Like a lot of things in the business world, being a good landlord both for your tenants and in terms of managing your own investment, is something that you often learn with experience. First-time landlords will often make simple mistakes and in some regards, this is to be expected given that this can be a demanding role to take on in many cases. In your position as a landlord, you are essentially managing people, risk and finances too, so it can certainly be a challenge for a lot of people. This article goes through a few of the common errors that landlords can make, with some suggestions on how to avoid them.
Not Understanding Your Insurance Policy
Taking out landlord insurance is an absolute must whether you’re renting out your property, flat or holiday home, and a general knowledge of what you’re covered for is essential.
Working with an insurance company that explains things clearly and works closely with you is always a big help. They can present you with your options and make a suggestion or recommendation that best suits your financial situation, the size of your investment and other factors. But it’s also up to you to make sure you read the fine print and know exactly what it is your covered for; do your homework, understand your policy and you’re in a better position to keep yourself protected and understand your rights as a landlord too.
Not Giving Proper Consideration to the Circumstances of Tenants
More often than not, having to deal with and manage an unreliable tenant or someone with money issues can be a massive headache. Without the proper insurance, this situation can be a strain on your finances and cause a great deal of stress.
It’s mandatory to check your tenant’s ability to pay; just make sure you don’t overlook this and write it off as nothing to worry about. If you see any red flags, it’s important to think carefully about your decision. Ask previous landlords how they were to deal with and check out all the references provided - in short, do your homework. Choosing the right tenant can make all the difference so take the process of selecting your tenant seriously.
Underestimating the Effect of Maintenance Expenses to Profitability
If you want to be successful in this, renting out property should be approached as you would approach the running of a business, rather than a side project. Figuring your expected revenue and costs etc. is very important if you want to be profitable in the long run. There is a tendency on the part of first-time landlords - and often inexperienced business managers in a number of industries - to underestimate how costly maintenance can be over the years.
When it comes to your property, failing to properly predict this can be an unexpected and unwelcome strain on your finances; getting it right can help you make better investment decisions in the future. Whether it be damage from water, pests or general wear and tear, the costs can be quite high, so make sure you account for them.
Also, remember that it’s very important to be prompt of any repairs that are required. Failing to do so and neglecting things that need to be done can result in big problems if the tenant is put at risk as a result.
Not Having a Lawyer
Quality landlord home insurance for your rental property can help protect your interests and ensures that you have professionals in your corner. However, it makes sense to have an ongoing relationship with a lawyer to ensure that you're looking after if things between you and your tenant do happen to take a bad turn. Have a lawyer draft up the legal contract from the outset so they are aware of the circumstances and have some idea of the case if problems do arise down the track. It can save you a lot of stress, time and money if you already are prepared from a legal standpoint and have protected your legal interests with the help of an attorney.
If you are a new landlord, keep these considerations in mind. Ultimately being a good landlord comes down to preparation and organisation, doing what’s necessary not only to protect your interests but to ensure you are profiting in the long term. For more information in regards to the best landlord insurance in Australia, speak to the team at St. George Underwriting Agency today for a discussion about your needs.
