8 Common Mistakes New Durango Landlords Make
Becoming a property investor can be a great way to build capital and a secure passive income, but only if done properly. Mismanagement of your investment properties can derail your career as a property investor just as soon as it starts. I’d like to share 8 common mistakes that new Durango landlords make when starting out.
Not treating it like a business
Investing is a serious item, your capital and plans for the future rest on it. Should you not treat investing as a business you should expect to make mistakes and lose money. Treating your investments like a business means putting together a plan that you refine and improve on over time and executing it.
Failure to look at ROI
ROI, or R.eturn O.n I.nvestment, is the benefit to an investor resulting from an investment of some resource. The resource in this case is your hard-earned money, the investment being the property you purchase. The benefit is relatively simple to calculate: income from investment (rent) minus all expenses (mortgage, HOA dues, taxes, etc) divided by the resource amount (your down payment)
Getting too close to your tenants
I’m not saying you can’t be friendly and professional to your tenants, but it’s not good business to have a personal relationship with your tenants. Friends may expect things from one another that don’t make to do in a business. Cordial and professional should be your mentality towards tenants.
Becoming attached to your properties emotionally
Your properties will always be important to you but they are just properties for you, not a home. While you yourself may not wish to live in the property it can be a golden investment opportunity. Use your head when making purchases, not your heart.
Lack of proper maintenance for a property
Repairs and maintenance expenses are a fact of life for property investors. Trying to save a dollar today can cost you much more farther down the road. Don’t neglect proper maintenance of a home and fix issues with your properties when they arise, not when they become too large to ignore.
Failure to depreciate properties
Keeping properties you own on a depreciation schedule makes a big difference to your cash flow. A couple of bucks a month adds up over 15 years, it’s not wise to leave your income potential un-optimized.
Keep rents at market rates
It’s always a good idea to keep a finger on the pulse of your local market(s). Keeping your rent in line with market rates will ensure that you don’t leave money on the table, money you can use to increase your portfolio of properties. Speaking of which…
Failure to grow
Growth should be the objective for serious investors, adding properties to your portfolio of investments will grow your equity which allows you to borrow more to expand your portfolio. Increasing your monthly income and securing your future is paramount, don’t let your earning potential slip away.
Becoming a landlord can be a great way to build wealth and secure your retirement. As with all investments there are risks involved and you can mitigate your risks by ensuring you dont fall into these common landlord mistakes.
Are you looking to buy a home? Let’s have a chat even if right now isn’t the best time. I have decades of experience in the real estate market and can help you with your plans.
Give me a call at 970.335.8225 or send me an email at firstname.lastname@example.org