{"id":2663,"date":"2022-05-26T07:15:44","date_gmt":"2022-05-26T07:15:44","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/15-common-landlord-mistakes-it-pays-to-avoid\/"},"modified":"2022-05-26T07:15:44","modified_gmt":"2022-05-26T07:15:44","slug":"15-common-landlord-mistakes-it-pays-to-avoid","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/15-common-landlord-mistakes-it-pays-to-avoid\/","title":{"rendered":"15 common landlord mistakes it pays to avoid"},"content":{"rendered":"

[ad_1]
\n<\/p>\n

\n

The most successful property investors have a number of tools in their landlord kit-bags.<\/strong><\/p>\n

\"QuestionsOne of the most important of them all is using professional property managers to do the heavy lifting for them.<\/p>\n

That\u2019s because, to create significant wealth, investors not only need to be strategic with their property purchases, they also need to hold for the long-term.<\/p>\n

This involves not making silly mistakes that could have easily been avoided with the right guidance and education.<\/p>\n

Here are 15 common mistakes that can ruin an investor\u2019s wealth creation plan.<\/p>\n

1. Not considering vacancy rates<\/span><\/h2>\n

Ignoring vacancy rates is always a bad idea, whether you are buying or already owning a property in a particular location.<\/p>\n

High vacancy rates mean there is too much supply, which will drag down rents as well as yields \u2013 sometimes for years.<\/p>\n

2. Not understanding demographics<\/span><\/h2>\n

One of the fundamentals that investors must understand before buying in a specific area is the demographics of the tenants (as well as the owner-occupiers) in the area.<\/p>\n

These means don\u2019t buy a one-bedroom unit in a suburb that is popular with families who want to rent three-bedroom houses.<\/p>\n

3. Not budgeting for maintenance<\/span><\/h2>\n

You must always treat your investment properties and your tenants with respect.<\/p>\n

That means always budgeting for maintenance because your investment is actually someone\u2019s home.<\/p>\n

4. Not listening to expert advice \"Business<\/span><\/h2>\n

Investors who engage property managers for their portfolios understand the importance of working with professionals.<\/p>\n

However, when some investors choose to ignore that same expert\u2019s advice, you have to wonder why they bothered at all?<\/p>\n

Remember…if you’re the smartest person in your team, you’re in trouble.<\/p>\n

5. Not knowing the market rent<\/span><\/h2>\n

Whether your investment property is currently tenanted or vacant, not knowing the market rent will likely cause you cash flow problems in the long run.<\/p>\n

That\u2019s because advertising it for a sky-high rent will see it sit empty and trying to increase the rent when the market is soft may motivate your tenants to move somewhere more affordable.<\/p>\n

6. Not having fixed-term leases<\/span><\/h2>\n

\"landlordOne of the myriad advantages of using property managers is the regular renewal of fixed-term leases.<\/p>\n

Having a tenancy agreement in place guarantees your income for the next six or 12 months, while periodic leases mean the tenants can shift out with very little notice.<\/p>\n

A good property manager will also ensure that your lease doesn’t expire at a time when it’s difficult to relet your property.<\/p>\n

For example, at Metropole Property Management<\/a><\/u> we will often get tenants to sign a 13-month lease so their lease doesn’t expire over the Christmas holiday period.<\/p>\n

7. Not using property managers<\/span><\/h2>\n

Worse than not listening to the advice or property managers<\/a><\/u> is not using them at all.<\/p>\n

Novice landlords think they are saving money by managing their property themselves.<\/p>\n

In reality, it is likely to cost them far more in the long run because of their inexperience.<\/p>\n

8. Not keeping your distance from tenants<\/span><\/h2>\n

\"3Private landlords are also prone to treating their tenants as friends.<\/p>\n

Of course, you should always treat tenants with respect, but it\u2019s vital that the relationship is professional.<\/p>\n

At the end of the day, it should be a business relationship \u2013 with a property manager the intermediary.<\/p>\n

9. Not having insurance<\/span><\/h2>\n

Similar to thinking that property management is not worth the expense, some landlords believe that insurance is not needed either.<\/p>\n

\n

Savvy investors, on the other hand, always have landlord insurance as well as the relevant building insurances to ensure their asset is always protected from damage.<\/p>\n

10. Not treating property investment as a business<\/span><\/h2>\n

\"TenantFar too many landlords adopt a set and forget mentality about their portfolios.<\/p>\n

The most successful investors remain engaged, including regularly their portfolios and their property manager\u2019s performance.<\/p>\n

They do this because they treat it as a business not a hobby that \u201chopefully\u201d will make some money someday.<\/p>\n

11. Not having a depreciation schedule<\/span><\/h2>\n

Some landlords incorrectly believe that depreciation is only claimable on the new property.<\/p>\n

The truth of the matter most properties will likely have some depreciable items, which can be claimed at tax time.<\/p>\n

Having a depreciation schedule prepared for each of your investment properties can save thousands of dollars in tax each year \u2013 regardless of the age of the property.<\/p>\n

12. Not having interest-only loans<\/span><\/h2>\n

\"LoanThe days of working diligently our entire lives to pay off our mortgages and then retire are thankfully over.<\/p>\n

Unfortunately, some landlords still adopt this mentality and have principal and interest loans on their properties.<\/p>\n

As it\u2019s only the interest component that is tax-deductible, the best strategy is usually to have interest-only loans on investment properties.<\/p>\n

This allows any extra cash flow to be used to grow your portfolio as well as maximise tax deductions.<\/p>\n

13. Not using an accountant who understands property<\/span><\/h2>\n

Compared to two decades ago, property investment today is a profession in its own right.<\/p>\n

These days, there are buyer\u2019s agents<\/a><\/u> and qualified property investment advisers<\/a><\/u> but there are also specialist accountants and mortgage brokers.<\/p>\n

Smart investors always work with property investment experts to help them achieve their financial and wealth creation goals.<\/p>\n

14. Not increasing the rent regularly<\/span><\/h2>\n

The Holy Grail of property investing is long-term tenants who treat the property as their home.<\/p>\n

\"HouseHowever, too many landlords fall into the trap of \u201crewarding\u201d this loyalty with abnormally low rent.<\/p>\n

The best strategy is to make incremental, but reasonable increases, to the rent during the course of a long lease.<\/p>\n

That way the tenant is happy and so is your cash flow.<\/p>\n

15. Not holding for the long term<\/span><\/h2>\n

A combination of some of these mistakes will often result in investors having to offload their properties early.<\/p>\n

Unfortunately, that usually happens at the worst possible time in the market and they have to sell for a loss.<\/p>\n

\"SellSavvy investors, on the other hand, follow a proven strategy, that includes using professional property managers.<\/p>\n

That way, they are able to grow their portfolios as well as hold them for the lengthy period of time it takes for true wealth to be created.<\/p>\n

Clearly, there are a number of different elements that create a successful property investment story.<\/p>\n

Of course, selecting a property that has a proven history of outperforming the averages as well as the potential for future capital growth is one of the most important.<\/p>\n

However, so is recognizing the value of professional property management\u2026 and avoiding common landlord mistakes that can easily derail your plans.<\/p>\n

ALSO READ: <\/strong><\/span>20 Australian suburbs where rent prices are set to soar<\/a><\/p>\n