What Errors Do Landlords Make?
You can go wrong with your ambitions of positive cash flow despite sealing a great investment deal and procuring a wonderful tenant. Often, the error is a miniscule one but it costs a fortune. Let us try and figure out a few of them.
Quoting too high or too low a rent
Sometimes, because our research is petty, we remain ill-informed about the running rental rate of the market. As a result, we quote either too steeply or too cheaply. In the former case, we restrict our prospective tenant base and in the latter event, we hinder positive cash flow and may falter with our mortgage payments (it is like bringing in the concept of negative gearing where there is no such intention).
Not getting adequately covered
It is one thing to get yourself a landlord’s insurance and quite another thing to get yourself a really smart one. The best ones cover almost all the aspects and have maximum endorsements and minimum exclusions to show. For instance, what if your home is insured against accidental damage to the property but not against intentional damage by tenants? As another instance, what if you have property insurance which dutifully protects your house assets but not liability insurance; thus making you financially vulnerable if there is an injury or an accident to you or your family or tenants.
Not checking if rents are being paid in time
When tenants have a healthy record, we tend to ignore their rent payments in due course of time. In time, when we check our bank statements, we may come across our mistake. It is wise then to keep a track of the arrears and send a non-payment notice in case the arrear begins to sit on the nerves.
DIY property maintenance
I have also noticed quite a few occasions when landlords have taken the job of property maintenance upon themselves. In such cases, they save money which is payable to property managers but end up paying a lot more in terms of neglected maintenance.
It is not enough then to buy a terrific property. As landlords, investors have a great deal to do. Hopefully, you will be none the poorer after reading this article.
Is your landlord’s insurance cover meaningful?