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  • Writer's pictureElenis M. Camargo

7 Common Mistakes Self-Managers of Rental Properties Make


Thirdstone Properties | 7 Common Mistakes Self-Managers of Rental Properties Make

Self-managing your rental properties can be a rewarding experience, offering complete control over your investment and direct interaction with your tenants. However, it also comes with its share of challenges, especially for those navigating property management for the first time. This is often why many investors, particularly out-of-state owners, entrust their properties to accredited property management companies like ours. But if you're here, you're probably contemplating taking the management helm yourself. To successfully navigate this path, it's crucial to be aware of the common pitfalls that can quickly turn your investment dream into a financial nightmare. This is especially true for out-of-state property owners. In this blog post, we'll delve into seven common mistakes self-managers often make and offer actionable solutions.


1. Inadequate Tenant Screening


The Importance of Screening

Tenant screening is the linchpin of successful property management. A good tenant can make your life blissfully easy, while a problematic tenant can make it exceedingly difficult.


What Can Go Wrong?

Skipping or skimming through the screening process can result in tenants who pay late or eventually default on rent, cause property damage, or even engage in illegal activities. Evictions are not only time-consuming but also expensive, often costing more than the lost rent itself.


Tools and Methods for Effective Screening

Consider using comprehensive tenant screening services that check criminal backgrounds, credit scores, and employment history. We always ask for—and check—references from previous landlords and verify employment with their current employer. It's imperative to comply with local and state laws regarding tenant screening—a point we'll elaborate on further.


 

2. Neglecting Regular Maintenance


The Consequences of Deferred Maintenance

Deferring maintenance may save you money in the short term, but it can lead to exorbitant repair costs in the future. From leaking pipes to electrical issues, small problems can quickly escalate into major headaches.


Tips for Setting Up a Maintenance Schedule

Create a preventative maintenance calendar. Schedule regular inspections and tune-ups for essential systems like HVAC, plumbing, and electrical preferably on an annual basis. There are countless times when we take over a property to manage from a self-managing owner or another property manager and we conduct an inspection for the first time in years that the owner is surprised about the condition of their home. It’s your asset so it’s your responsibility to ensure that the condition of the home is being well maintained.


 

3. Overlooking Local Laws and Regulations


Basic Laws Every Landlord Should Know

From security deposits to eviction procedures, each state has its own set of laws that govern landlord-tenant relationships. Ignorance of these laws isn't just risky; it's a legal liability. For instance, in Florida security deposits must be kept in a non-interest-bearing bank account and the tenant must be informed where their deposit is being kept at. Another common law that must be followed is the timeframe for notifications such as security deposit claims and notice of entry.


Extra Considerations for Out-of-State Owners

If you're managing a property from another state, it's doubly important to familiarize yourself with local laws. You may even want to consult a local real estate attorney for guidance.


 


4. Poor Communication with Tenants


The Value of Open Communication

Good communication is the cornerstone of any successful relationship, including that between a landlord and tenant. Prompt responses to complaints and queries can significantly improve tenant satisfaction and retention.


Best Practices for Maintaining Good Relations

Consider implementing a tenant portal where tenants can easily submit maintenance requests and communicate with you. We have found that always keeping lines of communication open and being proactive in addressing issues is the best way to make tenants want to renew their lease for another year. Inform tenants how you can be contacted in the event of an emergency such as a busted water pipe, but also, it’s important to set boundaries on what is considered an emergency. You don’t want to be disturbed on a Saturday night because the tenant has a burned-out light bulb.


 

5. Inadequate Financial Planning


Commonly Overlooked Expenses

From emergency repairs to property taxes and insurance, expenses can pile up quickly. Failing to budget for these can lead to financial instability.


Tips for Financial Planning

Maintain a cushion covering at least three months of operational costs. Don't underestimate the frequency of repairs; treat your rental property as you would your own home. Think about how many items break in your personal home that you have to repair and expect the same in your rental property. Don’t go into rental property investing thinking you’ll never have to add money back into the property. Things will break, so don’t be surprised when a tenant calls and says the toilet is leaking.


 

6. Ineffective Marketing Strategies


Old vs. New Methods

Gone are the days when only a simple "For Rent" sign would suffice. In today's digital age, a multifaceted marketing strategy is essential.


Strategies That Work in Today's Market

Consider leveraging social media platforms and real estate websites to advertise your property. Our philosophy is quality marketing reflects the quality of management. High-quality photos are vital and even virtual tours can give you an edge over the competition. Renters will look at how you market your property to give an indication on how you will manage your property. If your property looks like it’s professionally marketed they will expect the management to be up to the same quality.


 

7. Lack of Contingency Planning


Types of Emergencies to Plan For

Whether it's a natural disaster or a sudden vacancy, emergencies are inevitable. Being unprepared can exacerbate these situations, leading to financial and emotional strain.


Creating a Robust Contingency Plan

Ensure you have comprehensive insurance coverage, maintain a list of emergency contacts, and keep a reserve fund specifically for unforeseen events. There are things you can do to try to minimize these larger expenses. For example, in Florida, preparing for hurricane season is essential and that includes trimming back trees that are growing over the house. Additionally, another way we try to protect our assets and our clients’ assets is by requiring all tenants to have adequate rental insurance. Not only does this protect their personal property in the event of a disaster it also protects the property if they cause an accident like a fire.


 

Conclusion

Navigating the complexities of property management is no small feat, especially for those doing it from afar. By avoiding these seven common mistakes and implementing the outlined solutions, you're already ahead of the game. The key is to be proactive rather than reactive. However, if the weight of self-management becomes too cumbersome, remember that you don't have to go it alone. Companies like ours are equipped to handle the nuances, leaving you free to enjoy the passive rewards of your investment without the associated headaches. So if you ever feel overwhelmed, know that professional help is just a call away.

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