6 Common Mistakes New Landlords Make When Renting Out a Property
Many a new investor look towards property acquisition as a way to make money and maintain a steady income stream through rentals. One of the most popular ways is to buy a property in Malta for rent. After your first few purchases, you can repeat the pattern once you have enough experience. Over the years, this can become a very lucrative way of creating a perpetual income stream that will look after you for the rest of your life. Get this wrong in the beginning and it can squash your dreams of becoming a successful landlord in no time.
Correct property management takes time and effort as it entails a lot of paperwork such as seeing that the taxes are up to date, compliance issues, tenant disputes and of course the maintenance of the property itself as fit and proper for human occupation. We look at some of the most common mistakes new landlords make and will need to pay special attention to in order to be successful.
1. Purchasing a fixer-upper to rent out
If your first property falls in this category, you may find the task of upgrading the property and finding new tenants simultaneously very daunting. If you have deep pockets and you can appoint a project manager to take care of matters, things may go smoothly without too much stress whereby you will end up with a lovely property that you can rent out. If you are going to go it alone on a limited budget, you need to know about the rules and regulations when it comes to plumbing, building and electricity and you will have to babysit contractors on-site as well to make sure the work is properly done. This will be extremely difficult when you have a full-time job when you start out in the world of rentals. Your prospective tenants will also have little or no sympathy for your personal problems if the property you promised them is not move-in ready on the set date as promised.
2. Not doing enough research before the time
Before you dive into the world of becoming a landlord it is important to do your homework. For starters, speak to estate agents, read up on properties offered for sale and that have sold in the area, inform yourself about the area in general, what the demand for rentals are in the area you intend to buy in, what number of apartments for rent are being rented out for in the area and what tenant profile you want to attract. Becoming a landlord is running a real business… and you need to understand the basic rules that underpin this industry. It is well-known that in commerce there is no room for personal emotions so the more you inform yourself and know about your responsibilities as a landlord, the market and tenants, the better your chances are to succeed.
3. Having a lack of sympathy towards tenants
Many landlords have periods of plain sailing where not much crops up in the form of issues and problems, but there may be times where you will have no choice but to field calls late at night or on weekends. You will also have to learn how to distinguish between real emergencies, nuisance calls from tenants and tenants’ rights as protected by law. One of the fastest ways to lose a tenant and get a bad reputation as a landlord is being unsympathetic, cold and dismissive and not attending to real issues a tenant may have.
4. Not having a professional maintenance network
If you have a good tenant that treats your property with respect, pays on time and seldom bothers you with issues, it is crucial that you act immediately when they have a problem. Since you are unlikely to be a certified electrician and plumber rolled into one, the best advice is to have a good, qualified professional as part of your maintenance team that can attend to matters immediately when things go wrong. Always have a list of contractors for everything and backups for the said contractors in case your go-to is too busy to attend to anything serious that demands immediate attention and intervention. Make sure your turnaround time to fix a problem is as short as possible and always keep your tenant informed of the progress or situation regarding the problem.
5. Renting out multiple properties when you have limited experience
If you are fortunate to have more than one property that you are renting out, the best advice is not to do it alone and manage everything yourself! If you do, you will soon find out how overwhelming it can be looking after tenants while having a limited amount of time each day. Wise landlords appoint a rental management team to look after all the paperwork, legalities, getting the rent in on time, finding new tenants, inspecting properties on a regular basis and even appearing in court on their behalf. Property management companies also have access to resources that a landlord does not have such as manpower and personnel, legal, maintenance and more. Although they will charge you a fee for their services, property management companies are worth every penny especially if you have more than one property to look after.
6. Not Respecting Tenant’s Legal Rights
This is one area where you cannot take any shortcuts even if you have a problematic tenant.
As enshrined in the law, tenant’s rights are there for a reason and you will have to respect the rules and follow them.
Should you go up against the law, you may well end up having to pay damages to even a nightmare tenant!
- Deposits act as a kind of insurance and can only be used or dipped into by the landlord if the tenant has abused or broken anything that needs fixing up or repair upon them vacating the property. Deposits cannot be used for replacing or fixing anything that is considered as normal wear and tear over time. At the end of the lease, you have to return the remainder of the deposit to the tenant with any interest accrued and it is against the law to not do so.
You cannot surprise your tenant any time of the day or night by knocking on their front door, demanding to be let in. You are required to give them a reasonable notice in advance of your prospective visit (usually 24 hours).
In the event of a tenant not paying rent or causing on-going problems, you have to follow due process in order to evict them. This also applies to a tenant that does not want to leave at the end of their contract. As a landlord you will have to stick to the rules and issue them with several termination notices and you may well end up going to court if the tenant is still refusing to leave. Legal battles with tenants can be overwhelming and financially draining, so try and avoid it at all costs. For the most part, the law will be on the side of the tenant until proven otherwise.
Everyone has to start out as a new landlord at some point and many investors have made a long-lasting success out of letting properties… and undoubtedly many still will. Rental housing is always in demand and more so if you buy wisely in the right area. As a landlord your main aim (besides the right property investment) should be to find a quality tenant that will pay on time and will look after your property. That way you can build up a good relationship and look forward to years of hassle-free occupancy and mutual respect.