Investing in real estate can generate income and wealth, but becoming a property owner means taking on a lot of responsibilities and confronting many problems. We explore some top problems landlords encounter.
Tenants
Where there’s a landlord, there are tenants. Property owners worry a lot about tenant turnover, vacancy rates, showings, and marketing to get vacant properties leased. Most problems, however, come when the units are occupied—this includes noise complaints, late rent payments, property damage, or even tenants engaging in illegal activities. When things go downhill with a tenant, it can lead to eviction and the associated legal fees and court costs. Then there’s the perpetually dissatisfied tenant who complains constantly about insignificant problems and demands an immediate response. Some tenants might even blame the landlord for things well beyond their control, such as a power outage caused by severe weather. Difficulty with tenants is a top problem landlords encounter, so property owners have to keep their cool and deal with all tenants fairly and professionally.
Maintenance
Even the best do-it-yourselfers can get in over their heads. Landlords who own multiple properties will face never-ending maintenance requirements. Newer properties with good electrical, plumbing, and HVAC systems still need routine maintenance to remain functional, along with fresh paint and careful landscaping to stay attractive. Property owners have to do a little soul-searching and admit when their handyman skills reached their limit and it’s time to call in a professional.
Compliance
Landlords have to keep up with ever-changing, ever-multiplying laws and regulations. These may differ significantly from state to state, county to county, or between cities in the same counties. Tenants must be screened appropriately, but the screening process is fraught with potential problems, especially if a prospective tenant suspects bias. Tenants have guaranteed rights, and property owners have responsibilities to comply with landlord-tenant laws, zoning regulations, noise and nuisance ordinances, and licensing requirements. It can get so complicated that help from a real estate lawyer or landlord association is necessary.
Stress
If a pipe bursts, a toilet stops up, or the heat goes out, a landlord has to take care of it right away. This can put a strain on personal relationships. Moreover, the general stress of property management and all it entails can dampen a property owner’s enthusiasm for real estate investing in general. Many top problems landlords encounter can be anticipated and partially handled with a strong lease that spells out rules and penalties for non-compliance. The lease must comply with applicable laws, and tenants should understand what they signed up for. Good, clear communication is critical, along with a willingness to enforce policies after exhausting all efforts at compromise, to protect the landlord. Many property owners cope with the stress by hiring a property management company that can do everything from screening tenants, collecting rents, staying current with laws and regulations, and enforcing policies.
