In single family rental real estate, as in any area of business, nobody wants to think about failure, or even short of that, less than expected returns from your investments. However, in order to succeed as a landlord and operate profitable single family rentals, you have to be aware of the common mistakes property owners make so you can avoid them.
Avoiding Errors That Can Hurt Your Single Family Rental Business
Below are some of the errors often made by landlords. Make too many of them yourself, and you may find it difficult to meet your revenue objectives with your single family rentals. On the other hand, if you avoid them all, your odds of success increase significantly. Be sure that you don’t:
- Fail to fully screen potential tenants. Taking the word of a friend of a friend about their friend’s character, ability to pay the rent, etc. can be very costly. When that person starts to miss rent payments, damage the property, and throw loud, late-night parties, the person or people who vouched for the tenant have no responsibility — financial or otherwise — for the person’s actions. Be sure to do the necessary research and background checks.
- Fail to keep your landlord hat on.If you allow yourself to become a tenant’s confidant, counselor, case worker or anything other than their landlord, you have significantly complicated your relationship with them, which can have a negative impact on your business.
- Fail to ensure your property is well maintained.Between lost rent due to vacancies, advertising and repair costs, tenant turnover is expensive. It’s easy to say that you’ll replace the countertops, put in new landscaping, paint with more contemporary colors, and repair damage after the current tenant vacates. But, what if taking that approach causes tenants to vacate after their leases are up or potential renters see these deficiencies and decide to keep shopping? Being sure to balance your business needs with the tenant’s privacy rights, take steps to stay on top of repairs and upgrades.
- Fail to be firm about rent payments.Allowing a tenant to put off paying rent due to one unforeseen circumstance after another not only hurts your bottom line, it sets a precedent with this person and others who hear about your behavior. Be fair but firm.
- Fail to be decisive. From damage repairs to dealing with inappropriate or unlawful behavior, the longer you wait to act, the worse the situation will become. It can be hard to deal with tenant issues when life is chaotic as it often is, but doing so will save you time and energy down the road.
Your Strategy for Single Family Rental Success
Profitability in the single family rental business not only involves making smart decisions, it also requires avoiding poor ones. Knowing what caused other landlords to fail can be one of the best ways to ensure your success.