The truth is all people make mistakes. Even experienced professionals face unfavorable circumstances sometimes. By making mistakes, we learn to appreciate the struggles and challenges of life. Remember to view these blunders as lessons, not failures. But for landlords it's also reasonable to prevent mistakes that could cost you your property management business.
We've collected the top 7 common mistakes landlords and property managers make in their career and how to avoid them:
1. Ignoring background and credit checks.
Finding good tenants is only half the story. Making sure you're dealing with reliable residents is what matters. To verify that, run background and credit checks on every potential renter. A credit check will show a tenant's credit score as well as any history of late payments and/or non-payments. By checking such credentials, you'll find out whether a tenant can afford to rent your property and if they're able to provide monthly rent payments. A background check is necessary to verify a tenant's identity and get references from previous landlords and employers.
Keep in mind that vacant rentals aren't that terrifying when compared to difficult renters who can't be trusted.
2. Treating property management like a hobby, not a business.
Even if you'd spend a weekend renovating your property and reviewing lease agreements instead of going kayaking or chilling out in a country house, property management shouldn't be considered a hobby. Even if you enjoy managing your rentals, try to view them as a full-time business. This means establishing a business plan, consulting an accountant and tax professional on practical issues, and getting a separate bank account for rent payments and expenses associated with the rentals. Also ask advice from landlords who have spent a lifetime in the property management industry. Their suggestions might come in handy and help you avoid similar mistakes they once made.
The more you concentrate on business solutions, the more profit you'll eventually make. Developing a powerful money-oriented mindset is important for both newbie landlords and experienced property management professionals.
3. Procrastinating home repairs.
Overcoming procrastination isn't an easy task, but it's still doable. Once you quit procrastinating your daily tasks, you'll learn how to deal with maintenance issues as they occur. One common landlord mistake that tenants hate is postponing work orders. Minimize the risk of making your tenants angry by instantly dealing with maintenance problems. Additionally, accurate estimates of home repair costs are important when checking your cash flow and investment situation.
4. Neglecting state and local laws.
Before starting your property management career, it's important to learn state and local laws on rental agreements and tax laws concerning rental properties. Also make sure your rental meets housing standards, and pay particular attention to fire safety requirements.
5. Refusing to receive help.
Hire a property manager or use a property management software system such as TenantCloud if you manage several rental properties. By doing so, you can automate the process of running your business and optimize time spent solving daily tasks. TenantCloud allows you to automate online rental invoicing, online rent collecting, rental listings, maintenance requests, tax reports, reminders and notices, etc. With TenantCloud, you can keep all the necessary documents in one place and interact with your tenants inside the system via TC Messenger.
6. Overpricing the rental.
Don't waste money on appliances and furniture of questionable quality while expecting to raise the rent. Renters have numerous options when it comes to checking for better rentals out there. To effectively market your properties, analyze the rental market in the area nearby and then set the price that will attract tenants.
7. Not signing a residential lease agreement.
The danger of not having a written lease agreement is that you don't have any evidence that a tenant actually occupies your property. In the event of eviction, it'll be hard to prove any illegal activity or non-payment on the part of the tenant. So don't rely on a verbal agreement - complete a written lease document instead.
Can you recall any other mistakes you made in your career? How did they affect your business? We'd love to hear about your experiences. :)