Many see rental properties as a great way of generating passive income. While this can be a wise investment for the owners, managing them is not always as smooth sailing as people think. Novices may find property management particularly challenging if they have not done a good amount of research on the legalese of the industry, among other things. One could learn a lot from experienced landlords, online resources, and official documents. For those of you who are first-time rental owners, or just have some questions, we created this list of some of the most common property management issues to help you be prepared.
1. Finding Good Tenants
If your property is in great shape and in a strategic location, then you should not have any trouble attracting renters. The problem starts when you realize that the tenants you signed are negatively impacting your business. There are people who do not pay rent on time and are difficult to deal with. For this reason, it is very important that you screen each prospective tenant thoroughly so that you can know more about the individuals who may eventually live on your property. Run a background check, a credit check, and call previous landlords to learn more about how they are as tenants and if they are reliable as renters.
It is hard to ask people to leave once they are already living there, even when legally they cannot stay. As an owner, you simply have to screen interested parties with care and try to make the best decisions afterward. Part of the screening should involve a background check wherein you collect pertinent information like their full names, birth dates, contact information, and personal references. You may also get the names of current and previous employers, as well as the details of their current income. If they have rented other units in the past, then get the contact information of their past landlords.
2. Charging the Right Amount
The monthly rent can drastically reduce the burden of mortgage payments. Naturally, owners will want to charge as much as possible. On the other hand, renters will want to pay as low as possible. The market will largely determine the right amount to charge at any given time. It will be a question of supply and demand, particularly around the area where the property is located. Look into comparable listings online and see how much they charge. If the demand is high, then the rates will go up. If the demand is low, then the rates will have to go down.
If you feel that your property has an edge over other listings, then you could increase your rental fee by a reasonable amount. For example, yours might be a brand-new build with quality materials while most of the other rentals are in old buildings. Perhaps your units are fully furnished or recently renovated. Maybe you have a better location or more amenities for the occupants. Provide all of the vital pieces of information on the listing so prospective tenants can better appreciate the rental’s overall value.
3. Ensuring that Rent is Paid
Rents could be delayed for a number of reasons. In many cases, the tenant might have simply forgotten about it because of all the other things that are going on in their lives. Some might be out of town so they can’t hand over the payment personally. Assuming that these are honest mistakes, the issues can be quickly remedied after a gentle reminder. However, it can start to become intolerable if delays keep happening to the point that they severely affect your cash flow. If you aren’t getting rent on time, your quality of life may be affected; it’s hard to pay a mortgage when you don’t have an income.
One way to prevent delayed payments is to provide tenants with alternative payment options. Instead of having to knock on your door, they might just deposit the cash in a locked drop box outside your office or transfer payments using their mobile app. You may also add other online payment solutions to make it more convenient. Even if they go on vacation, they should still be able to pay on time. You could also require your tenants to set up automatic payments so that you can receive the money on specific dates of every month without fail. This eases their burden as well since they won’t have to think about it.
4. Maintenance and Repair Costs
Sometimes you need to spend a bit of money to avoid losing a greater amount of money. That is the principle behind preventive maintenance in rental properties. It is far cheaper to perform regular inspections, clean-ups, and minor fixes compared to dealing with major repairs due to years of neglect. You will also need to act fast when problems arise such as water leaks, clogs, and the like. Although these are not considered emergencies, they can trigger the development of worse problems over time. It is far better to deal with them while the damage is minimal.
It’s best to keep track of expected maintenance costs and their timelines. For example, the contractor may come annually, semi-annually, or quarterly with corresponding labor fees. Think of the items that will require periodic replacement including HVAC air filters, light bulbs, water filters, and so forth. You should also consider the eventual need to replace roofs, pipes, and fixtures. Create a long-term budget for these so that you are always several steps ahead in the game. Perhaps you can save part of the rental payments in an account dedicated to maintenance and repairs.
5. Addressing Tenant Complaints
From time to time, you might encounter complaints from the tenants that require your immediate attention. This could be anything from a noisy neighbor, utility issues, pest infestations, pet problems, and maintenance concerns. There should be open communication between tenant and landlord to settle matters amicably as soon as possible. Try to be available to hear these complaints. Provide contact details so that they can reach you for anything if they need to. Negative emotions will only be aggravated by neglect so listen to what they have to say and do whatever you can to solve the problem.
Do not invalidate the tenants just because you do not share their opinions on the matter. Ask questions so that you can understand where they are coming from. Let them finish with their story. Sometimes all they really need to get things off their chest. You could also ask them to provide you with a formal complaint in written form. This will be crucial if you need to get others involved, as the details will be helpful in finding the resolution. The written complaint may also be used as evidence in case it reaches the courts or insurance companies.
6. Handling Tenant Evictions
Property owners are not generally too keen on evictions given their tendency to trigger emotions, the negative effects on their property’s image, the legal hurdles, and the potential cost. For humanitarian reasons, most will try to find solutions to avoid this. However, it can come to a point where it becomes necessary for the owners to ask a tenant to move out. Habitual late payments are usually the reason behind these. It’s best to specify the consequences of late payment in the contract so that there is justification for the eviction. Evictions may also come about due to property damage, safety hazards, or other contract violations.
Just remember that there is a process that needs to be followed in evicting a tenant. This includes a written notice that follows the state’s suggested template. This usually gives the person a chance to rectify the problem with the specified solution and deadline. The notice has to be posted for the period prescribed in the local laws, which is usually 30 days. After this, documents can be filed in court to set things in motion. There could be a hearing on the case, after which the courts will decide the outcome. Both parties must comply with the ruling in a timely manner.
7. Keeping Up with Local Codes
Rental properties are regulated by specific laws that vary from state to state. Every landlord must read and understand these laws so that they can be applied correctly. The help of a lawyer may be necessary when dealing with certain issues that involve the local codes. Another strategy is to get assistance from property management companies that have experience in handling these issues. They can make rentals less stressful by taking on the burden of problem-solving.
Remember that both the landlords and the tenants are granted rights. These will have to be respected every step of the way. Certain provisions might change over time, so it is necessary to stay updated with the laws. These generally include details on maximum deposit amounts, deadlines on their return, recognizable damages, and the like. Some municipalities will have additional provisions on acceptable rental conditions, handicap accessibility, safety measures, and aesthetic issues.
Conclusion
Property management can be challenging but it can get easier with adequate preparation. A disciplined approach and the assistance of professionals are also helpful in ensuring the long-term viability of the rental property. Specialized Property Management Tampa is one of the nation’s leading property management companies, and we know how to help you get the most out of your property. Our team of professionals can help you be prepared for almost any situation, and we can handle them too! For more information, contact us online!
