The South Bend, Indiana, real estate market is active and in high demand. So, you may have followed in the footsteps of other real estate inventors and purchased a rental property.
If you are thinking about becoming a landlord, read on. We'll explain five common mistakes first-time landlords make and how to avoid the same missteps when preparing your house for rent by owner management.
1. Not Screening Tenants Properly
One mistake to avoid as a new landlord is shortcutting the screening process for new tenants. Proper vetting is vital.
That means background and credit checks. You should ask for references and follow up with every contact point. Ask about any history of unpaid rent or property damage.
If you have an empty property, you may feel a sense of urgency about securing a tenant. But never do it at the cost of rigorous screening.
2. Failing to Carry Out Repairs
All rental properties need routine maintenance and repairs. Timely action can save you money in the long run, addressing and fixing problems before they escalate.
Plus, maintenance issues will lead to more complaints from tenants and could strain relationships. If you neglect the upkeep of a property, you could also find yourself without tenants for an extended period, which will impact your rental income.
3. Not Familiarising Yourself With the Law
The landlord-tenant relationship doesn't end at the rental agreement. You are bound by law, specifically state law for Indiana. You must understand the details to avoid getting into a legal battle.
For example, there are laws about the process you must follow when evicting a tenant. If you don't know the process, your tenant could challenge the eviction in court, ultimately causing hassle and extra expenses.
4. Not Creating a Comprehensive Lease Agreement
A lease agreement is the contract between you and your tenant. When it's comprehensive and transparent, it can help aid relationships. Yet some new landlords can make the mistake of relying on generic or basic contracts.
These could leave you vulnerable to problems later on.
For example, suppose you don't specific payment dates and terms, including fees for late payments. In that case, you could face the problem of unpaid rent without a framework for resolving the situation with the tenant.
5. Not Researching Local Rental Prices
When setting rental prices as a DIY landlord, don't be swayed by emotion. You might feel tempted to calculate a rate based on what you think your property is worth, but real estate is like any other investment; the market sets the price.
So, instead of fixing the rate you think it's worth, you need to research your local area.
Find properties similar in size and style and look at their most recent rental prices. Or speak to a property management company like us for an expert opinion on pricing your property.
Preparing a Home for Rent by Owner Management
When preparing your investment property for rent by owner management, approach it like a real estate professional. Don't skip the preparation work, and ensure you are legally and financially protected.
You should also consider the benefit of using a professional property management company like PMI Michiana. Get more information on what we offer by viewing our services.