Owning rental property in St. Louis can be a solid addition to your investment portfolio providing diversification and a hedge against inflation. Properly managed, these investment properties can provide not only an increase in asset value but also passive income. Unfortunately landlords often find that instead of providing a nice cash flow they turn into money pits and hassles.
Regardless of whether you’re a first time landlord or own several properties, learning the biggest mistakes that St. Louis landlords make can help you turn your project into the positive asset you’d intended.
- Overpricing the Property
First and foremost, you need to get potential renters in to see the property. It’s important to understand that renters see rent as an expense with no real value to them. Since most renters now search online, it’s easy for them to see how your price stacks up to the competition. In addition, unlike home sales, very few renters think they can offer less than an advertised price, so they are more likely to pass on the viewing rather than offer less than asked.
- Not Properly Cleaning and Repairing the Property
Often landlords will attempt to do everything themselves to save money. This can include cleaning, handyman work, painting and possibly larger repairs. While they might save a little money up front, in the long run if the home is not cleaned and maintained correctly, it could lead to loss of rent, vacancy and costly repairs.
- Inadequate Background Checks on Tenants
Evicting a tenant is a long and costly process. Even with the proper documentation, you might find yourself fighting to remove a tenant for months. This can be avoided by doing proper background checks. Ask for and call references with a pre-made list of questions. Pull the FICO scores and review any concerns with the prospective tenant ahead of time.
- Not Hiring a Good Property Management Company
Don’t try to do this yourself. Hire an experienced property manager with a reputable company. A property management company can provide the experience and support you need to avoid and solve potential issues. They are the professionals and while they do charge a fee, in the long run you will find you get higher rents, better tenants and lower maintenance costs by using a professional.
- Not Having Proper Insurance Coverage
Unfortunately things do happen. Someone trips on a step or a water leak causes damage to the unit below yours. Be prepared. Speak with your insurance agent to ensure you have all the coverage you need.
Owning a rental property or a portfolio of rental properties in St. Louis is a great way to diversify your investments and build wealth. By avoiding common mistakes landlords make, you will find that investment properties provide asset appreciation and a good income stream, without costing you unnecessary money.