The decision to become a Sacramento landlord can easily be one of the best or worst of your life. In many cases, that difference will come down to whether or not you are educated on costly mistakes in property management and how to handle unexpected surprises that may arise. In order to help ensure that your decision to become a real estate investor in Sacramento is by far the best you ever make, you need to familiarize yourself with these common and disastrous mistakes made by inexperienced landlords.

1. Failing To Do The Necessary Research

If you have not yet purchased your first investment property in Sacramento, let me begin by advising you that you need to take the time to do your due diligence and research potential properties before putting in an offer. In this highly competitive market, properties can go quickly so when you find one you love you need to be prepared to make a move quickly. Part of that preparation is doing the necessary research to calculate potential profit and loss before adding it to your shortlist. If you see a property that you assume will be profitable and purchase it without doing research on the local market, potential revenue, potential costs, etc. you could wind up losing your shirt faster than you think. Believe me when I tell you it is worth it to put in the time to do the research upfront rather than find out bad news down the line.

2. Not Getting & Requiring Insurance

It is important that you not only obtain insurance for yourself as a landlord but that you at least consider asking your tenants to get themselves insured as well. Many people do not realize that tenants can obtain a type of renters insurance that will protect them and help cover their rent costs should they fall on financial hardships. Just imagine how many landlords were financially devastated by the Coronavirus pandemic that didn’t have to be had they been properly insured. You may want to consider requiring tenants to purchase this type of insurance policy and even reducing your rent to help cover that cost to protect yourself in the long run.

3. Taking Tenants At Their Word

There is no shortage of horror stories that I can tell you about what happens when you decide to take a potential tenant at their word as an applicant for your rental unit. No matter how an applicant appears, you need to again complete your due diligence and put each applicant through a thorough screening process. This means running a proper criminal and financial background check, credit check, and reference check. You should also seriously consider including an employment verification and income verification to protect yourself from potential scammers that know how to use legal loopholes against you to avoid paying rent.

4. Cheaping Out On Repairs

Although it can be very tempting to take shortcuts on repairs, it will seriously cost you in the long run. Remember, your investment portfolio is your business and it needs to be run like a business and treated with care and respect. The more shortcuts you try to take in the repairs and maintenance of your investment properties, the more those repairs will end up costing you in the long run. Not to mention, should you wind up getting sued by your tenants for your failure to comply with building codes you will really regret your decision to take the cheap or easy route.

5. Forgetting To Save, Save, Save

I cannot stress enough to you the importance of maintaining and growing your savings from your rental revenue. The real estate investors that treat their rental revenue as pure cash in their pocket that they can spend how they wish are those that wake up one day in a world of financial trouble. You need to have a thorough and sensible plan to put as much of your rental revenue aside as possible each month or each year in order to protect yourself from future financial struggles, as well as, prepare yourself to take advantage of future financial opportunities.

6. Ignoring The Sacramento Laws & Codes

Whether you choose to ignore the local building codes and laws around a landlord and tenant relationship or you are simply ignorant to them, you will more than likely wind up paying for your failure to comply. You also should not assume that the local codes and laws that were in place when you purchased the property haven’t or will not change, because I assure you they do. It is your job as a landlord to stay up to date on all of this and ensure your units are in full compliance at all times. Failure to do so can result in devastating fines, lawsuits, and various legal troubles.

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