We all make mistakes, sometimes people make mistakes in managing their own rental properties. Fortunately, others have made these mistakes so you don’t have to! Below are 10 of the most common mistakes and how you can avoid them.
1. Not Accounting For Your Own Time
It is important for independent property managers to take into account the value of their time when managing their own rental properties. If you are managing your own properties in an effort to save money, but neglect to account for the value of your time, you may actually be losing more money in the long run. Take into consideration the value of your time when managing your own rental properties.
2. Poor Budgeting
If you’re paying the mortgage with the same month’s rent payments, thats a recipe for disaster. It is ideal to have your mortgage paid at least one month in advance. Also, be sure to have at least 1.5 to 2 times the monthly rent set aside for maintenance and emergency repairs; you never know what will arise.
3. Not Inspecting the Property(s)
Most independent property managers only conduct inspections when a tenant moves in and when they move out. Sometimes a property doesn’t get inspected for several years! This will lead to delayed maintenance issues and will allow for what would have been small repairs to become big and expensive problems down the road.
4. Lenient Enforcement of Rental Agreements
When property managers do not enforce the terms of a rental agreement, tenants begin to exploit leniency. All terms of the agreement should be consistently enforced.
5. Static Lease Rents
It is not uncommon for independent property managers to not increase rents in an effort to keep a good tenant. This approach may be effective in the beginning, but in the future it could create greater difficulties. Attempting to increase the rent to market rates after it has been artificially low for years can be difficult and can upset long-time tenants. By incrementally increasing rents annually to keep up with the market, you can avoid these types of problems and will be beneficial for everyone.
6. Not Having a Rental Agreement and/or Move-in Condition Report
Some independent property managers use a personally drafted or outdated rental agreement. Others fail to complete a thorough move-in condition report with accompanying photos. By not having these, it can cause problems when attempting to enforce the lease or deduct money from the security deposit when the tenant moves out.
7. Inadequate Background Checks
The most effective way to avoid having a troublesome tenant is to thoroughly screen them upfront. Many independent property managers do not even do a basic credit check when screening their prospective tenants. The best background check process will have not just a credit screening, but also a criminal background check, a review of any prior evictions, and foreclosures.
8. Poor Advertising
Many independent property managers advertise their properties in only a few places when listing their vacancies. Often times Craigslist and Zillow are the only sites where a prospective tenant can find your property. For you to get the most applicants and fill your vacancies faster, make sure that your property is listed on all of the major real estate and property management websites, portals, and apartment listing sites in your market. In Hawaii, a great website is AHRN.com, a site that helps the military community find housing.
9. Breaching the Landlord Tenant Code
Independent property managers that are unfamiliar with the local landlord tenant laws will often make mistakes and end up in court. Not providing proper notice to vacate and mishandling the security deposit are just two of the areas that are frequently overlooked. It is essential that anyone managing a property know the applicable laws in your state and county jurisdiction.
10. Maintenance and Renovations with Insufficient Experience
Finally, attempting to do routine maintenance or renovations to your rental property on your own, especially when the project is unfamiliar, can not only be dangerous but end up becoming much more costly in the end. Be sure to use licensed professionals when your property needs repairs that are beyond your comfort level.