Real Estate Investing: The Struggles of Being a Landlord
As a landlord or an income property owner/manager, you’re going to face many challenges on a daily basis. While most of them are easy to deal with once you learn the basics, some of these tasks might seem intimidating to a first-time property owner. With that said, here are some of the struggles that newbie investors find difficult to deal with at the beginning.
#1 Managing Rental Finances
Financing is always an intimidating topic, no matter which angle you look at it from. In fact, from the perspective of a first-time income property buyer, financing might be the biggest challenge on the route to growing a successful real estate business. However, there’s nothing that can’t be learned here. The key to managing rental finances is to stay organized and separate your personal finances from business ones. You need a proper filing and tracking system so you can keep an eye on your income and expenses without mixing it up. Tracking everything from cash flow to expenses allows you to plan for renovations, repairs, taxes, and insurance fees without worrying that you’ll be cut short on profit. After all, it is difficult to achieve profitability if you’re not properly tracking the money that comes in and out of your properties.
#2 Landlord and Tenant Notices
Issuing notices is a common practice for landlords and property managers. However, it might seem complex to someone who’s doing it the first time. Most simply put, a notice is a form of written communication, usually issued by the landlord, although tenants can issue notices as well. Tenant notices include a notice of termination (which tells the landlord that the tenant is going to terminate a tenancy), notice of repair (which informs the landlord of repairs that are needed at the property), and the intent to vacate (pretty self-explanatory). Landlord notices, on the other hand, include the notice to pay or quit, notice of termination, notice of lease violation, and notice of rent increase, all of which are pretty self-explanatory. Keep in mind that it is important to follow laws regarding notice periods and the terms stated in your lease agreement.
#3 Evicting a Tenant
One thing every landlord fears the most is having to evict tenants out of their property. Unfortunately, not every tenancy goes to plan and sometimes you just have to end things on bad terms. Landlords usually evict tenants who breach the lease agreement, conduct illegal activities or pose a threat to others, make late payments after receiving warnings, or cause damage to the property. While it might seem like too big of a hassle, evicting tenants is not always that difficult. Just make sure to deliver the eviction notice either in person or through a process server to ensure the tenant receives the papers in time.
#4 Move-Out Inspection
Lastly, what follows evictions is the challenge of doing the move-out inspection. Whether the tenant was evicted or they’re moving out for another reason, it is important to complete the move-out inspection with them before ending the relationship. This will allow you to take note of any damage in time before the person leaves the premises. In case they did do damage to the property, you don’t have to return their security deposit. Instead, you can use it for repairs. Your move-out inspection checklist should also contain the following tasks: collecting the keys, signing the rental inspection report, asking for feedback, and offering to be a reference for your tenant