Common Landlord Mistakes That You Can Avoid
Nov 16th, 2018
Having an investment property can be very rewarding, but there are some common mistakes landlords make.
These mistakes include misunderstanding the lease agreement, deferring repairs and maintenance, having inadequate insurance, charging the wrong rent and failure to budget for expenses and downtimes.
A property manager can help prevent these mistakes and can allow for an effective long-term relationship between the landlord and the tenant.
1. Misunderstanding the Residential Tenancy Agreement
Tenancy agreements are an essential part of renting out your property. It has important information about the tenant's rights and your responsibilities and can have serious consequences if you fail to comply.
Before you sign the tenancy agreement, make sure you've fully understood it and that it includes any additional clauses you require (note that clauses can only be added if they are compliant with the (Residential Tenancies Act of Alberta).
Davies Property Managers are experts at Tenancy Agreements and can answer any questions or concerns you have.
2. Deferring repairs and maintenance
When you purchase an investment property you are essentially buying a business and with that is the need to inject additional capital.
Maintaining your investment and keeping on top of repairs will help you protect the property's value and allow you to attract and keep quality tenants. Holding off on repairs and maintenance to save money is a false economy as you're only likely to attract unsatisfactory tenants, have longer tenant turnover between tenants, and get lower rent.
3. Inadequate insurance
We all know that it's important to have an insurance policy, but they often contain holes that mean you aren't protected against all the risks you face.
It's vital to read all of the fine print and ensure your policy covers everything that's important to you. Unless you're an expert, it's a good idea to work with an insurance broker who has the specialist knowledge to get you the right cover.
At Davies Property Management we have a group insurance plan for Landlords that can help you lower costs and provide the adequate protection. Ask us about our Group Insurance Plan.
4. Charging the wrong rental amount
Setting the right rental amount can be a balancing act. Over price and you can get longer vacancy times and frequent tenant turnover, but under price and you won't get the same return on your investment.
You need to ensure your rent is in line with similar properties in the area, and that you regularly review it throughout the tenancy.
Our property managers can guide you in setting the right price and can advise you on how to manage rent increases.
5. Failure to budget for expenses and downtimes
Owning a rental property means you'll incur expenses like insurance, repairs and maintenance. And on top of that, there's always the threat of having a vacant property between tenancies.
Many landlords do not have a comprehensive budget for these things or take them into consideration when setting the rent. Having a good financial plan in place will prevent you from ending up out of pocket.