Never Do These 5 Things When Managing Rental Properties

Running your own rental property management company definitely has its perks.

It diversifies your financial portfolio, brings in a significant amount of supplemental income to help pad bank accounts, fronts the costs of vacations, can help you retire comfortably, and even has the potential to get you away from the 9-5 day job.

That is, if you do it right.

There is much to be said about the experience of a long-term property manager.

And, learning from those who have travelled the path before you is never a bad idea if you want to make it in the rental property business.

That’s why today we will look at the things you should never dowhen it comes to managing your rental properties.

With the help of this knowledge, you will be one step closer to building yourself a successful rental property company.

Things You Should Never Do While Managing Your Rental Properties

1. Randomly Set Rent Rates

You want to make money, that’s a given.

However, randomly setting your property’s monthly rent rate is bound to backfire eventually. Whether you go too high or too low, you’ll suffer the consequences down the road.

One of the most important property management tips for those managing their own rentals is to perform due diligence when it comes to strategically setting rent rates.

Here is a list of things you shouldn’t do when it comes to setting the rent for your rental property:

• Fail to Conduct Research. This includes the rental market both nationwide and in your specific region. When researching rent rates, consider the demand for a property like yours, and the going rates of nearby rentals.
• Forget to Evaluate Amenities. Your property’s individual amenities will play a role in how much you can reasonably charge for rent. Just because the property down the street charges “X” amount each month, does not mean you can do the same.
• Raising Rent Just Because. Many property owners feel they should automatically raise the rent each lease term, just because. Do your research and evaluate your current tenants. Remember, retaining a tenant, even at a lower than ideal rent rate, is much more cost effective than having to replace a tenant with a new one.

2. Underestimate Repair Costs

Another thing that is bound to get in the way of your financial success, if you are not careful, is the cost to repair and maintain your property.

The point of owning rental property is to make a profit.

However, there will be those times when a major appliance breaks, a tenant damages your property far beyond that of normal wear and tear, or worse, an emergency, such as a fire, occurs.

Though there are security deposits and insurance to cover most of these costs, there will be times when you need to dip into your own pocket – even if it’s just to clean the place up, replace the flooring, and paint the walls before a new tenant moves in.

So, do yourself a favor and don’t forget to factor in the costs of general repair and maintenance while managing your properties. Your bank account (and stress levels) will thank you.

Also, don’t fail to require renter’s insurance for all tenants that lease your property. This will help curb a lot of expenses, should a true emergency happen to your property or the people living in it.

3. Dodge Leasing Rules & Regulations

As the owner of a rental property, there are likely to be specific housing codes to follow, especially if you added on to your property.

If you own an older property, know that it may be subject to stricter codes that have been updated for tenant safety.

In addition, for any rental, you may need to conduct inspections before leasing. This typically includes ensuring you have things like a smoke detector and carbon monoxide detector in your property.

Property inspectors also check for things such as the presence of mold, lead paint, and any other health and safety hazards that may threaten a tenant’s well being.

You want to make sure you don’t forget to secure the proper rental license and registration. Your business needs to be documented with the proper authorities at all times.

Lastly, check the federal, state, and city rules and regulations before leasing your property to avoid any legal issues with tenants.

4. Be Too Lenient

It can be tempting to give in to your tenants when their rent is late, when they really want a puppy despite your no pet policy, or when they accidentally put a hole in the wall of your property’s living room.

However, when it comes to managing your rental property, you need to be tough and stay in line with the rules set forth in the lease agreement.

That’s how any successful business runs.

Do not be too lenient with your tenants, regardless of their excuse, unless you want your tenants to take advantage of you in the future.

5. Forget to Write it Down

And by “it” we mean everything.

The tenant application, background checks, lease denials, lease agreements, any correspondence between you and your tenants, notices you provide tenants, rent collections, invoices, and any other thing that you think is important.

Written documentation enforces your lease terms, and binds tenants into a written contract that will stand up in a court of law, should a legal dispute arise.

Without written proof, it is going to be tough for you to recoup any losses you may experience because of a bad tenant.

In the end, the list of things to avoid in order to be successful at managing your rental properties can seem quite daunting.

That’s why experience in the rental property business is so critical to your overall success.

However, as one final piece of advice of what not to do while managing your rentals, we will leave you with this: do not fail to ask for help.

There is no shame in recruiting the help of a knowledgeable property management company to help you manage your rental properties. Whether you don’t know what to do, want to learn more, or simply want the responsibility to go into someone else’s hands, asking for the help of a professional property manager is one of the best things you can do as a rental property owner.