The Most Common Property Management Pitfalls
The outlook for the property management sector is positive, including multifamily management which means a large group of people will jump into it with the expectations of big profits.
While huge profits and fast growth are reported in some sectors, particularly Airbnb rentals and the multifamuly rental sector, new owners or landlords would be wise to take a hard look at the pitfalls. Yes, landlords likely will do well and continue buying new rental units. However, pitfalls will unvariably eat into ROI.
Not Anticipating and Progessing Means Disappointment
Disappointments simply mean they didn’t ensure all contingencies are covered. From unexpected turnover to property rehab and renovation costs, to tax issues, and tenant relations problems, just a few issues could make property management an exhausting activity.
What’s more important, adopting an efficient property management solution or ensuring disasters can never happen? Ensuring profitability and smooth operations is important, but a few persistent and costly events could result in you exiting the business.
6 Bad Issues You Must Prevent
- Mechanical systems breakdown: that old furnace or A/C unit will be costly to fix or replace. A charge of $5000 to $20,000 could put you in the poorhouse. Maintenance calls can eat up time and money. Before you buy that unit or property, definitely go through it carefully with a property inspector. Property inspectors only have to investigate so far, so it’s up to you to get nosy and ask questions. Read up on common mechanical breakdowns, roofing and flooring problems, and issues with lighting, plumbing, windows, and appliance operation.
- High Tenant Turnover: tenants will leave for a lot of reasons including finding a better unit, because your property isn’t competitive in amenities, location or rent price. If the local economy cools, cheaper rents will draw your tenant away. Read up on what causes tenant turnover and what you can do to make your unit the most desirable in the neighborhood.
- Tenant Non Payment: to keep your cash flowing and avoid losses from eviction, conduct your tenant screening well. It’s expensive to evict a tenant or two and they may skip town if they can’t pay rent. Look for past behaviors that point to employment interruptions, instability, bad behavior, and them keeping lifestyles they can’t afford. Every case of renter eviction has a story.
- Manual Collection of Rent: Many tenants do pay by cash or check, month to month without an active, signed lease. Yes, this happens. However, you could use the automated rent payment solution provided via ManageCasa that gives these tenants the choice they want, without you suffering issues from manual payment.
- Going off Lease: After the initial lease is expired, a landlord may just go without a re-leased agreement. Sometimes the landlord doesn’t want to lose the tenant if they force them to re-sign a lease. Also, they figure the tenant is stable and probably isn’t going anywhere. Even though tenant vacancy rates are low, they could leave the unit with notice, at an inopportune time for you. At certain times of the year, it may take time for you to get the vacancy filled.
- Manual Bookkeeping and Accounting: If you’re still working with paper invoices, receipts and bills, it’s time consuming as you increase doors. Managing rent, security deposits and keeping the expenses of each property and your business separate are important. When tax time comes, you’ll be more organized and your accountant does not like piles of receipts. Definitely look into a software designed for property accounting.
No End to Problems Really
There are many other problematic things including setting the wrong price, not communicating well with tenants or responding to their issues, poor maintenance management, and not charging owner/landlords enough for services.
So there’s plenty of problems, challenges, mistakes property managers have to contend with. The more conscious you are of them, the more likely you’ll be asking the right questions and anticipating well.
Good luck with your progress in the years ahead. Review again why a good property management solution is vital in this day and age. The growth of proptech, automation, and personalization will only grow putting more pressure on traditional managers. Make sure you have a great business model and the resources to be successful.
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See also: Choosing Property Management Software | Software for Multihousing Management | Online Rent Payment | Choose Better Tenants | Tenant Management Tips | Property Management Teambuilding | Online Marketing for Property Managers | Property Management ROI | Cloud Property Management | Lease Agreements | Property Management Leads | Rent Vs Buy | WASH Laundry Solutions | Property Maintenance Software | Multifamily Housing Investment | Stripe Payment Solution | Trends in PropTech | PropTech Guide | Property Management and Housing | California Housing Market | Property Maintenance Tips | Cloud Based Property Software