Investing in real estate can be a great way to generate wealth, but some people become property owners by accident and don't know how to approach things.
Accidental landlords have a huge opportunity and how they proceed can have a huge impact on their future. If you've found yourself in this position, don't rush into things or proceed lightly. While you may be thinking about the things you're now able to do, it's also important to consider what you shouldn't do.
In this rental property guide, we'll go over some key property management tips that can help accidental landlords in Nashville, TN, avoid major mistakes. Let's dive in.
1. Not Screening Tenants
The quality of your tenants will have a sizable impact on your experience as a landlord. Quality tenants will:
- Pay rent on time
- Take care of your property
- Report any issues straight away
- Adhere to lease conditions
Low-quality tenants may cause various issues that can cause you stress and impact your cash flow. Thoroughly screening tenants can help you avoid bad tenants. A property manager knows how to do this properly so it's often a good idea to outsource your tenant screening.
2. Not Budgeting for Vacancies
There will always be monthly expenses, and while these are typically lower when a property is vacant, you'll also not be making an income from it during this time. You should budget appropriately so that you can afford these expenses even when a property is empty.
3. Underestimating Costs
There are various costs you need to consider for any rental property, such as maintenance and mortgage payments. If you underestimate these, you could end up facing financial difficulty.
It can be a good idea to get new landlord advice from an experienced property manager. They can inspect your property and give you an idea of what costs to expect. You'll then be able to budget properly and avoid cash flow problems.
4. Making Handshake Deals
It's important to protect yourself legally when you become a landlord. Handshake deals may initially seem fine, but you could regret them if any problems come up.
Even with high-quality tenants, you can have disagreements. If this happens, having clear, written documentation is vital. You should always get a professional to assist you with lease agreements to make sure they're suitable and airtight.
5. Not Handling Finances Properly
Many new landlords go into it with a relaxed mentality, and this can lead to problems down the line. You should set up separate bank accounts specifically for property finances like expenses and security deposits.
Establish a bookkeeping system and talk to a tax professional to make sure you're handling things correctly. You should also look into the potential tax breaks you can get as a property owner to improve your overall profits.
Professional Assistance for Accidental Landlords
Accidental landlords can have a tough time at first, but with the right property rental strategies, you can start generating a strong, reliable income. Having a professional on your team is also key.
PMI Greater Nashville is a full-service real estate asset management company serving clients in Nashville, TN, and the surrounding communities. Our experienced team uses the latest technology to help accidental landlords thrive and get their real estate business going. Take a look at our property management services page to see more about what we can do for you.
