Tell me and I forget. Teach me and I remember. Involve me and I learn.
- Benjamin Franklin
As someone who wants to lease a property privately, you have nothing to worry about. ZeroCommisison.com.au is here to guide you and constantly provide relevant information to help DIY landlords like yourself. There’s no better way to learn about the for rent by owner industry than by experiencing it yourself.
But, as another saying goes, it’s always wisest to learn from the mistakes of other people. You don’t want to realize mistakes after the fact.
Many DIY landlords leave plenty of room for mistakes early on. This is understandable, but the decisions you make from the start determine how profitable your enterprise ends up.
We listed 5 mistakes private landlords, especially those new to the job, should avoid. You might gasp at some of these, with palms clasped over your gaping mouth. “I didn’t know leasing my apartment to drifters would hurt so much!”
Well, there’s a difference between a drifter and a transient, but let’s not mince words here. On with the list…
Rookie Mistake #1: Leasing to Friends and Family
We just have to let this out the gate first. It might seem to make perfect sense that the ideal tenant is someone you’ve known all your life. After all, didn’t your cousin Tony save you from financial problems once?
But this is one mistake you should never, ever, even dare to commit. Blood can boil green when money is involved.
If you intend to screen friends and family as you would a stranger tenant, please, just don’t. Never lease a property privately with strings attached, especially as a favour! You’re setting yourself up for landlord woes later on.
Go for the average Joe or Jane you meet, someone you’re not related to. And definitely not someone you work with!
Rookie Mistake #2: Falling for a Sob Story
How many excuses can you concoct to skip rent? Let us count the ways!
Seasoned landlords have the privilege of hearing the usual sob stories. Would you believe your tenant if he claims the money hasn’t arrived yet? Sure you can, and you should. But that doesn’t mean you have to accept it. Alibi or not, a deadline is a deadline, and you have to be firm from the very beginning.
There’s a reason why patsies are compared to a doormat, and you do not want to be considered lenient and understanding. It’s possible your tenant is having a hard time making ends meet, but remember you’re running a business.
Give them three days and they’ll ask for a week. Be immovable when due date comes.
Rookie Mistake #3: Failure to Screen Tenants Thoroughly
This is understandable for rookies, their spider-sense for crap tenants needs fine tuning. When you lease a property privately, expect plenty of riffraff coming your way.
Conducting full background checks with today’s technology—hello, Internet–is no longer as expensive or difficult as it once was. With a few tap of the keyboard, you can gather plenty of data online about anybody. This will help you immensely in narrowing your pick.
Don’t take applicants at their word. Always confirm what your gut instinct tells you. An applicant may look the part of the perfect citizen and tenant on paper, and even in person, but so did Hannibal Lecter. You don’t want Hannibal Lecter hosting dinners in your apartment.
Google is your friend. Hang out with him often.
Rookie Mistake #4: Failing to Treat Leasing a Property Privately as a Business
You’re running a business when you’re leasing a privately. Some signs your head is not in the game: misplaced receipts, poor organization, and co-mingling of personal and business funds.
If you spent a trifle in the business (the apartment is your own, and you barely invested in renovations), manage the regular payouts so you’ll quickly recover capital.
Sure, you can coast by and treat your for rent by owner set-up as a hobby, but not for long. Tenants can be as unpredictable as rabbits in heat. Prepare for a rainy day in case you face the need for sudden eviction or serious renovation.
Rookie Mistake #5 – Not Putting Everything in Writing
It’s like trusting someone’s word on a spit-ball handshake. If you lease a property privately, verbal agreements also don’t amount to squat. If it’s important enough for a note and signature, don’t hesitate.
Applicants might think you’re obsessing the details, but you’ll have something to show for when your tenant tries to throw a curve ball your way.
“We agreed the security deposit would cover for the shirt I flushed down the toilet!”
Did you? With terms detailed in black and white, you’ll never grip the short end of the stick.
Being a DIY landlord is easy if you set your priorities straight. When you lease a property privately, you’re staking your claim on the rentals market. This means you’re in business for the profit, so mind the rookie mistakes and learn as much as you can. Each mistake is money lost (or unearned), so make each dollar count!
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You might also be interested in these other articles to help you lease or sell a property privately:
- Discover the 5 advantages of renting out unfurnished property
- Top differences between online agents and commission-based real estate agents
- Tips to write real estate descriptions to sell or lease your house fast
- 9 reasons why you should post your listing on Facebook
- 5 bathroom staging hacks so you can sell a house privately or lease privately quickly