As a landlord, you’ve probably learned the value of observing your peers. You’ve learned many excellent approaches by shadowing other landlords, but you can often learn more from their mistakes.
In 2019 and beyond, you can be an impressive landlord by simply observing and avoiding these common errors:
1. The Price Is Wrong
Be realistic with your rent pricing. Asking too little will diminish profits and potentially attract the wrong tenants. Asking too much will turn away great tenants and create more vacancies. Perform a market evaluation to determine the correct price for your property’s location, size, and amenities.
2. Your Advertisements Don’t Do It Justice
Put effort into your advertisements, highlighting features that your tenants are most attracted to. For example, a central AC unit can be incredibly appealing to tenants.
Be honest, take great photos, and give your tenants an attractive, but realistic view of your property. Also, use social media and other digital sources (such as Zillow or the MLS) to get the word out.
3. Prioritizing Filling Vacancies
Of course, you must fill your units, but if that’s your entire focus, you’ll likely miss out on something greater. You might drop your standards and accept tenants that will prove expensive in the long run. Or, you might neglect your current tenants because you’re hyper-focused on your empty units. Both can lead to a cash flow drag.
4. Being Too Lenient on Policy
You set the rules clearly in your contract, and you need to stick with them. Don’t accept late rent payments for any reason, don’t tolerate pets if you say they’re not allowed, and don’t budge on charging fees as dictated in the lease agreement. These rules are in place to make things fair for everyone, and if you give some tenants an inch, they’ll walk all over you.
5. Not Screening Tenants
Very few tenants come without a paper trail, and if you follow that trail, you’ll discover a great deal about who they are. If you want to avoid late payments, partiers, destructive tenants, and other troubles, you’ll use a screening service on every potential tenant.
6. Paying for the Wrong Upgrades
You can easily overpay for upgrades that aren’t worthwhile. Most rental properties don’t warrant stainless steel appliances and a top-of-the-line HVAC system. Usually, simple, inexpensive updates that look good and last will be most beneficial.
Choose upgrades that offer the most bang for your buck, typically with the least amount of maintenance. For example, carpet requires heavy maintenance—it rips, stains, and requires expensive cleaning. Vinyl flooring is inexpensive too, but it’s easier to maintain.
7. Deferring Maintenance
That leaky pipe under your tenant’s sink won’t get better because you ignore it. More than likely, it will turn into a larger problem that’s more expensive to fix. In some cases, it can even generate a lawsuit because you breached your agreement of regular maintenance. It’s not fun to make repairs, but it’s part of the job and something that should be done in a timely manner.
8. Being a Mystery Landlord
If you want good reviews from your current tenants, as well as less tenant turnover, you need to be available and responsive. Set office hours and respond quickly to communications. It’s a simple thing that goes a long way.
9. Remaining Uncompetitive
Most rental markets are competitive given the large supply of renters. If your market isn’t overburdened now, it likely will be at some point. You’ll need a competitive edge to fill more vacancies.
You might offer discounts or special promotions, give a gift to new tenants, offer cheaper applications, etc. Do something to set yourself apart from other rentals in your market.
10. Overpaying for Services
Keeping your overhead costs low is key to making money as a landlord. Landlords can’t do everything themselves, so they often hire out services. Lawyers, landscapers, insurance agents, repairmen, and others can all overcharge if you’re not careful.
Do a little research to find competitive rates. Ask your current providers if they’ll cut you a better deal. If they won’t, switch to a provider that offers a better rate for the same services.
11. Having Inadequate Insurance
While you’re trying to cut costs, don’t undercut your basic insurance policies. Good insurance that covers all your bases is essential to making a profit and protecting your investment. Look into different insurance policies offered to landlords. At the very least, you’ll want:
Landlord’s insurance Liability insurance Building/property insurance Protection from threats specific to your area (i.e. flooding, natural disasters, etc.)
There are other supplemental insurance policies you might also want to consider. Choose an affordable policy that will truly protect you in time of need.
12. Rushing Through the Check-Out Inspection
If a tenant damages your property or doesn’t clean properly, they should pay for it. That’s what the deposit is for, and if you want to maintain the condition of your property and keep your profits high, you’ll use it for its intended purpose.Additionally, document the condition of the property before a new tenant moves in so that the new tenant won’t be charged for something they didn’t do.
13. Treating Your Property Management as a Hobby
Even if you’re only being a landlord for a few hours each week, it’s still a business. A hobby gets put to the wayside, and you only work on it here and there as you have time. A business will get proper attention and the profits associated with it.
14. Ignoring the Laws
All landlords must abide by certain laws laid out by the federal and state governments. Research these laws carefully. You may want to ask a real estate attorney if you’re complying with all laws. Keeping your legal house in order will protect you in case you’re ever faced with a lawsuit.
15. Going It Alone
No landlord should try to take on the hefty responsibility of caring for a property and its tenants alone. That’s why there are property managers who have the resources and experience necessary to keep your property in tip-top shape for a small fee.
If you own a property in the greater Houston area, we’re here to help! Our property managers at Green Residential have decades of experience. We know Houston’s properties and rental markets better than anyone, and we’re happy to lend a hand so you can enjoy greater profits with a little less work.
For more information about our property management service, contact us today!