Rental Property Sins You Can Avoid by Hiring a Property Manager
Are you a landlord trying to handle your rental property yourself? Even with the best intentions, there’s a lot of potential for problems along the way. Hiring a property manager can help you get the most out of your landlord experience, plus avoid these 14 rental property sins.
Not Keeping Track of Paperwork
There’s a surprising amount of paperwork that mounts up regarding rental properties. You’ll have purchase receipts to keep track of, invoices, statements, legal documents, warranty paperwork and a whole lot more. Whether it’s digital or paper copies, if you don’t keep track of all that paperwork, you’ll be in an awful situation. You could lose out on deductions, miss deadlines or even come under legal scrutiny. If you hire a property manager, they handle a vast majority of this paperwork for you and present it for your review in an organized fashion.
Neglecting Tenant Communication
With no property manager as a buffer, you must make yourself available to every tenant communication. In turn, you’ll need to reach out to the tenant as necessary during their lease. Neglecting to maintain tenant communication or respond in a timely manner can lead to all sorts of problems, such as overlooked serious complaints, strained relationships, and misunderstandings. Whereas with a property manager, you won’t ever have to speak to your tenant, yet you’ll know that open lines of communication are firmly in place between your tenant and the PM.
Procrastinating on Doing Repairs
Property managers take care of needed repairs on your rental property as soon as possible. They’re able to quickly assess the urgency and potential ramifications of every repair imaginable. On the other hand, you may be likely to procrastinate taking care of repairs for lack of time or money, or not realize the seriousness of the issue. For example, a simple water leak can lead to cabinet damage. If the problem is still not resolved, the moisture could damage flooring and even lead to wood rot or mold.
Being Ruled by Emotions
If this is the first rental property you’ve ever owned, you may have some emotional feelings attached to it. You might even think of the property as “your baby.” Be careful. Although these feelings might seem natural, they can impede your ability to make objective decisions based on the property’s performance. Many first-time landlords hold on to losing “pet project” rental properties long after they’ve shown themselves to be a bad investment. Use a property manager to avoid this. Part of the PM’s role is to continually assess the profit value of the rental and offer expert advice to landlords on how best to proceed.
Overspending on Renovations
It’s exciting to transform a rundown rental into something that tenants are lining up to lease. But the mistake many landlords make is to overspend on renovations. It’s important to keep in mind that it’s a rental property. The standard should certainly be quality level, but some landlords have a hard time discerning the line between good enough and grandiose. When renovations are called for, experienced property managers understand precisely the quality level to which they need to bring the property.
With no property manager acting as a buffer between the tenant and the owner, some landlords make the huge mistake of overstepping boundaries. This may stem from a lack of experience, distrust or simply a personality trait. In any case, it’s never okay for landlords to do things like:
- rifle through the mailbox “in case there’s something there for me.”
- repeatedly call/email/text the tenant for no good reason
- show up unannounced
- make sexual advances
- make threats
- display outbursts of anger
- ask neighbors to report on tenant behavior
- turn maintenance calls into social visits
With a property manager in place, there’s little opportunity or need for a landlord to overstep boundaries and get into trouble. The PM is always in the middle, keeping a safe distance between the two.
Letting it Sit Vacant
As a busy landlord with a full-time job and no property manager, you have two full-time jobs. Tending to your rental property is the second job. Once a tenant leaves, someone needs to get into the property and assess it for damage, then get it prepped for the next tenant. Then someone needs to do the marketing to find that next tenant, and so on. With a property manager, all this is taken care of while you work your day job and have a life. Without a property manager, your rental sits vacant for who knows how long until you can find the time and energy to sign a new tenant. By then, prospective tenants are wary because they’ve seen the rental sitting empty and assume there’s something wrong with it. Not only that, but vacant properties quickly attract unwanted attention from vandals, insects, and rodents.
Failing to Treat it Like a Business
You may have purchased your rental property as a sideline moneymaker, but unless you treat it like a business it’s going to be a money pit. For landlords without property managers, it’s easy to forget that the property needs to be treated just like a business. Otherwise, you lose control over what’s happening with the property, the tenants and worse, your financials.
Not Overseeing Workers
Unfortunately, there’s a lot of potential for trouble when you hire workers for your rental property. Workers need constant supervision. Otherwise, you could get shoddy work, no work done at all or even ripped off with cheap materials substituted for what you actually paid for. Unless you’re willing to use your vacation time to stand there all day and make sure you get an honest day’s work out of your renovation crew, you’re sure to learn the hard way that you absolutely need a property manager to handle this oversight on your behalf.
Pricing Too Low/High
It takes a considerable amount of real estate experience and research to know how to calculate a property’s rental rate. If you attempt it yourself and price it too low, you leave money on the table. You could also attract less than ideal tenants by pricing too low. If you price it too high, you’ll have trouble finding tenants at all and run the risk of losing money through extended vacancy. Hire a property manager to take the guesswork out of setting your rental rate. It’s a skill they have, and it’s well worth the monthly fee. This is especially true since they re-evaluate every time the lease comes up for renewal, or it’s time for a new tenant.
Not Vetting Tenants Properly
As a landlord without a property manager, you’ll need to sift through applications, run background checks, conduct interviews and try to avoid the many landmines of correctly vetting tenants. If you make even the tiniest mistake, you could end up with bad tenants, have your property damaged or even be charged with unfair discrimination. Avoid all this risk by simply hiring a property manager. The PM will vet prospective tenants in a fair, objective manner that provides the best possible outcome for you.
Paying Retail for Materials
One of the rental property sins that landlords often make is losing money by paying retail for materials. If you’re trekking to the big box stores yourself and lugging materials piecemeal to your rental property, you’re missing out on one of the biggest benefits of hiring a property manager. Property managers work with licensed contractors who deal in bulk purchases. They also get discounts on materials that you could never get unless you have a contractor’s license. This is where property managers save you time, trouble and money.
Being Ignorant of the Eviction Process
Sometimes tenants need to be evicted. But the landlord can’t just show up at the door one day and tell the tenant to start packing. There’s a legal process that needs to be followed to the letter. If you as the landlord fail to adhere to the process, you and your property are vulnerable. It’s the job of a property manager to know and follow the proper eviction process, so you don’t have to. Hire a quality property manager, and you’ll never have to worry about personally spending an afternoon in court over a bad tenant.
Thinking There’s Only One Way To Be a Landlord
Finally, the single biggest mistake you can make is to assume that your method is the only way to be a landlord. When you don’t hire a property manager, your experience as a rental property landlord could be so chaotic, risky, time-consuming and nerve-wracking that it could sour your taste for renting properties in the future. If this happens, the sad thing is you’ll be missing out on one of the best sources of revenue that exists. The difference between being a landlord with a property manager and without one is like night and day.
When you hire a quality property manager, you can get a true, passive experience. You won’t have any of the rental property sins mentioned above. If you’ve been on the fence about hiring a property manager, hopefully, this article will help you make the best decision. For more information about getting a passive rental property experience, contact AmericanRealPM today.