Top 12 Landlord Mistakes From An Investors Perspective

At Empire Industries, we have put together a list of the top 12 trending mistakes in Houston we see landlords making on a daily basis. Remember that we aren’t only property managers, we are investors as well. That means we have made some of these mistakes personally and want to help you avoid them.

1. Landlords not running proper criminal and background checks. When your property is vacant, you want to get your mortgage paid and you want to let anyone in. That’s a huge mistake, so do a thorough tenant screening.

2. Showing dirty property. If your property is not ready for the rental market yet, don’t show it. You’re not going to get it leased quicker. Also, if you get an applicant who is willing to lease a dirty or unfinished property, is that the tenant you want? It’s better to have a picky tenant who wants a nice place to live.

3. Lack of eviction procedure. When you have a tenant who doesn’t pay, you need to know the laws for eviction and you need to know what to do. Don’t take half of the rent and don’t stop the eviction process in the middle of it. A huge mistake is setting a precedent that you aren’t serious about rent or eviction.

4. Missing documentation. Every judge is different. If you end up in court, you’re going to need what that judge wants to see, and you won’t always know what he or she is going to ask for specifically. Some will want to see the lease; others will want to see the eviction notice. Have everything available in case you need it. Don’t communicate verbally. Instead, have everything in writing.

5. Stubborn landlords. If you don’t fix something for the tenant or you charge the tenant a large amount for a repair, you’re making a mistake. For example, if the tenant has leaky sink and you are going to charge that tenant $250 to fix the leak, the tenant probably won’t call to report it. Then, you’ll end up with mold when the tenant moves out because you tried to save that $250. You are legally obligated to fix things and there is common sense to consider as well. Even after the tenant leaves, it’s your investment property, so take care of it. Don’t let small issues become huge.

6. Licensed and insured maintenance people. Run criminal and background checks on your vendors as well as your tenants. You don’t want someone in the house who is going to steal from the tenant. You’ll end up in a lawsuit, and the judge will ask if that vendor was licensed and bonded. If the contractor falls and doesn’t have insurance, they will go after you. Cheaper is not always cheaper. Using an unlicensed vendor is a mistake.

7. Making your property a second job. You don’t need to be meeting contractors at Home Depot. Leverage your time and utilize the people who are on your team. Let professionals do what they are supposed to do.

8. Lack of capital. Don’t purchase a property if you can’t spend the money to make it look nicer and appealing to renters. You don’t want to fix it slowly over time. That only creates turnover and bad tenants. You will end up spending more money when you do capital improvements over time than if you fixed the property up correctly as soon as you bought it.

9. Paying vendors upfront with no tracking. When you are managing your own property, you are not able to get volume discounts from vendors. That means they can disappear on you. We offer our vendors a lot of work with all the properties we manage, and we still never pay up front.

10. Legal issues and compliance. Property management is one of the most heavily regulated things in the real estate business. Landlords make a big mistake when they don’t know their legal obligations and tax obligations. Pay attention to local and federal laws and stay in compliance. Landlords get in a lot of trouble when they comingle funds or spend the security deposit. The accounting can really get you in trouble, so remember the deposit is not your money and you have to track everything you earn and spend.

11. Landlords not viewing residents as customers. Tenants don’t work for the landlord. This is a marketing and sales business and that tenant is your customer. You might be right to charge them for something, but you’ll lose when they move out and you have two or three months of vacancy and no rent. Provide customer service to your tenants.

12. They want to do everything themselves. Landlords who don’t leverage people are making a big mistake. Remember that you don’t need to do it all. Get the right people working for you so you can do what you do best, which might be finding new investment properties, working at your own full time job or spending time with your family.

We hope you’ll avoid these mistakes.