I talk to people every day that have rental property they wish they could sell. Unfortunately they have joined the realm of “involuntary landlords.” Managing rental property seems very simple, but like any business venture, there are lots of things to know and the learning curve is steeper than it looks. I have helped clean up a lot of messes for these fine people and here is a list of some common mistakes. If you are making these same mistakes, maybe you could use my help.
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Not performing routine maintenance on their home – Owning a home is an expensive proposition. Maintaining a home properly can cost a lot of money. Failing to do so is guaranteed to cost a lot of money. A properly maintained heating and air conditioning system can last three times as long as a neglected one. Ignoring a small water leak can lead to a mold problem and you don't even want to investigate the cost of a big mold problem. A tiny crack in your basement wall can be a sign that the foundation walls are in danger – do you really want to ignore them? You may have a tenant, but you really need to look after your own home.
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Not visiting the home – One of the first homes I ever managed was outside of Atlanta in Lawrenceville and was owned and self managed by a lady in Virginia. When I saw the house for the first time, she had not been there in over two years. To this day it is the shining example to me of what a bad tenant can do to a house. Broken windows, holes in drywall, fixtures ripped from their mountings, dirt and debris everywhere – if you can imagine it, this home had it. Just a semi-annual visit would have stopped this issue in its tracks and saved her thousands of dollars. If you live too far away to visit your tenants 2 or 3 times a year, you really need some help with your property.
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Allowing rent to be paid late consistently – Late rent happens. If you have tenants long enough, you are going to accept some late rent. When it becomes a habit, however, you need to be proactive and find out why. Late rent is usually a symptom of some other malady and left unchecked can quickly turn into “unpaid” rent. Landlords and managers should have a system for dealing with late rent and follow the system. Enforce late fees, send written demands, make phone calls – whatever you have decided to do. Show the tenant that you take late rent very seriously and you will move to the top of the list of who to pay first. Let it slide and you will find yourself on the bottom.
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Having a rigid “No Pets Allowed” policy – 80% of renters have or want a pet. Do you really want to market your home to only 1 of 5 potential tenants? Stop thinking of your home as “your home” and start thinking of it as an investment. Every day your home sits unoccupied costs you money. Even two weeks of vacancy time will cost you more than the average “bad” pet will cost you and most pets are pretty good. Accept pets with a pet deposit and see your home rent much faster.
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Asking for an above market rent – This is incredibly common and very costly. Determining market rent is simple. Find out what homes like yours have rented for recently in your area. That's the market rent. It doesn't matter how much your mortgage is or how much you spent on repairs, paint and carpet. Your home isn't that much nicer than your neighbor's. I know you think it is, but you're wrong. Don't be confused by what people are asking for their homes, either. All that matters is what people have actually paid. If you can't find the information, don't guess. Call an expert. If you price your home too high it will sit empty and you can't afford that.
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Leasing without a written agreement – This is just stupid. I know hundreds of people and about four are welcome to live in my property without a lease. I don't care who it is, put your agreement in writing. A standard lease is available in any office supply store or online for a few dollars. Not having a written lease can cause you thousands of dollars, not to mention the stress!
This list is far from complete. The landlord game really seems simple until it isn't. Don't get fooled. Read some books, get some advice, do your homework or just break down and hire a professional. It's very likely that if you own rental property your time is worth more than you would pay your property manager.
In Atlanta, call the Best Atlanta Property Management Company – Absolutely Affordable Property Management. Find us online at www.absolutelyaffordablepropertymanagement.com or call us at 770-682-7735. We keep more money in our client's pockets every day.
For tips and advice, visit www.InvoluntaryLandlord.com. We post vlogs every Thursday and Monday, so visit often.
