Top 10 Landlord Mistakes
One of the best ways to learn how to do anything is to learn from the mistakes of others, and to take advice from seasoned veterans to heart.
RHAWA’s Resource Desk hears from dozens of our members, daily, about the trials and tribulations of being a landlord. Over the years we’ve amassed a long list of stories to tell and learned how to offer resources and information to our members to help them avoid pitfalls. Listed here are the top 10 mistakes landlords make.
Not knowing the law, or at least the important parts of it. We’re not all attorneys, and most of us work outside of operating our rental properties. However, all landlords should have a basic understanding of their obligations under state and local law, as well as Fair Housing laws. RCW 59.18 is your starting point, as well as specific laws referenced in the RHAWA leases and other forms. There are a ton of references and information on the law available, and you’ll be better prepared by researching them.
Not staying educated. Been a landlord for 20 years? Congratulations on your success! Having said that, you’re setting yourself up for failure if you don’t stay current on changes in the law and best practices for operating your rentals. Laws are changing rapidly in the rental housing industry, and how you operated your rentals even 5 years ago likely is not legal today.
Inadequate tenant screening process. Your only measure of ensuring an applicant is qualified and likely to be a good renter is by having a thorough screening process. Credit history, income and employment verification, previous landlord verification, and evictions and civil records history are critical components to consider. Recent changes have impacted a landlord’s ability to consider criminal records, and at a minimum a landlord must now make a “business case” for rejecting an applicant due to criminal records. Check with RHAWA to learn more on this emerging issue in screening.
Inadequate or no rental agreement. Perhaps this should go without saying, but your rental agreement is literally your greatest protections should problems arise during a tenancy and sets a groundwork for expectations of landlord and tenant. If you don’t have a current rental agreement with your tenant take care of this issue today to prevent huge headaches tomorrow.
Forgetting to increase rents on a regular schedule. Regular, predictable rent increases do a favor to both you and your renter. Yes, keeping rents lower will keep your renter in the unit a long time and save you the headache and financial risk of turning a unit over. However, consider the shock and financial stress that large, unpredictable rent increases place upon your tenant. Huge rent increases once every 5 years are a great way to wind up on the news, and are of no benefit to anyone involved.
Not knowing who to call when disaster strikes. Having a set procedure and vendor list who you know can take care of problems for you when disaster strikes at your rental is a huge stress relief and will ensure problems are taken care of quickly. You’ll also go a long way toward keeping your tenant happy.
Not regularly inspecting your rental units. For many landlords, so long as the rent is paid on-time and you don’t get an angry call from a neighbor or police things are running smoothly. Don’t let those positives lull you in to a false sense of security. At least once per year, ideally at least twice, you should be posting notice to your tenants to do a routine walk-through inspection of the unit to make sure everything is being taken care of appropriately. Crucially, you’ll also see if any damages or repairs have gone unreported to you which could expand in to even bigger problems if not reported in a timely manner. An ounce of prevention is worth a pound of cure.
Not keeping track of the local rental market. You don’t have to be an economist to know the basics of the industry and where your property stands in the market. Keeping tabs on rent trends, vacancy rates, and the types of features offered in rentals will ensure you’re on top of your game when it comes time to finding a new renter and maximizing the potential of your investment.
Letting things slide. One of the greatest parts about being a landlord is the personal relationships you develop with your renters. It’s important, however, to not allow those relationships to get in the way of responsibly operating your rental. Allowing timely rent payment or other rules to be ignored will likely strain your relationship more than a simple reminder or compliance notice ever could.
Not running your rental as a business. In the end, landlords are small business owners with hundreds of thousands or millions of dollars tied up in assets that demand your professional attention. It’s tempting to “set it and forget it” once a good renter shows up who pays rent on time and treats your property right, but this is an industry in constant change and a professional approach to being a landlord will always net you greater returns.