There are a laundry list of things that landlords shouldn’t do if they want to make as much money as they can. Here are some of the most popular pitfalls
.jpg)
Maximizing revenue potential isn’t as easy as charging the highest possible rent that the market can bear. Being a successful landlord means also being a smart one, staying aware of mistakes that could potentially cost you a lot of cash if you’re not doing your due diligence.
Civic Financial explores how to be a successful landlord by avoiding expensive mistakes in a recent blog post. Understanding how costs can add up over time allows you to make smart choices and maximize your revenue. While there are obvious times where you will spend money in order to make money, avoiding the below mistakes can limit your expenses and really maximize your revenue over time.
- Investing in the wrong properties
Investing in the wrong properties is an obvious move that can cost you if you’re not careful, but plenty of investors who are eager to jump into the market either move too quickly, move without doing their research, or move without the advice of those who are more experienced in similar projects.
“You make your money when you buy a property,” said Civic. Investing in the wrong properties or overpaying for the right ones makes it impossible to generate profits worth your time and energy. Bad properties have slim margins and need lots of work. Practice patience and find properties that have the best opportunities for greater gains and more margin for error.
- Renting to the wrong tenants
Remember, tenant selection matters. Ask yourself, are you advertising in the right ways to capture the eyes and interests of the best tenants? Then do you have the right screening process in place to vet those applicants? If not, you could impact your long-term profitability. Bad tenants can cost you in late rent checks and/or missing payments, lack of care for the property with frequent maintenance issues, violations of lease agreement terms, high turnover, and failing to leave the property in good condition when they move out.
“If you aren’t carefully screening tenants, then you’re taking a major risk,” said Civic. Bad tenants could cost you, so be sure to enhance your tenant screening process to maximize profitability.
- Overpaying for insurance
Overpaying for insurance will also impact your revenue. Be careful, do your research and, again, be patient. Many landlords accept whatever insurance or personal loan they can afford, often over spending. Now is a good time to shop around and compare rate options. Civic recommends services like GoBear that allow people to analyze and compare products from providers. If you are conscientious as a landlord, you will enjoy better profits.
- Doing the wrong renos
Cosmetic changes might not seem like a big deal, but selecting the wrong finishes could be a bad move, impacting your bottom line over time. That doesn’t just mean selecting the most high-end options that your wallet will allow. It means knowing your market, and what’s right for the renters in that area.
“Be smart with the finishes you choose for your rental property,” said Civic. “You want designs that look good yet don’t require expensive replacements after every tenant moves out.” Instead of easy-to-ruin cheap carpet options, Civic recommends going for options like vinyl plank flooring that is more durable while offering a potentially better look.
“In the end, there’s a fine line that separates successful landlords/investors from the average ones,” said Civic. “It comes down to purposeful cash flow management and intelligent, proactive decision-making.”
