Do you ever wonder how a seemingly good rental property investment goes wrong?
Today we're going to talk about the top 5 mistakes that can destroy your rental property investment.
1. Not Doing Proper and Regular Maintenance
When you own a rental property, you're obligated to ensure that the property is safe and habitable for tenants. This is not optional. You are required to do this by law and typically by local property codes.
However, you can't only do the bare minimum when it comes to maintenance. Some landlords are tempted to try to use cheap labor and materials to save money. What ends up happening is that the same issue has to be fixed over and over because it never is fixed correctly.
Also your tenant may get fed up with the poor service and decide to leave. Guess what happens after they move out. You still have to fix the same issue again and now you don't have rental income coming in from that tenant.
So don't skimp when it comes to maintenance. Remember, small maintenance problems only snowball.
2. Not Planning Ahead for Vacancies
Dealing with vacancies can be very stressful. That's because it is not usually planned for a tenant to leave you with a vacancy. You don't want a vacant property that isn't producing income.
Worse, maybe you thought that you might be able to find a replacement tenant quickly but months later, the unit still isn't rented. What happens next is that you start making concessions. You accept a tenant you otherwise wouldn't have if you weren't in a jam.
Understand that when you have a rental investment, there are going to be periods when you have vacant units. Make sure to put money aside in advance so that your prepared and don't start making emotional decisions that could leave you in a bad financial position.
3. Poor Communication
Poor communication is a major problem in any type of business. However, if you have poor communication in your rental business, you could end up losing a lot of rental income fast. Remember that you are in the customer service business so your tenant has the right to go elsewhere if your service as a rental property manager isn't meeting your needs.
So make sure that you communicate regularly with your tenants so that they have an opportunity to voice any concerns. Let them know your availability so that they know when and how to reach you. Make sure they are aware of what constitutes an emergency and when they should reach out for help even if it's the middle of the night.
4. Not Setting Expectations
It's not only important that you set expectations with your tenant, you should also do the same with the contractors and vendors that you work with. Let them know when you want a job done, how you expect it to turn out, and what you want the costs to look like.
When it comes to your tenant, all expectations about the rentals terms should be clearly outlined in the lease agreement.
5. Goal Mismatch
The last mistake that you can make when it comes to rental property investments is not having a strategy that is aligned with your long term goals. Many property investors make this mistake by buying properties and not even knowing why they bought them.
Even if the property seems like a good idea in theory, you need to determine whether it will actually fit into your financial plan and help you to achieve your goals. Don't only consider the next few months but whether the property will be a good fit for you years down the road. Stay on track and you can expect to see your real estate profits grow. If you don't: expect that you'll be watching your hard work go to waste.