Top 10 Property Management Mistakes

Property Management is not a skill that you can learn overnight. It is a continuous learning process. Mistakes are part of the process, but you still need to be careful. Therefore, you will not make bad decisions. As a property manager, any mistake could cost you money and may affect your business. You can avoid these headaches by learning from these top 10 property management mistakes.

Top 10 Property Management Mistakes

#1 – Failure to Properly Screen Tenants

Tenants are an important element in owning a rental property. They are the main source of profit in the business. I understand you want to make sure there are no vacancies as much as possible. But that doesn’t mean you will not screen your tenants anymore. Some property managers do this out of desperation. Without tenant screening procedures, you can encounter issues along the road. Such as deferred rent payments, property damages, or even legal issues. Thus, effective screening is a must. Property screening includes standards and requirements that are both strict and reasonable. These standards and requirements will be your guide in finding quality, long-term tenants. So be sure they are always met.

Here are examples of standards and requirements you can use:

• Good Credit Score
• Stable Income
• Good Background Check
• Proof of Identification

These are some of the requirements you can include in screening tenants. You can always add more depending on your needs and security.

#2 – Incomplete or No Record Keeping

One of the common mistakes that most property managers make is not having proper documentation. Typically, leasing agreements are in place for tenant reference. However, some property managers tend to neglect other important details in writing. Aside from leasing agreements, eviction notices, move-in/move-out documents, maintenance requests, and other timestamps need to be on file too. They help you in any disputes or in case someone breaks an agreement. Furthermore, you can use them as legal protection. You wouldn’t know when you might need them for court.

In addition, house rules and guidelines should be written as well. Having them in place shows that you are clear and consistent. This will also help you to implement rules and enforce penalties easier. You can include these rules and guidelines in the leasing agreement and make sure they sign them.

#3 – Lack of Communication with Tenants and Owners

Effective communication is crucial in managing a property. It is considered as the key to successful property management. Good communication keeps the relationship strong and provides client satisfaction. Besides, tenants find landlords reliable if they communicate effectively. Especially in today’s age, there are lots of communication channels available. You can respond through text, calls, and emails. Though each tenant may differ in communication preferences. A good property manager understands how someone likes to be communicated and how to deliver the message.

#4 – Negligence of Maintenance Duties

Rental properties are the owner’s investment. As an investor, it’ is in your best interest to keep the investment in the best condition. Thus, property managers need to keep the property in good condition. This will ensure the safety and satisfaction of the tenants and maintains the property value.

When tenants report a problem, it is best to fix it as soon as possible. This is an opportunity to show good customer service to your tenants. They will feel taken care of. Checking on the properties like checking on your body. You would want to identify problems ahead of time and resolve them before they get worse. Delaying repairs can cost you more money since the issue has gotten worse. To keep the property in good shape, you can ask the owner to conduct an annual inspection. Doing this can protect owners from financial liabilities and catch any lease violations.

#5 – Employment of Bad Contractors

Other than delaying repairs, hiring bad contractors is also a costly mistake. You wouldn’t even settle for any tenant so why settle for just any contractor? It may be tempting to save money by hiring a cheaper contractor. But there are repercussions in doing so. For example, an inexperienced contractor offered you cheaper services. But after a few months. you found out that the painting starts peeling. As a result, you will hire someone again to fix it. So, you just paid twice the amount of a workload that can be done once.

An experienced contractor may come with a higher fee, but the quality results can save you money in the long run. Thus, only hire reliable and experienced contractors. You can conduct interviews and shop around to identify the best ones. You can also check this article to learn what and how to negotiate with contractors.

#6 – Careless Handling of Finances

Handling finances is a serious task. A property manager cannot mess this up. The Internal Revenue Service collects taxes and enforces tax laws. Thus, the audits must be accurate. If not, this will cause a huge headache.

For instance, a property manager cannot just place security deposits into a wrong account. Always put them in a trust account so that they won’t be part of operating funds. If you do this, there is a chance that the funds may not be available once the tenant moves out. Once this happens, the tenant may sue you. Other financial handling mistakes may also include paying too much for repairs, not raising rents to reflect the current property market value, and not charging late rent fees.

#7 – Failure to prepare the unit for vacancies

After each tenant moves out, you need to conduct a walkthrough to make sure the tenant left the unit neat and complete. Run the faucets, check the appliances and lights. Most property managers do this before returning the security deposit to the last tenant.

#8 – Disregarding Google and Review Sites

Reviews and ratings from the previous tenants are important so you can get new tenants fast. If you are advertising your property online, you would want to make sure you get good ratings and reviews only to attract prospective tenants.

#9 – Not responding to safety issues quickly

Once you figured out any important issues in the property such as illegal drug use, violent behaviors, or any problems that endanger public safety, address them immediately. If possible, report to the authorities. Ignoring these issues won’t only cause a big scandal, but the authorities might suspect that you allow them to happen.

#10 – Inappropriate handling of eviction and rent issues

When handline eviction, always consult an attorney. You can’t just kick a non-paying tenant. Especially right now that most people are having a hard time paying rent due to unemployment. You want to make sure you’re doing it properly and legally. Learn how to deal with rent payment issues during COVID19 here.

Now that you learned the top 10 property management mistakes, make sure every decision you do is in line with all warnings mentioned above. This will help you become successful in property management.

DISCLAIMER:

Neither Alpesh Parmar nor Wealth Matters associated claim to be an expert in tax, legal, or insurance strategies. Please consult an expert or advisor.