- Being a landlord is a common side gig in the U.S., with about 10 million Americans owning rental properties.
- New landlords often make mistakes like poor tenant screening, lack of lease agreements, and property maintenance.
- An absence of an emergency fund and poor communication with tenants are frequent pitfalls for new landlords.
- Improving rental properties can involve investing in security systems, upgrading appliances, and regular inspections and maintenance.
- Offering incentives to good tenants and fostering clear communication can improve tenant satisfaction and business success.
Being a landlord can be an excellent way to earn extra income and build wealth over time. However, it can also be overwhelming, especially for beginners. Being a successful landlord means learning from your mistakes and avoiding common pitfalls. Here’s a look into various landlords in the country, common mistakes that landlords make, and ways to improve your rental properties over time.
Landlords in The U.S.
It’s estimated that about 7% of tax filers are considered to be landlords in the U.S. This means that about 10 million Americans are landlords. The majority of these landlords, about 77%, own only one rental property. Only about 6% of landlords own more than ten rental properties. These numbers show that being a landlord is a popular side hustle in the U.S. and can be achieved even with just one property.
Common Mistakes Landlords Make
Being a new landlord can lead to various problems. Here are some common mistakes made by landlords:
1. Screen Tenants
One of the biggest mistakes that new landlords make is not screening tenants properly. It is your right as a landlord to screen potential tenants for your property. Tenant screening may be time-consuming, but it’s essential to make sure that you have responsible, dependable renters. Consider running a background check, credit check, and rental history check before renting to anyone. Take the time to verify employment and income to ensure that your tenants can afford to pay rent each month.
2. Lack of Lease Agreement
Another mistake beginner landlords make is not having a lease agreement. Some landlords believe that a handshake agreement is enough. However, a lease agreement can protect your interests and clearly outline expectations for you and your tenants. It should include basic information like the lease terms, rent, and security deposit amount. Ensure you provide copies of the lease agreement to your tenant and keep it on file.
3. Lack of Property Maintenance
Failing to maintain your rental property is another mistake that new landlords make. Regular maintenance and inspections can help you avoid costly repairs down the road. It’s essential to keep your property in good condition so your tenants feel comfortable and safe. Address any problems or maintenance issues quickly to ensure your tenants stay happy.
4. Not Having an Emergency Fund
Unexpected expenses are inevitable when you own a rental property. Not having an emergency fund can be a huge mistake and leave you in a bind when something unexpected happens. Make sure you set aside money each month for emergencies like repairs or maintenance. An emergency fund can help you address problems quickly and avoid financial stress.
5. Failing to Communicate With Tenants
Lastly, communication is essential when you’re a landlord. Failing to communicate with your tenants can lead to misunderstandings and cause an otherwise good tenant to leave. Make sure you establish clear lines of communication with your tenants from the beginning and respond promptly to any requests or concerns they have. Being responsive and easy to reach can improve tenant satisfaction and help maintain your rental property’s reputation.
Ways to Improve Your Rental Properties
As a landlord, it’s essential to look for ways to improve your rental properties constantly. Here are some tips to help you enhance your rental business:
1. Add Security Systems
Security systems are essential for every rental property. They can help protect your property from theft and vandalism and make tenants feel safe. Add security cameras, deadbolt door locks, and motion-sensor lights to increase security. Better yet, you can get a packaged home security system for your properties. This system caters to residential life, which fits well with rental properties.
2. Upgrade Appliances and Amenities
Upgrading your rental property’s appliances and amenities can increase the value of your property and attract potential tenants. Consider installing new energy-efficient appliances, updated flooring, or modern fixtures to make your property more appealing. You can also add amenities like a gym or pool for tenants.
3. Regularly Inspect and Maintain Property
Regular inspections and maintenance are crucial to keeping your rental property in good condition. Schedule regular inspections of your property to ensure everything works correctly and address any issues promptly. Keep up with regular cleaning, landscaping, and repairs to maintain the value of your property over time.
4. Offer Incentives for Good Tenants
Retaining good tenants is key to a successful rental business. Consider offering incentives like discounts on rent or gift cards for tenants who pay on time and take care of the property. This can help encourage positive behavior and foster a good tenant-landlord relationship.
Being a landlord can be a profitable endeavor, but it also comes with its fair share of challenges. Avoiding common mistakes, such as not screening tenants properly or failing to maintain the property, can make a significant difference in your success. On top of that, constantly seeking ways to improve your rental properties, like adding security systems and upgrading amenities, can increase the attractiveness of your property and tenant satisfaction. Remember, good landlord-tenant relationships are built on clear communication, mutual respect, and the understanding that both parties have responsibilities to fulfill. With careful management and a proactive mindset, you can ensure that your journey as a landlord is both rewarding and successful.
