The Top 5 Landlord Mistakes to Avoid Baraboo WI

Tenants worldwide dream of becoming homeowners, and homeowners dream of becoming landlords — expanding their real estate ownership while someone else pays the bills. This dream is not hard to realize, but that doesn't mean it is without pitfalls and easy-to-make mistakes. That said, with equal parts hard work (which you'll have to do yourself) and knowledge/expertise (read on), being a landlord can be a fast track to passive income and wealth accrual.

Landlord Mistake 1: Over-Leveraging Your Rental Properties

It's a classic error which is made by not only real estate investors, but also homeowners. Whatever the bank says they're willing to lend, borrowers typically take their highest offer. While this mistake may not cripple you with your home mortgage, over-leveraging your rental properties is a drastically different story. With rental properties you have far less control over the associated expenses. For example, if you own five rental properties, and suddenly three of the tenants decide to move — or worse, just stop paying their rent — you will suddenly find yourself with not only your home mortgage, but three additional mortgages to pay. If that isn't bad enough, you will also be faced with eviction costs, repair and maintenance costs, advertising costs, etc. As a general rule, you want your predictable monthly expenses (mortgage, taxes, insurance, legal entity fees, ground rents, etc) to be no more than 50% of your collectable rent.

Landlord Mistake 2: Signing a Generic Rental Agreement

The cheap and easy thing to do is to scrounge up a free generic rental agreement online, or buy a boilerplate lease for a few bucks at the office supply store. But guess what? The second your tenant decides they don't feel like paying you anymore — and starts looking for ways around it — they can simply sue you for failing to include necessary addendums or disclosures (such as national, and state, mandated lead paint disclosures). They could also target your failure to use a state-specific rental agreement with state-required clauses, or maybe for writing in unlawful fees, security deposits, and so on for your state. There are two ways to get a lawful rental agreement for your state. Your should either hire a local real estate attorney who is well versed in landlord-tenant law, or use a quality online service that helps you through the process of creating a rental agreement for your specific state.

Landlord Mistake 3: Failing to Research Rental Applicants

Most landlords simply want the perfect tenants to show up, sign a rental agreement, then pay their rent on time all while keeping the rental property in pristine condition. Reality check: this is a fantasy. Most rental applicants aren't going to follow this idealized pattern, but you can maximize your chances of finding the good ones by doing your homework. Start by verifying their income and employment (to see if they CAN pay), pull a credit report (to...

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