The 5 Biggest Mistakes Made By Rental Property Owners

1. JUST LOOKING IN THE LOCAL NEWSPAPER CLASSIFIED ADS FOR A RENTAL RATE

Prospective tenants have many ways to check comparable rental rates besides the newspaper: local property managers, Realtors, the Internet listings.  Property owners renting their own property need to check these sources in addition to the newspaper.  Local Realtors can provide a list of rental rates - current and past - for various areas, subdivisions, buildings.

For apartment rental rates, owners should check the internet listings on Yahoo, RentNet and Springstreet as well as any local apt association website.  

Owners of single family homes should also check Yahoo, as well as the RentConnection and HomeRentals.net sites as these are excellent resources for marketing single family homes, townhouses and condominiums.

2. LISTENING TO WHAT OTHER PEOPLE ARE GETTING FOR SIMILAR PROPERTIES

While this information should be put in "the mix" in determining the property's rental value, there are often circumstances that are not relayed that could cause the information to be less than helpful.

A country property often reported as being rented for $1,600/month was, in fact, being rented in one year increments to residents new to the area who did know that the property was over-valued.  When the tenants determined they were paying $200/month too much, they quickly found other property as they no longer trusted the property owner.  The rental property owner then had a vacancy and downtime which, in  reality, brought his annual income to the market rate of $1,400/mo which, if he had quoted this market rent originally, he would still have a tenant in residence and not had the hassle of multiple move-outs and the expenses of re-renting.

3. VACANCIES ARE BAD

Planned vacancies are good.  Vacancies allow for major renovations and repair projects - replacing a bathroom in a property with only 1 bath, rebuilding a deck/porch/patio, replacing carpet/refinishing hardwood floors, converting fuel sources (propane to gas).

Sometimes these can be done with a tenant in place; however with a little pre-planning, a lot of hassles and inconvenience can be avoided.  

Another reason is to put the property in the "proper rental cycle" for the area.  Many rental markets are geared to the school year - either public schools or college or university - more prospective tenants are planning for September and October move-in dates and avoiding the "back to school rush" of late July and August.

4. USING A POORLY WRITTEN OR PREPARED LEASE

There are numerous sources for good lease documents including a low-cost computer program that can be purchased from Nolo Press (LeaseWriter) where the document can be formulated for the specifics of the state in which the rental property is located.  Unless a lease is prepared for the specifics of a property or the desires of the rental property owner, the use of an attorney is unnecessary.  

Most local property managers will share their lease format.  In a pinch, forms can be purchased from the local Realtor association.  From whatever source, the forms should be no more than 3 years old and clearly state the duties of the resident and property owner.

5. AND LASTLY, NOT CHECKING ALL PROSPECTIVE ADULT APPLICANTS' RENTAL/CREDIT HISTORY

This is the easiest part of the process and is most often the portion of the process that rental property owners are least likely to
perform.  Most state laws allow for the collection of a credit check fee to allow rental property owners to check a would-be rental resident's credit.

In addition to the old standby of a "retail CBI" report, property owners can now obtain a "scored" credit history much like a mortgage credit report that will alert them to the prospect's past delinquencies, recorded judgments and the possibility of their being over-extended on their current credit obligations.  These are all valid "business criteria" that a prospective landlord should use when screening applicants for their rental property.