According to the 2015 Census data on rentals in Los Angeles, it was found that in all the major US metropolitan areas, Los Angeles has the highest percentage of renters at 53.1%.
With such a high percentage of renters, it is safe to say that Los Angeles is the ideal area for anyone who wants to venture into being a landlord.
Being a landlord for the first time may seem as easy as buying a house and placing an ad in the classifieds but be assured, that it’s a much more complicated process than that.
Many first-time landlords make the common mistake of assuming it is as easy task. And while becoming a landlord can be a profitable decision, if done wrong, it can become an extremely costly mistake.
So the question becomes…
“What mistakes do first-time landlords need to avoid?”
Now while we may be focusing on Landlords in Los Angeles, fret not. These tips apply to ALL landlords. So if this question is at the forefront of your mind while you’re considering such a venture, read on to find out the common pitfalls…
- Choosing the wrong location
Anyone who has investment in property will tell you, location is key. The same principle applies to rentals, you need to research the location of the property you want to rent out. For starters; get to know the neighborhood which is inclusive of the transport system, the accessibility, the stores, etc. All these factors play a very important role in determining the attractiveness of your intended property and the amount of rent you can then charge.
- Understanding the housing laws
Ignorance of the housing laws is a common error most first-time landlords make which subsequently can lead to legal issues due to non-compliance, acts of omission, etc. For instance, a first-time landlord should understand the laws on equality and how every applicant must be treated fairly irrespective of their race, sex, family status, etc.
- Improper Advertising
A well-known mistake of first-time landlords is that they fail to advertise their property properly. Getting professional pictures taken of the property and making sure that you correctly describe your property is advisable. Consider advertising your property online as well, as the internet can reach a wider audience.
- Failing to screen your tenant
Your main focus as a landlord should be getting the best qualified renter. A screening process must be created for every applicant that involves running a background check and credit check on each applicant. The reason for this check is to ensure that there is not past squabbles that may be troublesome for you as a landlord, like non-payment of rent.
- Failing to complete leasing paperwork
A lease is a binding agreement that should address all rules, policies and conflict resolution procedures for living on the property. It is advisable to get your lease agreement perused and confirmed by a legal professional to make sure all your rights and interests as a landlord as well as the tenants are equally protected.
- Failing to meet your duties as a landlord
Being a landlord does not mean you just have a tenant and a steady income, there are numerous responsibilities that arise from being a landlord. You have to check in on your tenants, provide routine maintenance; keep the property safe and also keeping up with taxes and financial reports of your property.
- Hiring a Poorly Managed Property Management Company
Renting out your property through a poorly run Property Management Company is one of the biggest mistakes that first-time landlords make. You become dependent on them to manage your property and take whatever action is required should there ever be a rent default. Many times, these companies don’t make repairs and fill your units with bad tenants. That is a legal nightmare. Before hiring ANY management company be sure to get third party references.
Also make sure your rents are market value and with the management fees you should still be cash-flow positive. If not, you need to decide if managing it yourself is worth your time.
8. Failing to see your rental as a business
Many first-time landlords underestimate the work that goes into owning property and being a landlord. A wise decision to make would be to set up a Limited Liability Company that will protect your personal interests from any legal action or claim against you in regards to the leased property. A landlord should not just depend on insuring their property from any damage that may be caused by a natural disaster, they should also get insurance to protect them against lawsuits that may be brought against them by the tenant.
As you can see there’s a great deal of things to be aware of. And after looking at all the above mistakes not only will you be armed with good advice for Los Angeles, you’ll be ready to be a landlord anywhere.
And if you ever decide the landlord life isn’t for you, be sure to give me a call. I can have a cash offer on your property in less than a day.
Landlording isn’t for everyone, and if it isn’t for you give us a call or fill out the form on this site.