Owning a rental property is a distinct advantage for its owners. You have the potential to earn passive income on a regular basis without the need to spend more energy and time working. Many people also think that managing rental properties is not difficult to do. However, in reality a lot of people make mistakes and can harm themselves. Without a good knowledge base in managing rental properties, it is very likely that you will lose money from time to time. To prevent this from happening, the following are some mistakes in renting out property.

1. You Didn’t Check the Tenant’s Background

Even though you want to quickly find a tenant who will pay, that doesn’t mean you shouldn’t have to check the identity and background of a tenant. The best way to do this is to ask prospective tenants to fill out a rental application form so that you can get sufficient information about their background. The form can contain your hometown, current job, telephone number that can be contacted, name of the tenant, and other basic things that you feel are necessary to know.

2. Don’t Think Your Owned Property Will Always Be Full

Owning a rental property puts you at risk of not always having tenants who will always use the property. You need to instill this mindset, especially when you buy the property on credit and depend on installment payments from rent every month. You need to prepare an emergency fund that can be used, when no one is renting the property.

3. You Don’t Pay Attention to Repair and Maintenance Costs

The property that you own requires regular care and maintenance. Routine costs that we mean here are utility costs such as electricity, water, cleaning fees, and various other types of costs. You also have to make sure that the property rental fees paid can cover the costs that must be incurred. You can start from now on setting aside a portion of your rental income to invest in profitable investment instruments. KoinWorks is one of the peer to peer lending investment instruments that can be considered. Even though investment funds are very minimal, you are still able to get a very optimal rate of return that is above the inflation rate.

4. You Don’t Take It Seriously As A Business

The next mistake in renting out property is related to seriousness. Rental property is a profitable business and you should run it that way too. You must create a separate account between the property business account and the daily expense account, record all transactions in your business, pay property taxes, and prepare the workforce that will help you run the business.

5. Not Making a Written Contract

When running a business, It is important to make sure the tenant signs the lease agreement and make sure they understand the terms of the contract. The rental contract will protect you legally, should you ever have a problem with one of the tenants.

6. You Have No Rental Rules

Make sure you have clear rental rules that all tenants can understand. Explain the ground rules when tenants are late in paying rent, do you allow tenants to bring pets, do tenants need to replace when they damage or lose equipment on the property, and so on.