Landlords Reveal Their Most Common Fears
While property investment can be an attractive wealth creation strategy, it is not without its risks.
“From our experience, arrears, maintenance issues and having an unoccupied property are some of the most common fears for new, prospective and experienced landlords alike,” said Carolyn Parrella, executive manager of Terri Scheer Insurance.
To counter such risks, Parrella advises landlords to seek a specialised form of landlord insurance to gain peace of mind, knowing that they will be covered for the risks associated with property investment should the unforeseen occur.
“Appointing a property manager to oversee a rental property can also help landlords overcome their concerns and help ensure investment success,” said Parrella.
Listed below are some of the most common landlord fears:
1. Tenants falling into arrears
Unpaid rent can be a major contributor to stress for landlords. To counter this fear, landlords should have a plan for meeting their mortgage repayments if their tenants fall into arrears, as many rely on the rental income.
Since even the best tenants could fall ill and be unable to work or lose their jobs, “landlords should thoroughly check tenants’ rental history during the screening process, looking for issues with missed or late payments,” said Parrella. If a tenant falls into arrears, it’s important to follow the correct procedures and issue the right notices within the proper timeframes to help ensure the debt can be recovered.
2. Unexpected maintenance issues
Whether it’s faulty electrical wiring, cracked tiles and windows, or a broken water heater, maintenance issues are an inevitable headache landlords simply need to deal with. It’s usually advisable not to manage your property privately, as a lot of owners have regretted it due to these maintenance issues.
“Some landlords may try DIY fixes; however, cost-cutting and substandard workmanship can end up costing them more in the long run,” said Parrella.
To prevent maintenance issues from escalating, landlords should consider having a trusted handyman on standby should problems arise. “Tending to issues quickly stops small, cheap repairs [from] becoming major, costly fixes. It also helps avoid potential legal liability if the maintenance issue causes injury to a tenant or their guest.”
3. Tenants behaving badly
While the vast majority of tenants are orderly and law-abiding, a small minority can be truly unruly, causing headaches for landlords.
“Unruly tenants might violate their lease agreement by behaving poorly or undertaking illegal activity at the property. Cleaning up after breaches of a no pet or no smoking policy can also be costly for landlords,” said Parrella.
By performing routine property inspections, landlords can mitigate such risks by identifying problems before they become unmanageable. Again, it’s worthwhile to still need a property manager to oversee all these aspects.
4. Vacant properties
Unoccupied rental properties can place great stress on a landlord’s cash flow. In fact, landlords could miss out on thousands of dollars of income if their properties remain unoccupied for a few weeks.
“Real estate can be a competitive environment, so it’s important for landlords to offer a rental property that best appeals to prospective tenants. Presenting a well-managed property can broaden the pool of prospective tenants and reduce the time and money spent on advertising for re-let,” said Parrella.
By Michael Mata | Source: Your Investment Property