Are you planning on investing in your first Portland investment property? If so, you’re making a smart choice!
Right now, is the perfect time to invest in Portland investment properties because mortgage interest rates are still historically low and it’s never been easier to purchase an investment property in the Portland area.
Depending upon your financial situation, you may be able to easily purchase an investment property here for cash compared to what it would cost you to purchase an investment property elsewhere in the United States.
Even though buying investment properties is an ideal choice for every investor to make the reality is that there are a variety of mistakes that a newbie landlord should not make if you plan on managing your investment properties yourself.
In this article, we will break down common landlord mistakes and also provide you with several tips for first-time landlords.
Mistake #1 – Not Renting to Families with Children
The first landlord mistake that you do not want to make after purchasing a Portland investment property is choosing to not rent your property out to a family that has children.
Sadly, many investors over the years have made this mistake because they feel that some children are responsible for causing wear and tear on their rental properties (even more so than adults) but the reality is that thanks to local and Fair Housing laws, as a landlord you do not have the ability to discriminate against a potential tenant by choosing to not rent to them if they have children.
Besides not discriminating against families with small children, you also must not discriminate against people of the opposite sex, race, national origin, color, job status or their disability status.
Yes, it can be tough to be a landlord especially when it comes to screening potential tenants, that’s why when asking questions to a potential tenant you should always keep your questions scripted and make sure that you’re asking the same thing to your tenants each time to avoid any allegations of discrimination.
Mistake #2 – Banning Tenants with Criminal Histories
Another landlord mistake that you do not want to make after investing in a Portland investment property is banning potential applicants that may have criminal histories.
Most landlords in the past typically didn’t think twice when it came to potentially banning a tenant with a criminal history because they did not want to put their other tenants or neighbors in the area at risk by renting to someone with a criminal history.
Thanks to recent policy memo issued by the Department of Housing and Urban Development though, we know that an applicant’s potential criminal history is not a sufficient reason to turn them down as being someone who you would not potentially consider renting to.
Although you cannot turn down an individual who potentially has a criminal history, this does not mean that you cannot “consider” an individual’s potential criminal history during the screening process especially if that individual’s criminal history could put other tenants who live in your rental property at risk.
During the process of considering a potential tenants criminal history, some of the things to consider when interviewing them include the following:
- Was the applicant arrested or convicted of a crime?
- What exactly was the severity of the crime?
- How many years ago was the crime committed?
- Did the crime involve firearms or drug-related?
To be on the safe side, you should always screen a tenant based on criteria like their financial qualifications and the results of their background check. Doing this will protect your best interests especially when it comes to renting to tenants who may not pay their rent on time or possibly cause you trouble because they have a background which may not be a good fit for your Portland investment property.
Mistake #3 – Using Generic Lease Forms
So far, we’ve covered two major mistakes that you do not want to make as a landlord after you invest in a Portland investment property but, the third mistake that you absolutely should avoid making at all costs is using generic lease forms.
Thanks to the internet, it’s easier than ever before for landlords in Portland or elsewhere across the United States to have access to generic lease forms that they can download from the internet, print from their office, and have available for their tenants when they show up.
Sadly, there’s no way for a landlord to know if a generic lease form is actually compliant with their state or their local fair housing laws plus the protections of the generic lease form may not extend as far as the landlord expects.
To avoid the hassle of using a generic lease form, every landlord who owns a Portland investment property should first hire an attorney to craft a custom lease form that is specific for their property. Doing this will provide the landlord with plenty of opportunities to write down specific rules for the property including parking rules or regulations, who are responsible for yard maintenance, and other issues that may be important to the landlord.
Hiring an attorney to have a custom lease agreement created is a one-time cost but the reality is that doing this will ultimately pay dividends for the landlord which will last them for years to come and protect their best interests should their tenant become unscrupulous and decide to not pay their rent on time or cause them specific problems.
Mistake #4 – Improperly Collecting or Holding onto Security Deposits
Yes, there are many landlord mistakes that you do not want to make after purchasing a Portland OR investment property, and we’ve already covered a few in this article, but the next landlord mistake that we want to talk about is improperly collecting or holding security deposits.
As a landlord, it’s important for you to know that security deposits are a very contentious issue for tenants because many landlords in the past have charged exorbitant security deposits. When it came time for the tenant to move out, the landlord took most or all of the tenant’s security deposits.
In Portland, landlords have 30 days to return a tenant security deposit after they’ve moved out. The tenant, of course, must provide the landlord with a forwarding address that the landlord can then mail them a check or money order to plus a complete list of itemized deductions that the landlord took out if they had to use some or all of the security deposit.
Mistake #5 – Hiring a Resident as the Manager of Your Portland Oregon Investment Properties
Over the years that you own your Portland investment property, it may be very easy for you to offer one of your tenants a rent discount in favor of them managing one or more of your investment properties.
