Biggest Mistakes Landlords Make
“If only I’d known then what I know now.”
That’s what too many landlords utter when they’re struggling to keep afloat, facing weighty financial challenges, and looking for ways to improve their profits.
When we cover the topic of the most costly landlord mistakes, it’s not insinuating, but rather just a reminder to avoid the potholes in the road ahead.
It’s a roll call of the things holding your business back and provides a little more relief and confidence that you’re onto a good year ahead.
Because considering all the threats to cash flow and profits, and how portfolios are growing today, we really do need to focus on managing well.
With bloating accounts receivables, this could be a challenging year. Avoiding big losses and problems comes down to education, awareness of units, tenants and market trends, digital tools, and a focus on success. A post like this might be the most important information a new landlord consumes this year.
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The 20 Most Costly Landlord Mistakes
- not taking failure seriously enough — by looking at dark side possibilities, you remind yourself you could lose it all, as many landlords are this year. By paying more attention to negative possibilities, you’re less likely to suffer points 3 to 18 below and get back to focusing totally on personal and business success.
- not wanting business success badly enough – when success is a driving goal that powers you every day, you’re more likely to ensure you’re doing all you can to succeed, from smart investment decisions to unit maintenance and good tenant relations.
- ignoring the rental market — being a student of the rental housing market keeps a lot of property investors and property managers on their toes. The pandemic exodus to the suburbs and out of high-density multifamily apartment units, rent controls, preference for houses, choosing the wrong rental upgrades, and employment and economic shifts make for painful lessons, but also opportunity.
- not finding the best types of rental in the right neighborhoods — taking the effort to research the market and deciding on which properties and neighborhoods are investment-worthy. Buying the wrong property could be the number one mistake.
- not conducting tenant screening carefully enough — bringing tenants in solely on credit ratings and employed status leaves landlords open to other important influences that might lead to surprise events such as rental unit damage. Good advertising and then screening good tenants is key.
- not conducting move in move out inspections – without detailed inspections, you have to eat all damage and emergency costs and you won’t know about mold, leaky pipes, and mice chewing through wires.
- not adopting a property management platform – digital business is much more efficient and gives you important feedback on your business performance including details that can’t be seen other than through digital transactions and events. Property management software provides powerful optimization of operations, expenses, and opens up new profit-making services.
- not knowing regulations and not maintaining accurate and detailed documentation – with poor documentation, collecting rent and evicting non-paying tenants becomes difficult. If you can’t prove tenant’s behavior to a judge in court, you’re putting your business at risk.
- poorly written or standard lease agreements – only a specific and personalized lease agreement can be counted on when legal issues arise. The judge in court, will read the terms carefully and anything not covered will likely result in you losing the decision.
- letting tenants and maintenance issues go – not keeping up with tenant problems and maintenance issues translates to vacancies or unneeded repairs and replacement which is expensive. Good tenant relations means keeping up on complaints, anticipating unit problems, timely response, managed through your landlord software which streamlines management.
- investing in a property in a low-quality, low-return neighborhood – investing in the best types of rental property in the best cities and neighborhoods makes success easier. Buying and managing units in neighborhoods with economic or crime problems exposes you to huge risks. Perhaps it’s better to own units in amazing distant cities than low-quality properties near you.
- not finding a competent property maintenance company – good maintenance is vital to keeping your asset values, avoiding tenant complaints and negative social media comments, and helping your important tenants feel well and comfortable, thus keeping your vacancy rates down to zero.
- accepting cash or partial rent payments – the courts may deem you’ve reached some sort of arrangement and thus may not force them to pay the overdue rent or back rent. Cash payments are risky allround, given the reliance on paper receipts which can be lost, misplaced in files, or stolen.
- not doing your financial calculations thoroughly enough – using your property financial software, you can have very accurate reports on expenses, maintenance cost trends, cash flow issues, and more on each property.
- not achieving marketing excellence – marketing your building and units is vital to building continuous demand so you can keep rent prices up and fill vacancies quickly.
- not managing tenants professionally – being transparent and responsive to tenants, and respecting them with courteous service, maintaining units, and staying in touch to keep their comfort levels high reduces vacancies and turnover costs.
- Getting too busy that you neglect the things that matter – When you don’t have time for tenant communications, marketing, maintenance schedules, and you’re overwhelmed, the potential for business disaster grows.
- training and conditioning your tenants — conditioning your tenants to maintain the properties, communicate with you openly without fear, and to pay rent consistently, ensures you offload time-consuming work.
- Not pursuing revenue growth — revenue and ROI don’t magically appear. You must raise rents, charge late fees, deliver more services, and grow your rental property portfolio.
- Not spending enough personal time and time with family. Never taking time to enjoy life, rest, do nothing or travel is a professional and business health hazard. Landlords and property managers burn out and this is when costly mistakes occur. The solution is frequent breaks during the week, a day off, extended weekends and vacations to give your mind, brain and heart time to recuperate.
Is a Sole Focus on Success a Sure Guarantee?
An intense focus on success is so important. It can drive better awareness, reduced workload, better decisions, better management, and better performance. When we drive for success, we’re apt to see what’s ailing and act to improve that.
Without a strong drive for success, well, you might not have the willingness to keep your business on the tracks so to speak. Today, successful landlords use excellent software that’s easy to use and keeps you on top of business.
And your financial reports tell you where you’re falling off the tracks.
The Matter of Back Rent and Evictions
Our Gordon Leung covers many of these legal, procedural, and documentation matters in a series of posts here on ManageCasa. For landlords just launching their business, it’s wise to get focused on preparing for court action.
It’s believed renters owe an estimated $70 billion dollars in back rent in the United States alone. It’s apparent many of them will not be recovering much of that back rent. This puts extra emphasis on managing your business more effectively going forward and learning from your misfortunes.
We hope you’re planning for property ownership success in 2021 and that you’ll be enjoying using ManageCasa’s superb, simplified, digital property management solution.
See more important topics on our property management blog to help you get positioned for success.
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