The 5 Most Common Property Management Mistakes
Owning an income property seems like a foolproof investment. You have a house, condo or apartment that someone is willing to rent from you. You will be pulling in extra income each and every month. It’s a real gravy train!
Or is it?
Most experienced rental property owners know it’s never as easy as it sounds. It takes a lot of work to make an income property profitable. Smart property management is vital to keeping your unit occupied with quality tenants, covering your ownership expenses and collecting enough rent to make consistent profit from month to month and year to year. There are certain property management mistakes you’ll want to avoid as a rental property owner.
Here are 5 of the most common property management mistakes we see at PropertyLark:
1. Poor Record Keeping
The first thing you have to remember is that owning a rental property is a business. It is generating income for you while you have your own outgoing expenses to buy, hold and manage the property. A very common mistake is when the owner/landlord doesn’t keep good records. You want to have all the proper legal documentation, lease contracts, financial bookkeeping, property records, tenant records and other agreements in place. This will help you properly track expenses and income for tax purposes, while also protecting yourself legally if there are any potential issues encountered.
2. Poor Tenant Management
Your lease contracts need to be clear and legally binding. You should take the time to interview and screen any tenants before finalizing any rental agreements and terms. Collect safety deposits and clearly communicate any rules, expectations and information to your tenants. Make sure they know who to contact if there is a maintenance issue or complaint. Be responsive and diligent in your tenant management. This is what helps you keep the unit occupied with quality tenants and preventing major tenant problems.
3. Not Keeping Up with Maintenance
One of the biggest complaints tenants have is when the landlord ignores the property and necessary maintenance tasks. Some maintenance needs to be performed periodically no matter what. Then, there are emergency repairs and issues that inevitably come up from time to time. You have to be ready and responsive to take care of these maintenance issues. Maintenance and repairs must also be built into your overall budget and property management plan. If not, you may find yourself losing money.
4. Not Ready for Property Management
Some rental property owners are simply in over their heads. They aren’t fully prepared to handle everything it takes to successfully manage the property and their tenant’s needs. They end up overwhelmed or they ignore important duties, and the problems tend to add up. Unless you know what you are doing as a property manager, you should strongly consider hiring a professional property management company to handle the day-to-day issues. It will be more money out of your pocket, but it could allow you to be more profitable in the long run with happier tenants, reduced vacancy periods and higher rent prices.
5. Not Having a Plan
Going back to mistake #1, this is a business and you must have a solid business plan to make it successful. Whether you are planning to buy a property to use as a rental or you already own extra property that you want to rent out, you have to plan the budget, define all the roles/duties and put all the right pieces in place. If not, you are going to run into one or more of the property management mistakes above and your investment may end up more of a liability than a windfall.
PropertyLark is here to help with all your real estate investment needs. We have built up a network of successful real estate investors and we offer unique resources to help property buyers get more out of their investment opportunities. To learn more or to apply to join our network, please visit the buyer’s pages of our website.