Top 7 Mistakes Homeowner Freshmen Make When Picking a New Tenant
Learn from our wrongdoings and don’t repeat them
In this article:
- how to cleverly cover you are a newbie to rentals
- unrated list of seven mistakes to avoid when renting
- SWORP TIP!
Are you new to a landlordship? Doing all the management yourself? You probably have hands full of advertising, phone calls and emails with prospective tenants, drafting contacts, and other duties. Many property investors tried have been through purgatory for sake of doing it all alone before they decided to switch to a property manager. Many times making mistake when picking a tenant causes no harm, but occasionally you end up paying quite a cost (especially money).
What property investment freshmen generally have in common, is that they hurry to occupy their vacant units as fast as possible. It is natural, that you want your property to generate rental income, but usually, it doesn’t pay off in a long-term time horizon, because you can easily make a wrong pick. Can you imagine buying a sailboat just because it looks good on paper and you wish to be at the helm? I didn’t think so.
No one suggests that you can’t be lucky enough to get away with good and happy tenants and happy you. But sure someday you will get into trouble ignoring red flags as we have discussed in the previous article on the hellish tenants. The probability also rises when you are just lazy to screen a prospective tenant or accept one just because he offers to move in earlier than other tenants or because of anything else he promises.
If you try to avoid financial havoc, certain factors you shall never underestimate. Internalize the guidance of the following mistakes homeowners tend to make even if they know it might get them into a hairy situation.
- Not asking for reference: It takes one phone call on email to find out about the aspiring tenant is the right person. Demand a contact to the previous landlord or employer and ask them about this person. If they hesitate to answer, let alone don’t answer at all, something is off.
- Not verifying at the Debtor Register: Some homeowners tell their prospective tenants in advance that they will require official proof of the non-existence of arrears. But be sure that the majority of problems you could have with tenants come from those who have credit issues. Don’t be lazy to check yourself online for example at https://www.exekuceinfo.cz
- Not charging for late rent payments: We know it may feel draconian to charge someone because he paid the rent a few days later. Homeowners usually embrace the idea that they should be popular among renters. Also, the renters usually come with a convincing reason why their payment was delayed. The only thing that can save you from losing money is, in the end, applying zero tolerance to all, even single mothers, people suffering from a mental breakdown, and fresh divorcees. Don’t forget to incorporate the fee for payment delay into the contract!
- Not checking on houses: We know that checking the condition of a unit is not the most amusing thing to do, but surely it pays off to do it regularly, even though there definitely will be tenants who consider it as an invasion of their privacy. However, if you do it at least once a year and then make a thorough assessment of every detail when your unit is vacant, you will avoid unpleasant surprises as the new tenant moves in. It is for the protection of both tenant and landlord who don’t want to risk fighting over poor maintenance causing costly repairs.
- Not getting full payment before move-in: We all have been there. It is so much money all at once! The deposit, rent for the first month, in the situation where one literally spreads his money all over the place because of moving, packing, putting the previous accommodation to the original condition, buying new equipment for the new apartment… Yes, moving is costly indeed. Some prospective tenants beg for paying only a part of the required amount and promise to pay the rest later. So landlord freshmen indulge them, let them split the amount, and then… then the landlords wait. And wait… spending time waiting in vain. Because the tenant “forgets”, pays his regular rent next month, and pretends it is all just fine. Don’t ever let this happen again - no exceptions. Practically, if the tenant can’t afford to pay the deposit and rent at once, he can’t afford the rental at all. Be sure that late and not sufficient payments are already underway.
- Not discussing the expectations of an aspiring tenant: Especially as an inexperienced landlord, you may be astonished how many aspiring tenants plan to horse around in your rental. Sometimes they even tell on themselves. Some have “a few cats”, and some just “ run a small business”. If you don’t appreciate hearing of this cool porn that shoots in your exquisite factory loft, make it clear before the clapperboard claps.
- Choosing a tenant who lives in outer space: There are tenants well aware of what they can afford to pay every month. And some have absolutely no clue about the money they can make. Receiving bonuses at work or just getting some extra money somehow really isn’t the right impulse to move into an apartment one couldn't afford even yesterday. Demand proof of stable income.