Mistakes are part of life. They are also part of owning and growing a business. But mistakes in business can cost you money, and no one in business likes losing money.
Fortunately, we have the ability to learn from our mistakes and improve as we gain experience. One of the first steps in this process is to identify where we have made mistakes. This allows us to avoid these pitfalls in the future and helps us anticipate other areas of potential slippage.
The list below outlines some mistakes property managers and landlords tend to make. The list is not exhaustive and is not intended to be autobiographical either. But, after thirty-five years in this business, I have seen many of these mistakes happen. And maybe I made a few myself.
NOT CORRECTLY FILTERING TENANTS
This is where it all begins and where many potential tenant issues can be avoided before they even start. First and foremost, with the ease of the modern world, there is no reason not to carry out a credit check on potential tenants. The internet offers many low-cost solutions, even for single-property owners, to properly manage someone’s credit. In fact, potential tenants realize that these checks will be part of their application process and that it is common practice to have to pay the associated costs. So be sure to check the creditworthiness of your applicants. You won’t have anyone to blame but yourself if you don’t and things go wrong.
FAILING TO PERFORM REGULAR INSPECTIONS
Carrying out regular property inspections is paramount to protecting the investment that you or the owner(s) you represent have invested in a property. Visiting a property a handful of times a year may seem like overkill or an intrusion into your tenants’ homes. Still, it’s arguably the best way to stay on top of maintenance issues and make sure your tenants are sticking to the terms of their lease. So, don’t be lazy and trust too much. Do the checks.
NO PREPARATION FOR VACANCIES
The recent market has seen vacancy rates at or near historic lows, but that doesn’t mean you won’t have a break between tenants at some point. Remembering that owning and managing rental property is a business is extremely important, and every business should have a plan for when the sunny days cover up and income slows down or comes to a complete halt. It’s a good business decision and common practice to maintain a savings account that can cover at least three months of expenses associated with your property.
NOT HAVING WRITTEN, SIGNED AND DETAILED LEASES
It seems like the most obvious thing in the world, but believe it or not, some owners still operate with handshake agreements. So, again, I can’t stress enough – DO. NOT. DO. THIS. Even if you rent the house next door to yours to your best friend in the world, you must have a written agreement outlining the monthly rent and other tenancy stipulations. This will protect you and your tenant should anything go wrong while they occupy your property.
NOT KNOWING YOUR MARKET
Comps are king. In the world of real estate, whether it’s listing agents, buying agents, landlords, property management companies, apartment complexes, mortgage brokers or anyone who else, one of the first words out of most people’s mouths is “let me see the comps”. This is especially true when you have rental properties. If you have a two-bedroom townhouse near a college campus, you’ll want to know how much two-bedroom apartments in the same neighborhood are renting for. If you have a property two blocks from the beach, you won’t compare it to a single-family rental in a suburban neighborhood. Know your market and the comparable properties, and this will help you correctly assess your property.
NOT KNOWING LOCAL HOUSING REGULATIONS
There are MANY laws and regulations regarding housing. Entering the world of property management without knowing the landscape of rules, regulations and so on would be like taking the SAT without ever finishing kindergarten and expecting a perfect score. Again, knowing the fair housing laws and the rules and regulations around renting your property is made so easy by the modern world. Take some time and read up on these issues online and familiarize yourself. You don’t need to finish law school to understand the property management landscape, but you do want to know what laws and regulations dictate things in the industry.
As human beings and as professionals, we have the capacity to learn. Putting in some time and work and learning from the experiences of others can help you avoid potential pitfalls associated with property management.
As a leading property management company in the Cape Fear area, Sweyer Property Management recommends property owners to seriously consider working with a trusted and experienced property management company. Additionally, we want to make sure owners and investors understand the relationship they are entering into when they choose to work with a property management company.
If you own investment property and are not using a professional management company, we hope you will consider doing so. The experts at Sweyer Property Management will be happy to provide you with a free rental analysis or, if you prefer, call us at 910-239-1338.
Sweyer Property Management is a professional, full-service property management company specializing in all aspects of rental management. If you are a real estate investor or owner who would like to learn more about our services and what a professional property manager can do for you, contact us today at 910.256.3031 or through our website. Sweyer Property Management has shown continued growth in the Wilmington, Leland and Hampstead areas while maintaining excellent Google+ note for customer service.