Most “issues” related to property management boil down to 10 common pitfalls. Conquer these ten items and you can and should be able to reach the following goals:
- Keep occupancies full
- Maintain a high Return on Investment (ROI)
- Build and maintain value in the property
Good property management takes time…which is why a good property manager can be a very justifiable expense.
- Screen tenants thoroughly. We all have horror stories of the dirtbag who left in the middle of the night and left the unit totally trashed. Buildings don’t run buildings down – people do. An application is a good start. But you have to do the research behind the application. Verify rent and employment. Drive by their current residence if you aren’t sure.
- Establish policies. Without policies you open yourself up to lawsuits at the worst and unhappy tenants at least. Tenants need to know what is right and what is wrong. Some will still want to cross that line, but most of them will want to stay on the ‘right’ side. Not having policies, and not enforcing them, creates a gray area of confusion and opens everything up for misinterpretation. We have a set of rules and regulations garnered from 25 years of making mistakes. You should, too.
- Stick to your guns. If you enforce one part of the lease, but not another, then you are asking your tenants to read your mind to figure out what other parts of the lease will or won’t be enforced. Life is a lot easier when leases are black and white. It can be tough sometimes to “bring the hammer down”.
- Inspect your property. Tenants won’t tell you what is wrong for a variety of reasons. Most of the time they are worried you will charge them, even when it wasn’t their fault. But there are a host of other reasons they won’t call – ignorance, avoidance and laziness are just a few. Do drive-bys periodically and inspect the interior at least once a year.
- Maintain your investment. A shoddy house will nickel-and-dime you to death. You can bleed (draw cash out of) a property for awhile. But sooner or later you are going to have to pay. And when you do, you will be paying out a lot more than if you had just kept the place up all along. On top of all that, you won’t have to listen to Tenant complaints all the time. It makes for much happier living.
- Keep it legal. It is tough enough trying to keep up with the lawyers. But then to have to comply with all of their regulations is a full-time job! But the alternative (lawsuits) isn’t any better. So just make sure you or your agent continue to stay abreast of the ever-changing landscape. We do.
- Set goals. I like to say “If you don’t know where you are going…you might just get there!” Without defined goals, written down, how do you even know what you want the property to do? And don’t just write them down – review them periodically!!
- Know the numbers. Generate financial reports to tell you exactly where you are. You can then compare these to some of your goals to determine how you are doing. When we had just 1-2 rentals we treated them like a hobby – and hobbies typically lose money!!
- Save. Set up a separate escrow account for repairs. Just because the rent is covering your mortgage doesn’t mean you are home free. The carpet is wearing out; the roof is wearing out. Save up a “rainy day” fund of 3-6 months’ rent payments.
- Be responsive. “People don’t care how much you know until they know how much you care.” When a Tenant calls, call them back. Not tomorrow or the next day. As soon as you can. In some cases, it’s the law. But in all cases, it shows respect and it shows you care about them. And happy Tenants stay a long time. And respectful Tenants (and Owners!) are much easier to work with. Of course, being available 24/7 can have its drawbacks because nothing ever seems to break in the middle of the day!!
Property management isn’t always easy. But it doesn’t have to be all that difficult either. Hopefully these 10 tips will help keep a smile on your face and money in the bank! Good luck!
P.S. You can always get more helpful information off our website at www.fullservicepm.com