There’s more to managing a rental property than just collecting rent.
If you are new to the world of owning and managing investment properties, there are a few things you need to know.
Most importantly, you should know that running an investment property is like running a small business.
The more you know about proper management, the lesser the likelihood you have of making costly rental property owner mistakes.
So, you might be wondering what are these mistakes and how can I avoid them?
If you keep on reading, I guarantee that you’ll find the answer to your question.
Owning a rental property can be exciting. But it can also be full of difficult lessons.
Some of which can cost you your investment.
So, instead of making the same mistakes that other new property owners are making, here’s an eight-point cheat-sheet for new investors:
1. Doing everything on your own.
Owning and running a rental property are two very different things.
Owning a property can be easy but managing one can be a tedious and demanding endeavor.
Generally, property management involves many time-consuming duties and responsibilities. The larger the number of tenants, the harder it will get for you.
Now, without proper skills, knowledge, and experience, you are bound to make mistakes.
Mistakes that can attract costly penalties and even land you in court.
That’s why it’s always wise to hire a reputable property manager to handle your first investment.
After a while, you’ll have a clue on how property management works. Afterwards, if you are 100% sure about yourself and your skills as a landlord, you can start doing it all on your own.
2. Hiring a company that only offers a specific service.
When it comes to property management companies, there are generally two main types:
- The ones that offer single or specific services
- And others that offer comprehensive services
You can hire a company that deals with leasing only. And while it may seem like a cost-effective option, it does have its downsides.
Generally, companies that only handle leases won’t put more attention to finding you quality tenants. After all, their work is over as soon as the lease is signed. Leaving you to deal with stressful tenants on your own.
However, hiring a management company that offers comprehensive services means that they’ll not only get you quality tenants, but they’ll also manage them.
This gives a property manager more incentive to thoroughly screen and approve tenants who won’t be troublesome, as well as much more.
3. Hiring a real estate agent instead of a property management company.
Let’s face it, we all have our own unique talents.
Just because a veterinary surgeon is a doctor, it doesn’t mean that they’re qualified to treat people, right?
If you agree, then you should also agree with the fact that real estate agents shouldn’t be the first choice to do the work that property managers are specialized in.
Regardless of how good they are, agents cannot give you the management services that are offered by professional management companies.
That’s why, instead of wasting part your rental income on an inexperienced agent, hire a company that knows how to get the job done.
That’s the only way to make sure you are getting great value for your money. And you’re ensured that your property is in the right hands.
4. Setting the wrong rent prices.
How can you tell if your rent price is wrong?
There are two ways to identify this:
- One, is if you experience higher turnover rates, receive complaints about the rent being too high, or if you can’t seem to fill your vacancies.
- And two, is if your profits fall short of what a property like yours should be yielding.
Coming up with the ideal rent price takes a lot of time, analysis, and market research.
And if you don’t know how to go about that, then you may end up incurring losses in one way or another.
5. Failing to get proper insurance.
During calamities such as fires and flooding, having an insurance cover is always the best way to shield yourself from losses.
Unfortunately, some new investors don’t always know the importance of having an insurance policy.
And, as a result, a single calamity can tear down their investments.
Good property managers understand this. And that’s why they’ll always advise you on which insurance covers to take in order to ensure you don’t suffer losses when disaster strike.
6. Failing to set clear and specific tenant rules.
Without clear rules, managing tenants can be quite a daunting task.
Regrettably, a lot of landlords usually make this mistake. Sometimes, the lack of tenant rules can lead to expensive consequences.
That’s why you need to make sure you come up with a list of rules and the consequences of breaking these rules.
Once the rules are set in place, before a tenant signs a lease agreement, ensure they read, understand, and agree to abide by them.
7. Forming unhealthy relationships with tenants.
Yes, it is advisable to have a good and friendly relationship with your tenants. But you must always remain professional.
Becoming too friendly to your tenants may lead to carelessness and preferential treatment. This is not good for you or your rental property.
When this happens tenants can become irresponsible and set a bad example for other tenants.
8. Performing repairs and maintenance on your own.
This common mistake among property owners can sometimes be understandable.
During your first days as a property owner and manager, you may not see the need to get professionals to take care of your investment.
But you should note that small repair and maintenance (R&M) issues can evolve into big problems if you fail to do it the right way the first time.
So, at the end of it all, you may end up spending more on resolving these issues than you would have if you hired a professional.
Moreover, poor resolutions to repair and maintenance issues can tarnish your reputation or even cost you a few good tenants.
If there’s an R&M issue, make sure you hire competent professionals to resolve/fix it promptly.
In summary, owning a rental property means taking responsibility for it. And without the proper experience, you may forget or fail to do some things.
The mistakes above will help you to become wiser in property management, but they aren’t enough to make you an expert.
For the best results, seriously consider hiring a reputable and experienced property management company.
With their help, you’ll learn how to properly and effectively manage a rental property.
Are you looking for professional property management in Lancaster Ca? Contact us today to find out how we can help you manage your property and maximize its return!