Rental properties can be a fantastic source of passive income. Provided your properties are well-maintained and you remain attentive to renters’ needs, being a landlord can be a relatively easy – and profitable – line of work. However, this isn’t to say that rental property ownership doesn’t have its share of difficulties. Believing rental property ownership is much simpler than it actually is, many fledgling landlords wind up losing money due to a variety of rookie mistakes. To help prevent yourself from suffering the same fate, put the following pointers to good use.

Have Prospective Properties Thoroughly Inspected 

Investing in a property that hasn’t been meticulously inspected is practically guaranteed to facilitate undesirable consequences. Properties that have fallen into disrepair or require major updates can ultimately cost you more money than they stand to make you. Although owning rental properties can be a great way to generate passive income, it can also bleed you dry financially if you aren’t careful.

With this in mind, take care to have every property on which you’re thinking about making an offer meticulously examined by seasoned electricians, plumbers and building inspectors. Should these individuals discover any hitherto unknown issues, calculate the cost of fixing these problems versus investing in a more robust property. It’s also worth noting that not every problematic property necessarily looks the part. For example, there are a number of relatively new properties that are plagued by issues people generally associate with older properties. By the same token, there are a number of well-maintained older properties that offer the same amenities many people associate with newer properties. Additionally, budding landlords in the market for a safe investment should look into Wan Bridge build-to-rent communities. At the end of the day, you can’t judge a book by its cover, and you’d be wise to avoid investing in any property that hasn’t been thoroughly inspected. 

Carefully Vet Rental Applications 

A big part of being a landlord is being careful about the tenants you take on. Just because someone is able to present themselves well over the phone or during an in-person meeting doesn’t mean they’re going to properly keep up with rent. To be clear, being unable to pay rent doesn’t make someone a bad person, but taking on tenants who are unable to make rent isn’t the smartest move for properties owners looking to see a return on their investments. 

While there’s no surefire way of knowing which applicants will prove problematic on the payment front, running a detailed credit check is a great place to start. If an applicant has a history of evictions or late rental payments, taking them on as a tenant probably isn’t a good idea. Additionally, when vetting the applications of first-time renters with little to no credit history, confirm that they have enough monthly income to keep up with rent. In the case of college students or recent graduates, their parents may be the ones handling rent – and if this is indeed the case, make sure the parents are willing to co-sign the lease.     

Set Aside Funds for Maintenance Costs 

No matter how new or well-maintained a property is, the occasional problem is going to arise. As such, all landlords should take the adage “Plan for the best, but prepare for the worst” to heart. In addition to insuring your properties, you’ll need to have sufficient maintenance funds set aside at all times. This ensures that problems can be dealt with in an expedient manner, effectively keeping your tenants happy and preventing you from finding yourself plagued by rent complaints and potential legal issues. 

While owning rental properties is comparatively easier than many other types of work, it’s far from an effort-free endeavor. Although being a landlord can earn you a fair amount of passive income, there are still numerous responsibilities you’ll need to attend to. If you’ve never owned a rental property before, it’s easy to see why you might hold the mistaken belief that landlords don’t need to raise a finger. However, investing in rental properties while holding firm to this belief stands to lose you a considerable sum and possibly even land you in legal trouble. Taking the measures discussed above can ensure that your transition into a landlord is as smooth and incident-free as possible.