Property management is an ongoing learning process. It’s natural to make mistakes and learn from them as your business grows. Property management can be challenging – you have to juggle all sorts of responsibilities on a daily basis, all while making sure you keep your clients and their tenants happy.
Rental properties can be a great investment for their financial portfolio. However, it is also a great investment of their time, which is not something most people have a lot of. The best way to protect their financial investment is to partner with a property management company, so they have a team of highly qualified and experienced professionals dedicated to caring for their property.
Most of your potential clients don’t have the time or desire to become expert property managers themselves. They also do not have extensive knowledge of Nevada Landlord-Tenant law, state, and federal fair housing laws, disclosure requirements, tenant screening practices, rent collection, in-house maintenance and vendor contractor coordination, and lease administration – all of which are required for successful management of residential rental property in Nevada.
Choosing the right property management company from among the dozens in your area can seem like a daunting task. But with some careful planning and good interview techniques, you’ll be well on your way to turning the complex, time-consuming job of managing your rental property into a passive revenue stream.
Before deciding which companies to put on your short list, sit down and identify your needs and goals for the property in question. Do you need full property management services, or do you want help with only certain aspects of your business, such as leasing? Do you need a manager to live on-site? Would you prefer to work with a large company that has multiple locations and lots of resources, or would you rather work with a more boutique business, where you’ll likely receive more personal attention?
Once you’ve decided on your criteria and narrowed your search, take a close look at the following aspects of any property management companies who make your final cut:
Owning rental property can be both exciting and overwhelming if you are not sure where to start. Most new investors are unaware of the complexities and that lack of knowledge can lead to costly mistakes.
If you fail to do your job properly, you could end up losing clients, dealing with angry tenants, or even facing a costly lawsuit! To avoid these circumstances, let’s look at 10 common property management mistakes.
Every property manager has their own way of screening and vetting tenants. The question is, are you being thorough enough?
Without effective tenant screening procedures in place, you can run into major problems down the road. These can include anything from not paying rent, unknown pets to property damage or even hidden drug labs. To prevent these issues, be sure to take the time and money to complete thorough background checks and weed out undesirable tenants to find quality, long-term tenants.
You should always do some kind of background check on your tenants. A bad tenant is worse than no tenant. Sometimes, you may find it tempting to trust a tenant when they verbally provide information about their income level, rental history, and more so you can rent out a property faster. However, failing to get proper documentation and to screen tenants thoroughly, in general, can result in costly problems later on.
For example, if you don’t verify a tenant’s income level, you may find them struggling to pay rent. This can result in extra stress and work for you and can eventually mean that you need to begin the eviction process. So, make sure you always check a tenant’s references, perform a background and credit check, and follow all other necessary steps to screen a tenant properly – no exceptions.
Maybe a resident offers to fix their own sink or toilet. Let’s give them the benefit of the doubt that they are even a licensed plumber. It may sound appealing to both the resident and property managers and bartering services is a concept as old as humanity, however, this system does have its snares.
Multifamily property maintenance is not one of the areas where bartering should be applied. In allowing residents to make improvements or to fix problems in their own units, you are opening your property to many liabilities. Not only could the resident injure themselves while performing the task, but they could do more damage than harm.
Even if the resident is a trained professional, they do not know the history or entirety of the systems in your community. In their good faith efforts, they could create a larger issue that goes undetected. Hire out your maintenance to a licensed professional who can offer your property a guarantee. Stay consistent and utilize the same vendors for a period of time.
It is possible that tenants could get injured while doing repairs, and they may not handle repairs properly, eventually causing more damage. The best practice is to have repairs and maintenance handled by a licensed vendor and/or a skilled maintenance worker that you can trust.
Oftentimes, residents will do their own version of “fixing” their problems without the knowledge of the property manager. This leads us to another common mistake; Not Doing Routine Inspections. Breakdowns happen because of neglect, but also because of regular daily use.
If you let your property get run down, you will attract bad tenants who will run it down even more. Maintenance is a significant expense for most property owners. Some landlords have an “If it’s not broken, why fix it?” mentality, but delayed maintenance will cost more in the long run, as well as lower property value. Additionally, rent in buildings that have areas in obvious need of improvement tends to be lower, and many tenants will move if their landlord will not fix things or keep their units up to date. Few things frustrate tenants more than landlords who do not respond quickly to service requests. Neglecting maintenance to save money now will cost more in the future.
When managing a property, it’s your responsibility to keep the buildings in good condition. This is not only for the sake of maintaining high value, but also for the safety and satisfaction of your tenants. One of the most common property management mistakes is not keeping up with maintenance responsibilities.
If you don’t check on properties regularly, you won’t know what’s going on with them. It’s just like having routine medical checkups. You need to catch problems ahead of time and fix them before they get worse. When tenants report problems, you also need to fix them as soon as possible. A tenant shouldn’t have to request maintenance more than once.
Preventative maintenance saves you in every way it counts – time, money and stress. Routine inspections help you spot minor problems before they become big ones. They also develop trust with your tenants, securing high-quality tenants for the long-term.
