Common Mistakes New Landlords Make

So you have taken the big leap of faith and have become a landlord, or are planning to very soon. There are a lot of mistakes that new landlords often make. To avoid these pitfalls, I've come up with a list so you can avoid them.  There have been plenty of articles written about the subject, but it never hurts to revisit this.

I've synthesised a few great articles into my top suggestions.

I couldn't agree more with these ideas:

•  Not having enough funds in reserve. Putting away 3 months is good, having 6 months worth of funds is a much smarter idea. You don't know the market, you don't know what may or may not happen. Factor that in, have the money, and your stress levels will drop.
• Not putting enough effort into getting your place in tip top condition. Having your place in the best possible condition, shows your prospective tenants that you expect them to look after it, it shows that you care and will be responsive, and will minimise your initial maintenance.
• Impatient to rent it out. Renting it out as fast as possible opens you up to tenants that you really, REALLY don't want. Take your time, have a list of standards that your tenants need to meet, and don't negotiate on them. If go too fast the chances are high that you will need to dip into those funds that you set aside.
• Not putting the effort to retain good tenants. If you set it and forget it, then you are likely to lose the tenants. Put some effort in, send Christmas cards, offer the odd nice surprise or upgrade. This shows you care and you want them to stay. 

 Adding to these ideas this article included

• Not allowing enough for maintenance and repairs. It takes money to keep your place in good condition.  If you let maintenance and repairs slide because you don't have the funds (see first tip) then you property will quickly go downhill.  You will lose value in your property and your tenants.
• Treating the rental like a hobby, rather than a business. You are in business as soon as you have tenants. Therefore, set it up as such -  have separate accounts, use good accounting software or an accountant, make sure you pay the right amount in tax. If you don't treat it like a business you are more likely to either lose money or owe money.
• Not putting things in writing. From leases, to contractors working on your place. Have everything in writing so there are no questions about who said what.
• Not following through with lease terms.  If you have a clause in your lease agreement that says there will be a late fee for not paying on time, charge the fee straight away. If you follow through quickly, tenants know you mean business.

Don't forget about these emotional mistakes

• Failing to realise how difficult the business can be. It can be tough to follow through with unruly tenants. It's hard to keep many plates in the air - especially with multiple rental properties.
• Loving the rental too much. It is not your place to live in, it is your tenant's. Don't get too attached to it, otherwise, you'll be disappointed when tenants don't look after the property like you would.
• Underestimating tenant drama. Tenants are human and sometimes make bad decisions. Expect them to have some kind of issue, either with the place itself, with neighbours or with you. Prepare by developing a thick skin.
• Being too nice. You are their landlord, not their friend. When tenants slip on one thing, sort it out swiftly, otherwise it can snowball out of control. By being friendly, but not their friend, it's easier to follow through with the unpleasant things.
• Treating new tenants like the old ones. You've had bad tenants in the past, don't expect the new ones to be the same. New tenants mean a clean slate.
• Not understanding the law.  There are many legal pitfalls: from asking illegal questions, not having house to code or not understanding tenant/landlord laws for your area. If you don't understand the law, then you open yourself up to a world of legal hurt!  Do your due diligence to get up to speed.

Finally I would add my own

• Trying to do it all on your own. Sometimes it's better to get some help from a qualified Property Manager and take the headache out of it. That doesn't mean to stand by and not have any involvement, it means the day to day running is taken care of.
• Not becoming a landlord because it seems to overwhelming. It seems to hard when you see all the things that could go wrong, but it's not. Just take you time, develop a good team and you will be a great landlord in no time.
• Buying the wrong property at the beginning. Start small. Don't by a 25 unit complex until you have wet your feet and made a few smaller mistakes, that way you build your confidence and your empire as you go.

Are the areas that I have missed that you think are important? Have you made any of the above mistakes?