Sadly, this is a huge mistake to make especially if the tenant is living on-site or at the property that they will be managing because it’s very easy for a tenant who is already living in a property that they’re managing to have an allegiance to other tenants that live there and potentially cut them a break when it comes to tenants who break their leases or ultimately pay late.
To avoid the heartache and hassle of hiring a tenant to manage one or all of your Portland investment properties, you should only hire a local property management company like Property Management Systems because, we have years of experience when it comes to managing Portland investment properties and you can count on reliable service, great support, plus on-time rent collection when you choose us to manage your property for you.
Some of the additional services that you will receive when you hire us to manage your Portland rental include:
- Property Marketing
- Tenant placement / Selection
For more information about the property management services that we can offer you contact us today by clicking here!
Tips for First Time Landlords
Now that we’ve covered all the landlord mistakes that you absolutely do not want to make we’re going to provide you with a list of tips which will help you as a first-time landlord make the right decisions and best of all ensure that your property stays profitable.
Always Make Rent the Priority
Regardless of what you do as a landlord, the most important priority that you always want to have is to make receiving that monthly rent payment a priority. Why? The answer is simple, rent is your revenue, and if that rent is received late on a monthly basis, those late payments affect you because you are going to be responsible for paying that mortgage payment until your tenant is able to pay their rent so it’s always ideal to make receiving rent payment a priority every single month.
To ensure that rent is always paid on time you must make sure that you have an ironclad lease which states when the rent is due and what the penalties are that the tenant faces for not paying your rent on time.
By having an ironclad lease, and also instructing your tenants on how to pay the rent or where to pay it, you’re going to eliminate excuses for why they cannot pay their rent on time and ensure that you have regular, reliable, cash flow pay to you from your tenants on a monthly basis.
Choose the Right Partner
Ensuring that rent is a priority in your business is important but, another important thing that you want to do as a real estate investor who plans on purchasing a Portland investment property is to partner with the right individual if you plan on taking on a partner.
Choosing the right partner is key because, if you partner with someone who does not have the same shared values as you, it’s going to be more difficult to expand your portfolio of investment properties if one partner wants to keep things as they are while the other partner wants to grow it.
To avoid hassles in a potential partnership it’s best to sit down with someone who you plan on partnering with an interview them just so that you’re fully aware of what their goals are as an investor and if what they want to do lines up with what you want to do.
Don’t Spend Thousands Of Dollars Learning And Never Doing
Another mistake that you do not want to make as a real estate investor in the very beginning is to potentially spend thousands of dollars learning, but never doing. The reason why we bring this point up is that every year newbie real estate investors go to seminars, purchase courses, and invest hundreds if not thousands of dollars with gurus, trying to learn real estate investing tips, but then they ultimately end up not using what they’ve learned to actually invest in real estate.
As with any business, the key to success is actually doing or following through with the things that you’ve learned because, you can have all the knowledge in the world about how to invest in real estate but if you don’t actually use it, then that knowledge is ultimately worthless to you.
If you have problems with taking action, commit yourself to spend at least 1 hour per day towards investing in real estate because making this commitment will actually enable you to make real progress towards accomplishing your real estate investment goals quicker than you ever imagined.
Besides committing to taking action, you should also commit to never stopping the learning process. This tip is important because even though you may be taking action and applying what you’re learning, you must maintain your commitment to learning as much as you can about real estate investing over the course all of your career because doing so will ultimately make you a stronger real estate investor in the long run.
Screen Tenants Properly
As we mentioned above, you always want to make sure that you screen potential tenants properly before renting to them because, the proper screening will save you that time, money and hassle of renting to an individual who could be more of a problem than what they’re worth.
Think Carefully Before Allowing Pets
Another important thing to consider before renting to a tenant who has expressed an interest in living in your Portland investment property is that you should always think carefully before allowing pets.
Although many pet owners are responsible individuals who care for their pets, it’s quite possible that you may encounter one renter who is less than responsible when it comes to the care and management of their dog or cat and if those animals are left unattended, it could end up peeing inside of your investment property and it could take weeks or months to get that smell out so it’s best to think carefully about the owner and their pets before choosing to rent them.
Don’t Invest In Renovations That Won’t Produce Higher Rent
Last of all, the most important, another important tip that we have for you is that you should always think carefully when it comes to renovating rental properties and make sure that you invest in renovations that will produce a higher rent.
Unfortunately, many investors every year make the mistake of investing money in their properties that will not produce a higher rent so it’s always best to think about the return on investment that you will receive in the form of rent before making a renovation because it’s quite possible that you can easily let your emotions get in the way of you making a smart choice when renovating your investment property
Contact Property Management Systems
At Property Management Systems, we are the property management leader in the Portland area. You can count on us for full-service property management as well as being your source for finding potential investment properties that you will want to add your portfolio.
To learn more about the services that we can offer you contact us today by calling (503) 515-3170 or click here to connect with us online.