Although rental property ownership can be a fantastic vehicle for passive income generation, it does entail a certain level of responsibility. So, if you were hoping to just sit back and collect rent checks, you’d best manage your expectations. Far too many fledgling landlords take the “passive” part of “passive income” way too literally and wind up making various rookie mistakes as a result. First-time landlords looking to transition into their new role with minimal setbacks should work to avoid the following missteps.
Going About Renovations In The Wrong Manner
Renovations can be a great way to make your rental property more appealing to prospective tenants. Depending on the type of renovations you carry out, you may even be able to justify charging higher rental rates. However, making renovations to a rental property that currently has tenants can prove both frustrating and inconvenient for your renters. Even if a building or complex is fairly large, tenants are likely to hear work being done, and depending on where the renovations are taking place, their respective daily routines are liable to be affected. For example, if renovations are being carried out in the common areas of a multi-family property, it’s hard to imagine the people who pass through aren’t going to be inconvenienced.
To help minimize frustration, provide your renters with ample notice of any forthcoming renovations. While they’re still likely to experience some level of inconvenience, this will ensure that they have time to prepare accordingly. You can also make sure that renovations are completed within a reasonable time-frame by hiring licensed contractors who specialize in the type of work you need done. Furthermore, to avoid complicating matters, take care to obtain the proper permits for any renovations you intend to carry out. Good permitting software is likely to prove useful in this endeavor.
Going Overboard With Rent Increases
At the end of the day, you and your tenants have a business relationship. While it’s fine to be friendly with renters, it’s important to understand that you are not friends. You provide them with a place to live, and they, in turn, provide you with income. However, while you may not be in this business to make friends, this doesn’t mean it’s okay to price-gouge your tenants.
This is why raising rent by considerable amounts for the sole purpose of getting more income out of your tenants is a bad idea. While there are perfectly legitimate reasons for rent increases – rising utility costs, property taxes, operating expenses, etc. – raising rent just for the heck of it is likely to facilitate understandable pushback from your tenants.
Of course, this isn’t to say that you can never raise rent. With life in the U.S. becoming more expensive by the day, some rent increases are inevitable. And while you’re still likely to experience some pushback, make a point of telling your tenants why rent is going up whenever you have to enact an increase. Again, your renters are unlikely to be gladdened by this news, but your transparency and forthrightness on the matter should help soften the blow.
Disregarding Maintenance Requests
Disregarded maintenance requests are among the most common sources of renter frustration. As the landlord, it is your job to ensure that the property is livable, and ignoring maintenance requests from your tenants amounts to a dereliction of this duty. With this in mind, make a point of promptly responding to any maintenance requests you receive during normal business hours. Additionally, requests received after-hours should receive special attention first thing in the morning. Tenants should also be given a number at which you can be reached in the event of an after-hours emergency.
The longer you ignore a maintenance request, the larger the problem is likely to become. In addition to causing damage to your property, ignoring maintenance requests may result in withheld rent payments and declining renter retention rates.
No matter where it’s located or how many amenities it has to offer, no rental property can stay afloat without proper management. Unfortunately, far too many fledgling landlords go into this role without understanding the various responsibilities it entails. More often than not, this results in dissatisfied tenants and poor renter retention rates. So, if you’re hoping to make a consistent profit from your first rental property, you’d do well to steer clear of the mistakes outlined above.