A good way to create income and build wealth over time is investing in a rental property. What needs to be understood is that buying and managing a property are two different things.
Owning a rental property can be exciting and rewarding. On the flip side, however, it can also be full of difficult lessons, ones that you may not want to learn with your first venture.
If you are new to the rental business, there are a few things you need to know. The more you know about property management, the fewer mistakes you’ll make.
Don’t fall into the trap of making the same mistakes that other new property owners make, read on to find out what are the common rental property owner mistakes.
1. Doing everything on your own.
First off, you will need to know that owning and running a rental property are two very different things. To run a rental business successfully, you will need the appropriate knowledge, skills, and experience when it comes to managing your property.
These skills will help you steer away from any complex issues that may arise during the course of your career as a property owner.
Owning a property can be easy but managing one can be a challenging and demanding endeavor. Property management involves many time-consuming tasks and responsibilities. The more tenants you have, the harder it will get to handle everything.
Without the proper skills, knowledge, and experience, you are bound to make mistakes. For example, without knowledge of the landlord-tenant laws, you may find yourself battling a discrimination lawsuit in court. Moreover, without understanding tenant privacy laws, a tenant may accuse you of harassing them.
Therefore, it’s always recommended to hire a reputable property manager to handle your first investment. You’ll get to learn from a professional and once you are certain of your skills, you can opt to do it on your own.
2. Hiring a company that only offers a specific service.
Some property management companies only offer specific services while others offer full-service management. You will need to know which services you require and have a clear understanding of what property managers do.
However, remember that hiring a company that offers only a specific service also has its downsides.
For example, you may hire a company that only deals with leasing. Though it may seem like a cost-saving option, you also need to think about getting in good quality tenants.
After the lease is signed, the company won’t manage these tenants and will leave you to deal with them. They also may not have the most thorough tenant screening service in place.
Getting a management company that offers full services means that will make sure that you get quality tenants, but they will also take care of managing them.
3. Hiring a real estate agent instead of a property management company.
Avoid wasting hard earned money on hiring an inexperienced agent instead of recruiting a Medford property management company that has the knowledge and skills to maximize your investment.
We all have our own unique talents but just because a veterinarian is a doctor, it doesn’t mean that they’re qualified to treat people.
Similar to property management, real estate agents may be capable, but they do not specialize in managing property and tenants. They specialize in real estate and may not give you the same management services that are being given by property managers.
You can benefit from the professional services of a skilled and licensed property management.
4. Setting the wrong rent prices.
Setting the right rental price is a tricky business and may spell the difference between success for your rental business or a major flop.
This is because if you charge too little, you may end up with negative cash flow and if you charge too high, you may not find tenants who want to rent your unit.
Determining the ideal rent price takes a lot of time, analysis, and market research. Part of a property manager’s skill is to set the right rental value of a property to make it attractive to prospective tenants. This is only one of the many benefits of working with a property management company.
By factoring in the location and amenities, as well as the comparability of the property in the area, the property manager is able to set the most appropriate rental value for your real estate.
5. Failing to get proper insurance.
You’ll never know when calamities will strike. Fires and floods can do a lot of damage not only to your home but to your pocket as well.
A professional property manager understands the importance of having different types of insurance to make sure that your property and your investment is secure. They have the knowledge, licensing and insurance to save you money and avoid costly mistakes.
6. Failing to set clear and specific tenant rules.
When it comes to managing tenants, it isn’t an easy task. That’s why it’s important to set clear and specific rules before the start of the tenancy. This is a reoccurring mistake that new owners often make and can have costly and time-consuming consequences.
Property managers know how to set and enforce rules and have them in place in the lease agreement. They cover details such as deposit amounts, rent fees, rent due dates, penalties, and any damages to the property.
7. Forming unhealthy relationships with tenants.
Part of a good property management strategy is having a relationship that is good and friendly with your tenants. Keeping tenants happy is crucial to your investment’s success.
Make sure to focus on not being too nice to your tenant to the point that they start taking advantage.
Your tenants may become too familiar and become careless and irresponsible in regard to the lease or rental agreement.
To avoid this, it’s critical to set expectations from the start. Let them know what the lease or rental agreement requires of them and what happens if they don’t adhere to it.
It is always advisable to have a good and friendly relationship with your tenants. But you must always keep it professional. And always look to be fair and respectful.
8. Performing repairs and maintenance on your own.
This is another common mistake many new property managers often make. They may think that repairs and maintenance can be a DIY process with the goal of minimizing expenses.
The expectation may not be that experts are needed to fix things. What most don’t realize is that any small maintenance or repair issue, if not handled properly, may turn into bigger problems.
When this occurs, you’ll most likely pay more money down the line than if you had simply gotten it fixed by a professional upfront.
Repair and maintenance issues can ruin your reputation or even cost you a few good tenants.
When your property requires repairs and maintenance, get it fixed as fast as possible and get it done by professionals that’ll get the job done.
Managing tenants isn’t always going to be easy. That’s why many rental owners turn to property management companies for the professional property services they provide.
The mistakes above will help you become aware of common situations, but they aren’t enough to make you an expert in property management. The right property management company will help you maximize your investment by avoiding these common mistakes.