the intent of renting it out. It may be many individual’s first instinct to sell their home when they have to move; however, an analysis of renting the home may end up saving you or even earning you more money. Make sure you look into possible results of both options prior to committing to anything one way or the other.
Mistake #3: Paying too much attention to the short term and neglecting the long term. Many times landlords will opt for the “cheapest fix” or avoid repairs and tenant concerns all together. Neglecting simple maintenance and requests can become a major mistake for the landlord. Many times it is cheaper up front to properly maintain a property than it is to actually fix or even replace parts of a home down the road due to constantly placing a bandaid on it. Tripping over dollars to pick up pennies is cliche that holds truth here.
Mistake #4: Not treating their rental property as a business. Many landlords see their Northern Virginia rental home as just that…. A rental home. Landlords and investors should see their rental home as a business, not just a rental home. Anytime currency is traded for a product or service, a business is formed. In this case, the landlord is providing a product (the rental property) and the tenant is paying for that product (in the form of rent). As a result, the landlord has a great opportunity to turn a profit when running a successful business. Remember, new businesses have a very high failure rate, and that is no different when it comes to rental investments. Do your best not to fall in any of the traps mentioned in this blog and make sound business decisions with your rental business.
Mistake #5: Not enough emphasis, time, or resources spent on finding the perfect tenant. The single most important part of the rental process is placing the PERFECT TENANT. Here at Flat Fee Landlord we utilize a system called the “Perfect10ant” to find and screen tenants for the properties we manage. Landlords, this is NOT an area to skimp on. If you do not know how to properly look for, vet, and screen a tenant, then you need to hire a professional with a proven track record to do it for you. The tenant in your property dictates the experience you will have as a Landlord.
Mistake #6: Landlords not reading their agreements (property management, leases, etc) thoroughly before signing. Way too often do I have landlords call my offices and want to transfer management of their property to our company; however, cannot because they are tied into a contract with their current manager that they can’t break right away. Make sure you read and understand the management agreement, lease, and any other binding legal contracts before you sign them. Know what is expected of you as the landlord; as well as, what role the property manager and tenants will play as stated in the agreements.
Those are the top 6 mistakes landlords make based off our experience managing properties in the Washington DC Metro area. Make sure you learn from other’s mistakes and avoid at all costs. For questions regarding property management of investing in real estate, visit our website at www.FlatFeeLandlord.com or call us at 703-261-9414.
