Successfully managing your own investment properties requires the mindset of a business professional. With real estate investment still on the rise, it is critical to avoid common mistakes that limit growth. The following blog will list some common mistakes with practical solutions, to help you avoid mistakes if you are going to include real estate to expand your portfolio in the next few years.
Not Having Established Processes To Automate Your Rental Real Estate Machine
If you are operating a manual process, you need to find a way to convert the manual processes into something faster and more efficient. You need repeatable, simple systems if you want your business to scale and work seamlessly. From rent collection to maintenance requests to end-of-lease paperwork, everything is more efficient and effective with an established process. The systems you create don’t have to be elaborate or complicated. They just need to accomplish your goal in the most efficient and cost-effective way possible.
Not Having A Network Of Vendors
Managing a property is not a one-person job. A reliable and talented team of vendors is needed. Having the right contractor on your vendor list is paramount, and the decision on whom to use can make or break your profitability and tenant relations.
You will need to partner with the following professionals:
- Lawn care service providers
- Appliance repair and maintenance professional
Look for vendors you can build a relationship with and rely on to do quality work. Sometimes the lowest-cost vendor is not the one to select; it is more important to have reliable vendors.
Not Attracting The Best Tenants
A successful rental property requires equally compatible tenants. In other words, to have a successful rental property you need to have good tenants. The two go hand in hand. However, too many landlords wait till the last minute to fill a vacancy. Despite high demand, finding a tenant is not a quick process. Start promoting your property much earlier than you may think and get the word out on the right platforms.
Here are a few tips to take between tenancies to ensure you attract the perfect residents:
- Have an exit interview: The advantages of performing an exit interview with tenants are numerous. You will gain valuable marketing information as your ex-tenant is the in the income range you are seeking. You can learn about problems you did not know you had. They are likely to be very honest at the end of the tenancy.
- Make sure everything is in tip-top shape: The first impression is important. Fix anything that is broken. Do not showcase a property in photos until you have updated the paint in the apartment or house for rent. Check out the curb appeal and pay attention to the landscaping needs.
- Advertise in multiple locations: Take quality photos and write an in-depth listing. By far the most effective way to advertise your rental property is online. You can “borrow” from each platform to access thousands of potential leads in your area just by posting your listing.
- Set clear expectations for the possible tenant: The more information tenants understand from the beginning, the more likely for you both to have a smooth and happy relationship. Tenants should be clear on when rent is due, how to treat their property, and what to expect if guidelines are not met.
- After the application screening: Tenant screening is designed to help you find the best tenant for your rental property that’ll pay rent on time and not damage anything. Now that you’ve completed the screening process you need to verify the information the tenant provided. Be sure and run a thorough background check on everyone you consider as a final candidate.
- Effective communication with your tenants: Communication plays a critical role in strengthening a relationship, especially that of a landlord and tenant. Several renters move out of their rental homes due to conflicts with their owners, citing lack of communication as the primary reason. Transparent, reliable, and respectful communication is therefore essential for a smooth tenancy.
- Have maintenance checks on a regular basis: The best way to avoid reactive maintenance problems with your tenants is to make them a priority. Set up a regular time to inspect your property and make any preventative repairs so you are not taken by surprise with a problem.
Not Using Technology That Makes Tenants’ Lives Easier
Taking advantage of the most current technology available on the market is a practical way to streamline and simplify various aspects of the renting process for both you and your prospective and existing tenants. Keep it simple. Renters value services such as automated rent collection and online maintenance requests but do research before implementing anything new. If you get too fancy with your technology, you end up spending too much time updating systems and getting rid of “bugs” that crop up.
Not Having A Good Accounting Process
Never fall behind on your bookkeeping. Investing in rental property can be a great way to generate passive, recurring income and build wealth over the long term. In order to maximize the returns on your real estate investment, it’s important to understand how accounting works. That’s because the buck stops with you, and not your CPA or accountant. 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.
Not Knowing The Fair Housing Rules
The Fair Housing laws, created in 1968 and included in Title VIII of the Civil Rights Act, prohibit any discrimination on the basis of sex, race, color, national origin, religion, or familial status in the sale, rental, or financing of real estate transactions. The goal of the Fair Housing Act is to create a housing market where the merits of the buyer or renter’s financial position are used to make housing decisions instead of their personal background. Every landlord should be aware of all federal anti-discrimination laws, as well as those in their state and locality. Choosing to ignore, or even unknowingly break, these laws could lead to long and expensive lawsuits and costly penalties, which is why every landlord needs to know about these protections and how they work within the rental process.
Real Estate Can Be A Job
Do not think of it as a hobby, it is a business. Beating the pavement, making cold calls, and advertising your investment property are sometimes a necessity. This is hard work. If you want your property to be successful, there should be none of these activities skipped along your path to success. It is a job meeting with or hiring contractors to perform repairs on a property after you purchase it. Understanding contracts, state laws, and landlord-tenant issues are a constant part of real estate work. Keeping your personal finances separate the entire taxable year that you own an investment property is a job in itself. Real estate as a job can quickly consume your life and cause you to have to structure your daily life around your investment strategies.
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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.