It can seem an overwhelming task to take on.
Once you become a property manager, it’s possible to suddenly be saddled with endless lists of tasks to be completed, checked, fixed, and attended to. It is a juggling act that can be both stressful and unrelenting. Falling into a pattern where you are constantly behind, playing catch up, can lead to neglecting routine and preventative maintenance procedures.
You wouldn’t settle for any tenant, so why settle for any contractor? Hiring the wrong contractors can have costly repercussions in the future so it’s important to avoid the temptation of hiring based on price. We recommend you shop around for reliable and experienced contractors.
This may seem like a no-brainer, but it may be tempting to go with the cheapest bid, even if it’s not from a proven professional. Skilled, experienced workers provide thorough and longer-lasting repairs and results. In addition, you will need to know whether your service provider is up-to-date on the latest methods and standards.
An experienced contractor will almost always come with a higher fee but keep in mind that the quality results will save you money in the long run. For example, an inexperienced contractor may be able to complete a painting job but you may find that the same job requires attention again in the near future.
It can be tempting to shop around for the cheapest vendor, but there are many downsides to this approach. Working with a facility service team who is already familiar with your property and your goals can be worth a few extra pennies in the long run, or it may even save you money along with precious time and energy.
Not getting your cash flow is crucial – and timing plays a big part in it, especially when you have regular outgoings such as mortgage payments. The last thing you want is to be late or default on a mortgage payment just because the expected monthly income has not reached your bank account yet.
Therefore, you should always ask any prospective property manager about their payment processes and cycles.
One simple way to avoid late payments is to collect rent online. It increases the likelihood of tenants paying because paying online is easier than sending a check. When tenants pay rent online, the process is easier, which makes it more likely for payments to come in on time and recurrently.
Communication is also easier to facilitate, not to mention everything is documented easily for you in case you need to refer to anything. You don’t have to worry about losing your records, having extensive amounts of papers, or your computer crashing.
Not adhering to federal and local housing laws can put a landlord in the line of fire for litigation. While a comprehensive understanding of renters laws can seem daunting to explore, it is unimaginably important for new landlords to have a basic understanding of the federal Fair Housing Act and habitability laws before even accepting applications for renters.
When you manage a property, your money is at stake. That’s why it’s important for you to create a property management agreement and get it signed by the property owner, regardless of whether or not it is required in your state. This simple step can protect you from legal action and disputes with the property owner for the duration of your business relationship.
A formal property management agreement isn’t the only thing you need to track. When working with tenants, you should also document anything notable in detail. That can include:
While these steps may take some extra effort on your part, you will thank yourself later when you need the legal protection that proper documentation offers.
Make sure you always have a lease with your tenant that describes all the terms and conditions.
You need some kind of upfront commitment from your tenants. Make sure you get cash, certified cheque and that the cheque clears before you hand over the keys.
Occasionally, something bad will happen. Perhaps it’s a tenant who fails to give proper notice of leaving, or maybe he abandons the lease completely, leaving you with 2 months of unpaid rent.
It’s so important that you only withhold the deposit for actual, itemized damages (material or financial). This can be rent, late fees, or the cost to make repairs to excessive damages.
You can’t withhold a deposit just because you are mad, or because the tenant found a loophole in your lease. You need to be able to prove the damages with evidence in the form of receipts or a contract/lease.
More often than not, this single mistake is the cause of just about every problem affecting the management of investment properties.
The fact is that many people who buy an investment property take what seems to be the ‘easiest’ option and place it under the management of the real estate agent which sold it to them.
This means that their property is being taken care of by a single individual or at best a very small department within a larger organization whose prime focus is on sales rather than property management.
These property managers tend to be on the lower end of the career ladder within the real estate industry and are often the ‘poor relations’ of their sales colleagues who are bringing in the big commissions. Lack of experience and high staff turnover is all too common.
It’s a property manager’s job to maintain a friendly and professional relationship with your tenants. Having this open line of communication is priceless, and can help mitigate the possibility of disagreements and misunderstandings.
On the other end of the spectrum, you may be communicating too much with your tenants and forming direct relationships with them. Although some aspects can be rewarding, it can make business matters like rent increases difficult and awkward.
However, some property managers fall into the trap of getting a little too friendly. They may even decide to rent to friends or family members. Unfortunately, this can make it difficult for them to enforce rules and can lead to the tenants’ interests being favored over your own.
Have a policy in place that your property manager may not rent to friends or family members; or, if you work with a property management company, require that another team member be the point person for those friends or family members.
If you develop a personal relationship with your tenants it will be harder to evict them or treat them as “tenants” because you are emotionally involved.
Remember that at the end of the day, business is business and relationships should be kept courteous and purely professional.
Keeping your schedule in check can be challenging in an industry such as ours. Whether it’s managing maintenance requests, keeping track of payments, running reports – you name it – it’s probably on your to-do list. If you’re not leveraging software, particularly one that is designed specifically for property management, you’re wasting time and money.