There is no better way to set yourself up for a better future than to invest in property and build your real estate portfolio. Once you’ve crossed all the T’s and dotted all your I’s preparing your home to be rented, it is time to shift your focus on managing your property. Soon, you will be quite familiar with the challenges that come with managing a rental. Fortunately, you can predict the most frequently occurring issues that you might face which allows you to ensure that your property remains profitable, your tenants are pleased, and your stress level is minimal. You probably didn’t foresee their day-to-day household issues becoming a part of your journey to becoming the next real estate mogul, but it’s just a side street along the way. Below we will discuss 5 issues you will more than likely face as a landlord and how you can be proactive in addressing them.
Handling Disputes Between Tenants
If you want to be successful at handling tenant disputes, you should address them before they even become an issue. How? In your leasing agreement, clearly outline your expectations regarding noise, the right to a quiet environment, and the right to habitability. This way when problems arise, you are able to point to signed agreements and remind your tenants the terms that they agreed to months (or years) prior. In most cases, tenants are able to settle disputes between themselves without intervention from their landlord; however, when the same situations continue to pose a problem between the same neighbors, you might have to become their mediator. Should you find yourself in such a position, be sure that you have all the necessary tools in your ‘tenant toolbelt’ to resolve any conflict effectively, efficiently, respectfully, and fairly. Listen to the tenant’s complaints entirely while displaying genuine concern before you reach out to the offending party. After you have provided proper attention to both parties, document all communications, including any meetings held to come to a resolution. Store copies of this in both tenants’ files. There could also come a time where you find yourself in a disagreement with your tenants. Should this happen, take a moment to step away, calm down, and then approach the situation with a clear mind. There’s a big difference between running a successful business and arguing with your neighbor. See where you stand legally based upon the situation. If you find out you’re in the wrong, correct the problem appropriately as soon as you can. Being a landlord that is able to own up to their mistakes and fix them without any conflict will be rewarding. You will see higher levels of tenant retention as people enjoy living in places where they are valued.
Mitigating High Tenant Turnover
One of the most crucial aspects to keeping your property occupied and profitable is leasing to the right tenant. Do the work to get it right the first time. Of course, there will be times when tenant turnover is no fault of your own, expenses can become overwhelming if you are not vigilant when choosing the best applicant. Did you know that the average eviction process costs $3,500? This includes the time and money you devoted to advertising and showing the property, completing background checks on applicants, necessary administrative work to get everything prepared for the tenant, oh and the fact that you are not able to collect rent during the vacancy.
6 ways to shorten the time between tenants..
- Make your rental a place that people want to call home.
- Handle all repairs and updates before your tenant moves in.
- Communicate clearly and promptly with your tenants.
- Welcome your tenants into their new home with a small gift basket and community directory.
- Respect your tenant’s privacy. You can do this by scheduling any inspections and visits around their schedules.
- Provide clear instructions on when and how they are to pay their rent and utilities (if they are included in the rent).
Avoiding Late Payments
Be sure to clearly communicate your property’s late fee policy with your tenants early on in the interview process, then reiterate it throughout the paperwork they will sign to secure the lease. This is the simplest way to avoid late payments. By communicating this information effectively from the beginning, you are able to avoid imposing late fees most of the time. Verbally clarify the wording in the tenant’s lease agreement to specify exactly how late fees are to be calculated and when they will be applicable. Is rent due first thing on the first day of the month? Or do you accept rent through the 8th of the month? Either way, build the application of late fees automatically into your rent collection systems. Once the deadline of your grace period has passed, a penalty will be in effect. If you are new to the game, this might sound a little crass, but it is the type of system you will need to stay profitable and keep your business running as efficiently as possible. When signing their lease, your tenants are agreeing to what will happen should they pass their allotted grace period. Ensure that the penalties associated with late rent payments are clearly written out in all lease agreements Make sure that these align with local and state laws and that you stick to the agreement– this is the only way they will.
Maintenance issues are by-far one of the most common and time-consuming problems that a landlord will deal with frequently. Do not allow maintenance to become a mess.
Stay ahead of these issues by keeping these five recurring maintenance mainstays on the top of your routine to-do list:
- Building Codes: It is the landlord’s responsibility to maintain their rental properties and protect the safety of their tenants. You can do this by verifying that you are adhering to local building codes. This includes safety needs like smoke and carbon monoxide detectors and accessibility offerings such as elevators and ramps. These often vary from state to state, so take the time to review your local guidelines. Staying up to code is not optional and you can face fines if you fail to do so.
- Trash and Sanitation: Prior to renting out your property, be sure to review the current trash and sanitation schedule at the location. Is this schedule operating smoothly and regularly? What is required of your tenants weekly? Include all of this information in your lease agreements so that you know that this information has been communicated. No one wants to deal with tenant sanitation issues, especially when they are avoidable.
- Utilities: When you are between tenants, take the time to review the utility situation at your rental. If you cover utilities, be sure to check your meters to ensure they are working correctly and that you do not have any leaks. Even the smallest leaks can turn into a major expense. Review local ordinances to see if they include air conditioning as the landlord’s responsibility. Check to see if fast internet service is available in your area. Most landlords do not cover the internet expenses, but it is a necessary utility in today’s world.
- Security: This is a major selling point for prospective tenants. Be sure that your security system is current and fully functional before you rent out your property. Are all cameras operating and recording? Do all doors and windows lock and close with ease? If your building has on-site security that exceeds the normal expectations, include this in your advertisement. Ample security attracts tenants.
- Common Areas: In multifamily units, you will probably have a few common areas. Keeps these areas clean and usable. If you offer a shared laundromat, are the washers and dryers working? Do you have a community gym? If so, is the equipment being maintained? Does the pool need its filter replaced? Do you notice any other repairs that need tended to? Use the time between tenants to check in on routine maintenance needs of your property.
Property owners have their plates full, there’s no denying that. It is important that you keep everything as organized as possible to ensure that operations run smoothly. Being able to effectively manage your property will help boost your profitability. In an effort to achieve this, you will need to create streamlined systems, automating the tasks that you can, to keep everything functioning as it should. There are an endless number of organizational tools online to keep track of rent payments, maintenance requests, accounting, and more. TurboTenant includes tools for specific parts of the job as well as comprehensive property management software such as Buildium. Whichever software you choose, timelines and repeatable systems are important tools for you to have handy. If you’ve never been great at organizing, don’t fret – there are professionals you can hire to help you stay organized. Many landlords work with property management companies to keep their operations running without a hitch. When you work with a property manager, you can be at ease knowing you will have an expert helping you in all the areas where you may feel uncertain. Most property management companies only charge a percentage of your profits allowing you to earn more as you expand your real estate portfolio.
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About Real Property Management Midwest
We are local property management experts serving Cincinnati, Dayton, Columbus, & Louisville. We manage Single-Family Homes, Apartment Buildings, and Condos. With years of experience, Real Property Management is Cincinnati, Dayton, Columbus, Louisville and Northern Kentucky’s #1 Property Management and Leasing Company.