Turning a property into a rental is a great way to earn passive income and to build an investment portfolio. Unfortunately, there are a lot of headaches that can come with this type of investment if you aren’t careful about how those properties are managed.
Here are some common mistakes we see property owners making and how to avoid this.
Not properly screening tenants
In a market that has a lack of inventory for homes and rentals available, property owners could find themselves inundated with applications. It can be easy to start guessing who would make the best tenant just to get the process over with but the pain of having a bad tenant is not worth the risk.
One of the biggest mistakes is not getting the proper signed consent form to run background checks and credit checks. If your rental application does not have an area asking for signed consent, this is a good thing to add so it's part of the application process.
Another issue is consistency. Use the same application process for every tenant, no exceptions. This will help to keep you in check with fair housing laws by treating everyone equal.
It goes without saying that doing a background check and credit check can make a big difference in determining who is credit worthy as a tenant.
Make sure your screening criteria is clear. Do you allow pets, if so, how many pounds can they be? Do you allow smoking? How many months do they need to be employed with their current employer? What is the lowest credit score you’ll accept? Will you accept someone with an eviction history?
When you pick your criteria, you will want to be reasonable with your limits and you definitely can not discriminate against a protected class. You can learn all about this at hud.gov.
Lack of communication
Life gets busy and it can be difficult to handle lots of calls from tenants about every little thing from complaints about the neighbors to important calls about leaking pipes.
It’s important to have regular communication with your tenants to ensure they are taking care of your property and know that you care about them in return.
A lack of communication can contribute to turnover which can be costly to lose a good tenant that pays on time.
Maintenance problems
The biggest mistake is not answering maintenance calls quickly. A small leak can turn into a big disaster if that leak goes unchecked. Calls at midnight are a hassle and having a dedicated team available to handle those emergencies so you don’t have to can save you a lot of time and money down the road.
Hiring unqualified contractors to do repairs can be another issue costing you more money when you have to hire someone else to finish fixing the issue.
Create a dedicated list of professional contractors you can trust to handle any issue from plumbing, electrical, to roof & gutters.
Take Away
Hiring a property management company with a proven track record can help to avoid issues by finding great tenants for your vacancies, staying on top of communication and ensuring problems are getting handled quickly. If you are having trouble in any of the categories mentioned, it may be time to consider turning over those headaches to a property manager.
If you have questions or would like to discuss property management services for your investment property, give us a call at 443.252.3385 or email us at info@bluedoor-pm.com today!
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