One way to describe what the average landlord goes through is like being on a roller coaster than never ends. There are long stretches when things go smoothly but just when you think you the ride is over it picks up again. Owning the right rental property is one of the best additions you can make to your portfolio. That being said dealing with a rental property has its challenges. Between keeping the property updated and handling tenants it can be a full time job. What is certain is that there will be times when unexpected things pop up out of nowhere. If you are not prepared for this it can wipe away years of hard work. Here are five unexpected items every landlord should prepare for.
- Collection Issues/Missed Payments. At the heart of every successful rental property is rent collection. If the rents are not coming in nothing else really matters. If you own your rental property long enough you will eventually run into issues with rent collection. Between late payments, bounced checks and payments not coming in at all you will deal with everything. You can have a series of rules and guidelines on your lease but the most important should be with how and when you collect rent. Even the best tenants run into problems from time to time. The only way around this is to brace for the worst. You should have a few months in payment reserves in the event your tenant leaves unexpectedly. You always have their security deposit but sometimes this may not be enough to cover everything. By the 5th of the month you should know where you stand with the rent. Come the 10th you should be ready to take action. Rental collection and the occasional bad tenant are all part of being a landlord.
- Maintenance Expenses. Your rental property will not last forever. Many landlords think that their rental property is virtually indestructible. Whether you want to admit it or not your tenants will not treat the property like their own. Even if they do there will is always the need to repair or replace certain items. Things like fixing a clogged toilet or changing a lock won’t break the bank. It is the large ticket items that can catch you off guard. Issues with the plumbing, heating or the roof will often cost thousands. The longer you wait to fix these items the more your tenants lose confidence in you. It is also unsafe and possibly even illegal to let these issues go. Without a reserve fund to make these necessary repairs you can turn to credit cards and other forms of debt to make the repairs. This will cut into your monthly cash flow and change the way you look at the property.
- Weather Issues. There are a handful of weather related items that you may have to deal with out of the blue. Depending on where your rental property is located you can have issues with heavy snow, ice, wind, flooding and even heat related problems. One of the things that make these storms so devastating is that they are largely unexpected. You can never anticipate the wind knocking a tree onto your roof. Instead what you can do is make sure you have the necessary insurance coverage in case it does. You will pay a higher annual premium but when the unexpected weather issues do strike you will be protected. With every season there are weather issues you need to avoid. Some of these are much more damaging than others but they are present nonetheless.
- Tenant Conflicts. There are many different roles you take as the landlord of the property. One day you may serve as the handyman and the next you are a peacemaker. With any multifamily property eventually you will run into conflicts with tenants. Even with a single family property it is not unheard of to get a call to settle an issue. While this is not part of your job description it is essential for running a good rental property. You may have to remind your tenants as to what is on the lease regarding parking, noise and other rules. Most landlords despise doing this and seek the path of least resistance. The longer your tenants have problems in your property the greater chance it turns into a bigger issue.
- End of Lease Issues. The end of a lease often creeps up on you sooner than you think. Inevitably at the end of every lease there is an issue with the condition of the property or receiving the full security deposit. The best way to handle this is to deal with it at the start of the lease. On the day your tenants move in you need to fully document the condition of the property. Walk through the house and take as many pictures as you need to. Send these pictures through email so they are date and time stamped. If there are issues on the condition you have a leg to stand on. Additionally you need to walk your tenant through the lease. Explain the guidelines and expectations. Tell them exactly how you expect to have the property at the end of the lease. The more you can go over before they move in the easier the end of the lease will be.
With a rental property you should always expect the unexpected. The better equipped you are to handle whatever is thrown your way the better landlord you will be.