There are over 100 million people living in rental homes in the United States, according to the U.S. Census Bureau. There are many reasons why you would want to rent out a home and become a landlord. Maybe you inherited the house from a loved one, maybe you want to build your income, or maybe you just aren't ready to sell a house yet. Whatever the reason for wanting to rent it out, being a landlord is a lot of work. Without any knowledge, it is easy to make a few mistakes when you are renting for the first time. In an effort to help you avoid those mistakes, here are three common mistakes many first-time landlords make that you can avoid.
Not Knowing the Law
One of the hardest parts about being a landlord is being able to decipher all the laws surrounding the responsibility. Landlord laws vary state to state. It is important to know what the law says about your actions before you do them. For example, if you are planning on asking a tenant to leave, you must give them a certain amount of time to be out. Another major law you want to avoid breaking is denying rent based on religion, sex, or race. Doing so can get you fined and possibly jailed.
Underestimating the Costs of the Rental
While you can safely assume that your financial responsibility will be for the mortgage, taxes, and insurance, there are many other costs you need to take into account when you become a landlord. Some of these include advertising, property management fees, repairs, and maintenance. Before determining how much you plan on renting the home out for, you want to take a good look at what your costs are associated with renting. You may find that renting is not going to bring in any additional income for a while.
Not Keeping an Eye Out on the Property
Even though you have a rental contract in place, you still need to check on the property occasionally. If your tenant suddenly moves out with no warning, you may not know until the rent becomes late if you have not checked on the property in a while. Keep in touch with the tenants to ensure that the communication is flowing freely and your tenants are content. Tenant turnover can cost you a lot of money, so it is always best to keep your tenants happy so they stay longer.