Everyone has been a rookie at something at some point in their lives, whether it was in a new school, job or sport or even as a landlord.
Being a rookie means that you lack the experience of more seasoned players. This lack of experience often translates into so called "rookie mistakes" because some things just have to be learned from experience.
Over the years I have talked with many a rookie landlord. Many times these talks arise due to some sort of problem the rookie has encountered and they are now seeking advice to solve it. We more seasoned landlords tend to see these same rookie mistakes over and over again.
The Top 8 Mistakes Made By Rookie Landlords
The following are what I think are the top eight rookie landlording mistakes, and if you avoid them, you'll be sure to have a higher chance of success!
1. Rookies Do Not Properly Screen Tenants
Tenant screening is perhaps the most important thing a landlord can do.
I see too many rookies take potential tenants at their word and forgo the full background check thinking it will save them time and/or money. Unfortunately, rookies just do not seem to have built up their BS detectors yet and believe what potential tenants tell them.
2. Rookies Do Not Treat Their Rentals As A Business
Rookies will co-mingle funds, lose receipts, and generally keep things unorganized.
Landlording is not a hobby. If you want to make money you have to treat landlording as a business. Otherwise those dollars will disappear and you will be left wondering where they went
3. Rookies Accept The Sob Story
The first few time your tenant is late with the rent I guarantee that you are going to get some kind of sob story.
Of course, being the nice person that you are you will want to let them slide a bit. After all you do not want to be a jerk right? Wrong! Learn not accept the sob story. Rent is due when rent is due and if you let things slide once guess what you have taught them. Think about this. Will your bank or lender let you slide? Will the grocery store? No. Does that mean you can't make an arrangement for exceptional circumstances? No, but you need to....
4. Rookies Do Not Get Everything in Writing
Rookies will often do a deal with a verbal handshake only to get burned later with the "I thought you said I only had to pay this much?" Always get everything in writing. Insist on it.
5. Rookies Do Not Understand The Costs
What does it cost to paint a small bathroom?
How much is it to snake out a sewer line or to keep the grass cut? How about paying someone to do your taxes? If you do not understand these business costs you are setting yourself up for failure. At the end of the day you will wonder where all the money went.
6. Rookies Do Not Know The Law
If a tenant chooses not to pay you, you can't just change the locks or turn off the utilities.
There are laws and rules that we have to live by. I have seen more than one rookie landlord make a mistake with a deadbeat tenant that ends up costing them time, money and aggravation.
7. Rookies Never Do Property Inspections
Rookies often think that if they never hear from their tenant then everything must be alright.
Nothing could be more wrong. You need to go by every once in a while and make sure all is OK. Do not equate silence from the tenant with all is well.
8. Rookies Rent To Friends and Family
Rookies think renting to friends or family is the perfect scenario.
After all they believe they know them and their character. In reality, this is an awful thing to do unless you never want to speak to those friends or family members again. When money gets involved between friends and family, believe me, the character suddenly changes for the worse. Be smart. Do not rent to friends and family in the first place.