If you have been in a house and are now renting it because you can’t sell it quickly, or if you are the new owner of an apartment building, you are soon to appreciate the world that is being a landlord.
When it’s done well, being a landlord can be an excellent money-making opportunity, if you don’t mind the maintenance and dealing with people. But often, those who are new landlords or those who have many units to manage can find the work sometimes a bit overwhelming.
However, the thought of using a property management company to assist with the landlords seems like an extra layer of expense that offsets any advantage you get from rental income. But think about some of these common landlord mistakes, what they might cost you if you make them, and why in that sense it would be financially prudent to have a professional manager help you with your property.
Here are some of the more common mistakes landlords make.
A Too Much Rent : What makes any rental property easier to manage and more cost-effective is to have it always rented. And the best way for that to happen is to work out a monthly rental rate that is at the prevailing market in your area and not more. So you may feel that you are making a little less money than the next guy but in the long run, you’ll do better than the other guy who has higher rent expectation because while he is making no money each month, his place is unoccupied, you will at least be getting market rent. It’s about revenue, and 100-percent rental at market rent is preferable to 80 percent rental at above market value.
An Ignorance of History : Another good way to get more bang out of your rental buck is to check the background of your prospective renter. You cannot ask questions about gender, ethnicity, religion, disability (legal protections), but you should know where they rented before and find out how he or she was a tenant. Learn payment history, any damage or theft, etc. Good renters who pay on time and take care of the unit as their own home are the ones you want in your unit.
Just a Hobby : Even though you’re renting the property on a temporary basis or it’s just one unit because it is a source of revenue and expense, you really should treat it as its own business entity. Think of yourself as an entrepreneur and run this rental like such. Take the rules seriously, make sure to collect rent on time and keep track of your expenses.
A Sweep Under the Rug : There is a saying, “What they don’t know won’t hurt them.” But this is entirely wrong when it comes to renting your property. You have a legal obligation to tell prospective renters about any deficiencies in your unit, whether you plan to fix them or not. If there are water leaks or a pest problem, you need to alert your renters before any paperwork is signed. Failing to disclose could land you in legal trouble should that undeclared problem affect the tenants’ standard of living in the unit.
A Being Compassionate : We have all been there; times have gotten tight, and hey, the rent is going to be a little late this month. While you might understand hardships, you have to be careful not to let the rent slide too long or too often. You do have bills to pay on the unit and those due dates don’t change. Be assertive if not aggressive when it comes to eviction. A few days late once is one thing, but it happening more than once can be trouble, and you need to be ready to cut your losses, and not even take partial payment. The payment rules are laid out in the agreement; if they’re not followed, you lose money.
Relations with the society management committee: Majority of the societies in the city have a rule that landlords must obtain NOC (No objection certificate) from the society before they can rent out their property. Many societies do not allow the tenants to enter with their luggage if the NOC is not the presented at the time of move-in. Hence, obtaining the NOC is very crucial and sometimes it could be difficult if the management committee is unhappy with your last tenants. Having a property manager who could immediately act on the complaints of the society people and who could fix the problem becomes an asset in the long term renting. Property Manager not only ensures your peace of mind but also ensures zero hassles regarding NOC at the time of renting.
These common mistakes provide you with a real warning about when you are renting your home or taking over an apartment building. There are still other issues to tend to, as well; this is in no way a comprehensive list, but it does help bring to mind the convenience of using a property management company, which can help you remember all these issues and knows how to be a landlord and take care of most of the day-to-day for you. Property management can end up saving you time and money compared to handling everything yourself because a good company won’t make the common mistakes that cost you your profits.