Property management is an ongoing learning process. It’s natural to make mistakes and learn from them as your business grows. Still, you don’t want to make costly bad decisions that are detrimental to your business. You can avoid these common property management mistakes by learning from those who have experienced and survived them.
Common Mistake #1: Getting Behind on Maintenance Duties
When managing property, it’s your responsibility to keep the buildings in good condition. This is not only for the sake of maintaining high value, but also for the safety and satisfaction of your tenants. One of the most common property management mistakes is not keeping up with maintenance responsibilities.
If you don’t check on properties regularly, you won’t know what’s going on with them. It’s just like having routine medical checkups. You need to catch problems ahead of time and fix them before they get worse. When tenants report problems, you also need to fix them as soon as possible. A tenant shouldn’t have to request maintenance more than once.
Common Mistake #2: Incomplete or Lack of Record Keeping
There are several ways property managers drop the ball with paperwork. One is when they don’t get adequate information from tenants. Sometimes it’s by mere oversight. Other times it’s from desperation. No matter what the reason, trying to fill properties by not screening tenants or inflating financial information is a big mistake. It could wind up costing you more than a vacant property would.
Lost or incomplete documents for lease agreements is another common record keeping mistake. In addition to lease agreements, you need to keep eviction notices and move-in or move-out documents on file. To be on the safe side, have agreements with property owners, tenants, and external service providers (contractors, marketing team, employees, utility companies). You don’t know when you may need documents for court.
Combining lease-to-purchase and lease agreements also causes confusion. The combination could make court decisions challenging. It would be hard for an attorney or a judge to recognize who owns the property and who leases it. You should always have separate documents for each agreement.
Common Mistake #3: Not Being Clear and Consistent With Tenant Rules
Tenants need to have clarity when it comes to the guidelines and your relationship. It’s not enough to just make a phone call or pop-up visit when something goes wrong. Besides verbal communication, have tenant rules in writing. To be fair and enforce guidelines across the board, get signed acknowledgments from each tenant. Signage, verbal communication, and occasional reprimands hold little weight. Have solid proof tenants understand and agree with the rules.
Common Mistake #4: Frivolous Financial Mistakes
One common costly financial mistake with property management is putting security deposits in the wrong account. The agreement to return the tenant’s security deposit is contingent on them fulfilling their end of the lease agreement. Even the IRS handles rules for deposits the same way at tax time.
That’s one of the reasons you should always place security deposits in a trust account. If you don’t, the deposit becomes part of the operating funds. That means you risk not having the funds available for moving tenants you rightfully owe them to. You might also have to pay taxes and interest on the money for not following account rules.
Other common property management mistakes to take heed to with finances are:
Paying too much for repairs
Being too cheap with repairs
Not charging enough for rent to cover expenses and the projected profit margin
Not having a digital backup of documents for your records
Lack of innovation
Common Mistake #5: Not Having the Right Team in Place
Property management is a huge responsibility with many moving parts. If you’re growing overwhelmed from handling the responsibility on your own, it may be time for you to outsource. You need time to focus on the investment portion of the business. Hire experts in the business to help you operate smoothly, accumulate wealth, and continue to flourish.
When managing property, you should use what you’ve learned along with common sense to be thorough with your processes. The best way to avoid common property management mistakes is to learn from those most experienced in the business. See http://www.harkinscommercial.com/ for more property management advice or assistance!