Today we are talking about the four most costly mistakes that landlords make when they’re renting out their own properties.
Not Using a Property Manager
The first mistake is that they don’t hire a property manager. You would expect me to say that because I am a property manager. But, we’re in this business for a reason. We offer a great service that is very much needed in the industry because most owners don’t have the education and experience that they need to be successful. Then, they rent out their property a little too quickly or they don’t have a lot of time to show it or do the proper marketing. That can result in renting it for below market rent, and losing that money is a lot more costly than hiring a professional property manager.
Not Screening Tenants Properly
A lot of landlords also don’t screen tenants thoroughly. They might not have the time, the expertise or the resources to do full background checks or call previous landlords. They don’t verify employment or qualify the tenants financially. More importantly, they don’t do what property manager can do well: when I interview a tenant, I usually know whether or not they are well qualified within five or 10 minutes of speaking to that person. Usually, I can tell more than the background checks but when we combine both the interview and the background check, we get solid tenancies. We have not had an eviction in over 10 years because we prevent it up front with thorough screening.
Not Collecting Rent on Time
Letting tenants pay rent late is a huge mistake. Don’t set the precedent. As soon as you do it once, tenants will pay late every month and it will grow into a problem. There will always be an excuse if you tolerate late rent. This is not a good business practice to get into.
Deducting Maintenance Costs
Some landlords will let their tenants deduct maintenance costs from rent, and that’s another very bad precedent to set because once a tenant does that, they’ll want to fix things and deduct from rent all the time. They probably don’t have the expertise to fix whatever’s broken and they probably won’t put a lot of effort or money into fixing it. Also, if you allow them to deduct something once, they’ll look to do that over and over. We never allow tenants to deduct from rent. It’s much better to use professional contractors with warranties. This is a more professional way to run the business. You know the problem has been fixed properly when the work is done by professionals.
These are the four biggest mistakes, and you want to avoid them. If you have any questions about how to get more out of your property, please contact us at Santa Barbara Property Management.