Reasons why Landlords/investors lose their investment on rental property

Whether or not investors/ landlords of rental properties will be successful and have reliable return s of their investment s is dependent on Selecting reliable te n an ts , who will meet their contractual obligations for both the payment of rent and maintenance of the prope rty . However , many landlord s end up not being able to recoup their investment s on rental properties because of Bad tenants – those who do not meet these obligations. Hence, people are afraid of investing in rental properties. The main aim of this article is to point out the avoidable mistakes that costs landlords the return of their investments on rental property and to enlight en landlord s / would be landlord s on how to manage rental apartment successfully. This article is based on our e xperience over the years as property lawyer s.


1. Acceptin g a new tenant without careful and thorough screening.
The most serious and costly danger to a landlord is having a tenant who stops paying rent and uses legal ta ctics to delay eviction. Landlords have to do due diligence by check ing with former landlords . The tena nt’s income has to be checked from his employer . Very often, tenants are selected on their personal appearance and on very basic and often difficult to corroborate personal reference information .


2. Not Using a Lease / Tenancy Agreement
Another mistake that landlords/investors in rental properties make is not to have a written lease/ tenancy agreement, which will clearly state the terms of tenancy/lease agreement between the parties, signed by the tenant. Where there is no written agreement the provisions in various tenancy law of a state where the property is situated will dictate the terms of the agreement, which may not be favourable to the landlord. By Lease/Tenancy Agreement, the landlord will be able to put t erms and conditions that are favo u rable to him.


3. Charging very high and exorbitant rent

Most of the time , the landlords base the rent on the amount they spent on the property rather than the average rental value in the area where the property is situated. This is one of the reasons why many rental properties remain vacant and unoccupied for years and this results in loss of expected and projected income . Inflated rent will lead to reduction in the number of potential tenants. The majority of tenants have a very good idea of current renta l values and charging a comparatively fair rent will create the opportunit y to have a greater selection from prospective tenants .

4. Delay of Eviction/recovery of premises process.
Failure to issue necessary statutory notices for recovery of premise s immediately after the rent of tenants ex pires and refuses to renew. Once you get a tenant that starts paying late then you should issue required statutory quit notices and commence recovery process unless the tenant is ready to regularize.

5. Not carrying out periodic inspection on the property .
Some landlords or their attorney fail to conduct periodic inspection on the property so as not to bother the tenant or intrude in the tenant’s privacy. It is business wise for the landlord to inspect his property to ascertain that that house is being properly maintained and not being destroyed. This will save the landlord a lot of money and headaches in the long run.

6. Wrong Termination / Eviction Procedure s .
Landlords who follow the wrong procedures when terminating the lease /tenancy end up losing a lot of expected income , f or instance , where a shortage required statutory notice is given or the notice given is not in writing or the notice is defective in law. There are procedures which must be followed if the landlord s wish to evict a tenant. It is better to get a property lawyer to handle the recovery process to avoid costly mistakes which could lead to loss of revenue.

7. C aution fee / service charges .
Another mistake investor in rental property makes is not to collect specific amount as caution fee which will serve as a security where the tenant destroys the property . Service charges collected from the tenant at the point of packing in into the property will be used to maintain and to service amenities in the premises that are commonly used by the tenants.


8. Friendships with the tenant
When the relationship between landlord and the tenant is too cordial it makes it practically difficult to take action if the tenant breaches the terms in the lease/tenancy agreement . Leasing a property is a commercial arrangement and landlords should take a professional app roach to leasing their properties.


9. Maintenance problems.

A landlord/investor who intends to retain good tenants should be responsive whenever t here is repair work to be done o n the property. Maintenance problems should be addressed quickly to ensure good tenants remain happy. Landlords who argue with tenants over maintenance problems may find it difficult to retain good tenants or maintain regular rental payments from their tenants. Failure to carry out a repair may cause tenants to delay payment of rent.

10. Fighting with tenant s .
When dea ling with tenants, the landlord / in vestor must be professional courteous and should be able to keep his temper. An investor /landlord that could not keep his temper should hire a solicitor to manage the property for him. Aggressive landlord will scare the tenant away and the landlord may lose a lot of income as a result of this.

11. Refusing to hire a lawyer when landlord/investor has problem with his tenant
Some landlord instead of involving a property lawyer who has experience in tenancy law to handle his matter when he has problem with his tenants , get into more problems by taking law into his hands. It is only the lawyer that knows the technicalities involves and t he legal remedies available to the landlord that could handle such a problem with professionalism.

In conclusion, for landlords/investors in rental property to get value f or their investment, they would have to get a good manager/attorney who has experience and required expertise in tenancy law to handle it.

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