Are you a property manager who wants to improve their performance? Here are the most common property management mistakes that you should avoid like the plague.
If you’re managing rental properties, all the power to you! There are 8 million landlords in the US who can tell you how stressful of a job it is!
Unfortunately, there are plenty of mistakes you can make as a landlord that will make the job even more stressful! Luckily, you can protect yourself from making those mistakes. Let’s talk about some of the biggest property management mistakes to avoid.
Property Management Mistakes: Not Screening Tenants
Going with the first tenant who applies is a huge mistake. Background checks are crucial to making sure that you’re choosing the right tenant. Remember, you bought the property as an investment, and every tenant that you bring into your building has control over your investment. If you had to give somebody control of your TD Ameritrade account that had your life savings in it, would you want to vet them first?
One bad tenant can cost you a fortune. If you talk to any landlord with a couple of decades of experience, they probably have a horror story to tell you. Even if you collect a security deposit of $1500, there’s a lot more value to each of your units than that.
You have appliances, walls, paint, floors, ceilings, windows, doors, and more. That money adds up. Check each applicant’s criminal and rental history before making any decisions.
Not Running Credit Checks
Sure, a bad tenant can cost you a fortune by breaking your stuff. They can also cost you money by simply not paying rent. You need income to live just like everybody else, right?
Well, making sure that each applicant has a decent credit history and a steady income is a good way to ensure security for your investment. If they have a missed payment or two on their credit report, that doesn’t necessarily mean that they’re negligent. Go through a thorough credit report rather than just the number and check out the circumstances.
Was it one 30-day late payment in an otherwise good report? Probably nothing to worry about. If it’s a concern to you, ask the applicant about the circumstances and make sure their income is at least 3 times the rent (preferably 4 times) before considering their application.
Not Inspecting The Property
Before purchasing a new property, it’s critical that you know what you’re purchasing. You wouldn’t buy a new car with a rough idle and a rusty exterior for $2,000 above the listed value, would you? The same logic applies to investment properties.
Know about the details of the house. When it was built, the heating systems, the plumbing, the roof, and everything else. Replacing a water heater can be expensive, but replacing a roof will basically void your entire income for a year.
Not only that, but it’s also helpful to know the specs of your property and what you’ll need to be repairing. Is there a spot on the grass you can’t mow over? How do you change the water filter? These are important things to know about before making the initial investment or taking on the responsibility of the property.
It isn’t just tenants you need to protect your investment from. Every investment property needs some type of security system. That includes video monitoring, access control, and more. It will help your tenants feel safer, and help you protect your investment!
Hiring The Wrong Contractors
Before hiring contractors, vet them as if they were tenants. When you take on a tenant, you probably want the reference of another landlord or property manager, right? Then you’ll get the best idea of how you’ll work together.
The same logic applies when hiring contractors. A good contractor is worth their weight in gold for property managers or landlords. You want somebody who is reliable, who you can call when you need them, and who provides their services for a reasonable price. Once someone’s prices look good, ask for references, especially from other landlords. They’ll likely know about the quality of their services the best.
Not Getting With The Times
Do you still stop by and collect a physical check from all of your tenants? Get automated.
Not only is this easier, but it can also make you more money. You can have convenience fees for credit cards, late fees that are automatically charged, and you can offer other services on your website.
You won’t have to stop by and get a check on the first of every month, wait for the bank to open, stand in line, deposit it, and wait for it to clear anymore. You’ll have a one-stop, convenient way to access everything, including the lease agreement.
Stay in contact with your tenants. Some tenants will be sure to let you know every time any little thing goes wrong but some are shy. If you see them, ask how they’re doing and if there’s anything they need from you!
If a tenant is doing something that goes against the lease or that irritates you, be upfront with them and talk before the problem gets worse.
Doing It All Alone
One of the biggest mistakes in property management is doing everything yourself. Sure, you want to maximize your profits, but the wrong building or the wrong tenants can turn your side hustle into a full-time job. Earn passive income by hiring a property management company to take everything off your back while you just keep reaping the rewards!
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