Everyday lots of Phuket property owners decide to start renting out their homes in Phuket and enter into the world of the Landlord. The life of a landlord sounds like an attractive one. You buy a condo, rent it out, and receive the money at the end of each month. The goal is to make profit after any expenses have been paid. But it isn’t always as easy as it looks…
From property maintenance to tenants who don’t pay on time, being a landlord can come with a range of problems and tasks to overcome. If something goes wrong for your tenant in the middle of the night – you are the person they will be calling.
Here are some of the most common mistakes you should avoid as a new landlord, in the hopes that we may save you at least a little bit of money and time.
Mistakes to Avoid When You Become a Landlord
When you start out renting properties, you should avoid the following things…
1 –Not Hiring an Experienced Phuket Property Manager
Acting as a landlord with a property of your own comes with unaddressed responsibilities no matter how prepared you are. If you don’t want to have to deal with the weighty responsibility of attending to tenant’s needs, maintaining the property, advertising for new tenants, dealing with complaints, or any other duties, you do have another option.
Calling in a reputable property manager allows you to operate a more hands-off approach to renting. This method is ideal for those with multiple properties, who aren’t in the country, or who don’t have a lot of experience in property management. It is definitely something to consider carefully if you are looking to rent out a Phuket property.
Learn more about our Property Management Services in Phuket.
2 – Incomplete Lease Agreements
Arguably, setting up the lease correctly is one of the most important things you and your tenants will do together. Your lease should be as airtight as you can make it. Everything should be down on paper, from your smoking policy to your subletting rules. Your lease should be the document you can turn to, to prove what the rules are, or to prove that your tenant has broken said rules.
To make the lease as professionally written and ironclad as possible, consider consulting with an attorney, solicitor, or lawyer. Either will be able to direct you towards a full and complete lease, which makes proper provision for both parties. Engaging with a local professional property management company will ensure you have the right lease for the right property.
3 – Forgetting to Screen your Potential Tenants
All tenants should be screened. When taking applications for tenants, be sure to check out the references that they provide. Some landlords don’t even consider a tenant that doesn’t come with references, even though this may mean they have simply never had a place of their own before.
Why do we like to check everyone that comes through the door? It’s about ensuring your property will be cared for and having a respectful tenant. A disrespectful tenant, who has proven problematic for other landlords in the past, is twice as likely to prove problematic for you, too. If you can avoid late rent, property damage, and antisocial behaviour, with a simple fact check – why wouldn’t you make that check?
4 – Not Saving a Rainy Day Fund
As we mentioned in the beginning, renting to a tenant isn’t as easy as finding someone to live in your house, moving them in, and collecting rent. It takes more money than you might think to ensure that the house is always kept to a liveable standard. This means having a small pot of money set aside in case things go wrong.
Your Rainy Day Fund will be used for things like a fresh coat of paint, damages from water leaking or mould, and refurbishments between tenants. If you need to phone a boiler technician, plumber, or some other type of repairman, it is best that you have the money ready. Save a Rainy Day fund before you consider becoming a landlord if you don’t want to get into debt.
A good property manager working on your behalf will also request to hold a certain amount of funds so they can act immediately in case any issues come up.
5 – Not Knowing the Law
A landlord should know exactly what they can, and can’t, do, in and around their property. For example, you can’t just show up for unannounced inspections. You need to give your tenants notice if you’re going to pop in. While they are renting from you it is their home, not yours. Which means you can’t let yourself in anymore, even if you do still have a key.
Make sure that you know at least the minimum amount of law required to ensure that you’re not breaking it. You should know what your obligations are to your tenants, as well as what their rights may be. When it comes to matters of the law, it is best not to take any chances.
6 – Not Scheduling Home Inspections
On the other end of the scale, neglecting the property and leaving your new tenants alone without checking in once in a while, invites rule breakage. Maybe they haven’t told you that the pipes are leaking or that the front door is broken? Is it their fault for not reporting this, is it your fault for not checking in?
Schedule regular home inspections or having regular property cleaning each month if you want to stay on top of potential issues before they arise. It is important to have a friendly rapport with tenants, too, since this makes them more likely to come to you, should something be amiss.
7 – Not Adapting to the Market
What your average tenant expects from a property changes from year-to-year – even from season to season. If you are not prepared to stay on top of these changes to the market, then you are inviting a potential of lost earnings.
In a holiday island such as Phuket it pays to be flexible with pricing. You can use it as a tool to stop your property standing empty in off-seasons by offering special discounts, but you have the option of increasing the prices too, when the market picks up again. When using price as a tool, you should envision your property’s earning potential over the course of a year, and not just month by month.
Don’t forget price is only one of the tools available to you. You might offer other incentives (like free Wi-Fi or offer regular cleaning) to attract new residents.
We regularly keep you up-to-date on changes to the property market here at Select 1 property, so be sure to check in often for all the latest news.
8 – Neglecting the Ground Rules
Of course, most of your ground rules ought to already be laid out in your lease agreement. However, it is never guaranteed that your tenant will read the whole thing from cover to cover. You need to know (or your property manager needs to know) what the main points are for your property before they move in.
An example of this might be a tenant who owns three dogs and two cats. Your property agreement could state that pets aren’t allowed – but since your tenant came to the viewing without their pets, you don’t know that they have any. If your main points – ground rules, if you will – aren’t highlighted from the beginning, you risk attracting the wrong type of tenant. Things like smoking, pets, whether or not the apartment is suitable for children, and mobility issues (for condos with stairs), should all be mentioned from the outset.
Finding An Investment Property in Phuket
At Select 1 Property we have a wealth of experience when it comes to identifying standout rental properties in Phuket. If you need more information on property for sale in Phuket, contact us today for a free consultation.