Did you know 40 percent of property owners are planning to expand their portfolios in the next two years, a full 11 percentage point increase over the past two years? With real estate investments still on the rise, it’s critical to avoid common mistakes that limit growth.
We dissected 10 common mistakes costing landlords and property managers time and profitability. We’ve listed them here, along with practical solutions, to help you avoid missteps in your own real estate ventures.
#1: No Established Processes
Many landlords fail to understand the importance of organization and systems. To succeed in real estate, you must create repeatable processes that can run on autopilot in the background. The most common of these are for rent collections.
An inefficient landlord will ask for rent checks each month, which they’ll then collect and drop by the bank to deposit all at once. But someone with a smarter system in place skips the trip to the bank altogether, collecting rent automatically online so money appears regularly, and with less effort, in their account.
From rent collection to maintenance requests to end of lease paperwork, everything is more efficient and effective with an established process. With working systems, you’ll not only conquer any organizational issues but also be able to invest in new projects and scale your real estate business.
#2: No Network of Vendors
The reality is that, while being a landlord feels like a one-person job, managing a property is not. You need a reliable and talented team of vendors behind you who can step in where your expertise stops. If you’re waiting on vendors who continually show up late or cancel last minute, you’re wasting valuable time that could be better spent somewhere else.
At the very least, landlords should have go-to partners for:
- Plumbing issues
- Lawn care
- Appliance maintenance and repair
- Electrical issues
Instead of finding the best-priced service for each task, look for vendors you can build relationships with and rely on to do quality work. Over time, you’ll avoid the cost of having to fix a shoddy repair job and will likely be able to negotiate lower rates for recurring services.
It takes time and effort to collect a team of vendors you can trust and depend on, or you can jump to the finish line by partnering with an established property manager who’s already assembled a stellar team.
#3: No Tenant Turnover Process
Another common mistake is bringing in the wrong tenants for your space. That can come from rushing the process, not interviewing enough candidates, or ineffective advertising. Here are a few simple steps you can take between tenancies to ensure you attract the perfect residents.
- Prepare. Review what happened with your most recent tenants. Why did they move out? What worked well? What was frustrating? Or, if you’re searching for your first tenants in a new property, consider what the property can offer them.
- Fix What’s Broken. Don’t showcase a sub-par property. Before taking photos—and definitely before any showings—make sure to update paint, refresh caulking, double-check your curb appeal, and pay attention to landscaping needs.
- Advertise. Once you’ve prepared your space and considered what type of tenant you’re looking for, it’s time to showcase the space. Have quality photos taken of the property and take the time to write an in-depth listing. Then, advertise the property in multiple locations.
- Set Clear Expectations. If you’re looking for a long-term tenant, say so in the listing. If your property is in a quiet neighborhood, let tenants know they’re expected to keep the noise down.
- Perform Comprehensive Screening. After collecting applications, you’ll move to an interview process. After interviews, be sure to run a thorough background check on everyone you consider a final candidate.
If you find yourself in constant tenant turnover, you may want to check out our post, 5 Ways to Find and Keep Great Tenants, to make sure you haven’t got a blind spot in your selection process.
#4: Not Accessible
Another major factor in high tenant turnover is poor tenant service. If you ignore pressing problems or make tenants work too hard to get a hold of you, or if they're contacting you multiple times for the same issue, tenants likely feel like a pain rather than a valued resident. While in the short run this may mean you get fewer calls from them, they’re also likely planning a move as soon as their lease is up.
#5: No Regular Maintenance Checks
A frustrated landlord is one that’s always in reaction mode. If your time is mostly spent putting out fires instead of proactively growing your business, it’s time to make some adjustments.
Where do problems pop up the most? Maintenance. The best way to avoid reactive maintenance is to make it a priority. Block off regular time, depending on the size of property you’re managing, to inspect your property and make any preventative repairs, so you’re not taken by surprise. Get started with our Go-To Maintenance Guide.
#6: Complicated Technology Solutions
Technology is amazing, but it’s upgraded often and can get outdated quickly. Some landlords make the mistake of spending a lot of money upfront to create “smart” properties, where every unit has a lot of unnecessary technical extras. If you get too fancy with your rentals, you’ll end up spending too much time updating systems and squashing “bugs” that are bound to crop up.
This isn’t to say that you shouldn’t use tech at all. Renters value services such as automated rent collection and online maintenance requests. But do some research before implementing anything new and be realistic about what you can offer each unit you manage. Sometimes simpler really is better for everyone.
#7: Lack of Communication
Contrary to what you might assume, tenants don’t mind hearing from their landlords regularly. It’s nice to get an email reminder that your rent is due and to know about upcoming property maintenance. Luckily for landlords, a lot of these types of messages can be scheduled and automated, as long as you’re on the ball.
It’s best to communicate early and often with tenants and respond to their requests and concerns promptly, truthfully, and kindly.
Additionally, be sure to have clearly laid out policies and terms in your lease agreements. This can help prevent disputes and offer a clear course of action when issues arise.
#8: Falling Behind on Bookkeeping
Landlords and property managers must keep meticulous records. When you’re loaded with maintenance requests and having trouble filling units, it can be easy to let the bookkeeping fall to one side. But every penny counts, literally. You can’t know if all this effort you’re putting forward is worth it if you’re not keeping track of your profits.
Plus, businesses that are well accounted for are scalable. If you want to expand your company or invest in new properties, a clear picture of how you’ve been performing can point you in the best direction for growth.
#9: Not Knowing the Fair Housing Laws
Fair Housing is incredibly important. It’s a major mistake to be dismissive or willfully ignorant of these laws. While the Fair Housing Act is a bit of a lengthy subject to explore in detail in this article, a general guideline is to focus on highlighting the value of your property and amenities in your advertising to attract a wider pool of applicants, then implementing a fair, transparent screening process to find the right tenants..
#10: Remember, It’s a Job, Not a Hobby
A final mistake to avoid is treating your real estate venture as a hobby, rather than a business. This can be tricky when you’re holding down another full-time job. But whether you’re renting out a duplex as a side hustle or running several multi-family units across town as your full-time job, managing property requires a significant time commitment and consistency, especially when it comes to dealing with tenants.
No matter the size of your real estate adventure, it’s best to treat it as a business, small or large. This helps keep things in perspective when addressing tenant requests, maintenance issues, and other items that need your attention.
call Coastal Group Inc Realtors today to review your options and our services.
757-233-9595 or MDavis4.firstname.lastname@example.org