Investing in a rental property can be an exciting experience. However, as a property owner, you need to understand that buying a property and managing one are two different things.
In order to help you avoid making mistakes, we've put together this guide on the most common mistakes we see rental property owners make.
We often see new property owners trying to handle every aspect of the management of their property. This could be a big mistake, especially if you have no experience. There are many legal requirements for running a rental property. You need to be aware of the Fair Housing Laws, the landlord-tenant act, make sure your rental agreement is in accordance with state law and much more. There are also many management and maintenance related issues. By taking it all on yourself, you could be setting yourself up for future headaches. Consider looking for a qualified property management company that can focus on your property and growing your investment.
You may have a good relationship with your real estate agent who helped you purchase the property. However, keep in mind that while real estate agents have the necessary skills and experience to help you purchase an investment property, they may not have the same expertise in property management.
There are specific legal policies that must be adhered to and many intricacies of managing a rental property that most real agents would not know. They neither have the processes nor the infrastructure to manage your property.
This is another common mistake that property owners often make. If you hire a company that only handles the leasing of your property, they have very little incentive to lease to the best candidate. Their primary goal is to lease it to the first person who shows any interest. Since they won't be managing the property, they won't need to deal with the tenant they place. What you need is someone who will find a tenant who is reliable and trustworthy and someone who will ensure your property is taken care of and maintained.
Failing to obtain proper insurance could turn out to be a major blunder. If you try to save money by opting for minimum insurance, you're putting your property at risk.
If you're a property investor, you need to understand the different insurance options that are available to you. A good property management company will guide you as to which property and liability insurance policies would suit your needs. Investment property insurance is entirely different from homeowners insurance so you should consult a professional on this.
Your goal should not be to just find a tenant and fill your properties. Your goal should be to find a reliable and trustworthy tenant. Even if you are in a hurry to lease your property, you must follow a proper tenant screening process. This way you will be able to filter out the good from the bad, and you increase the likelihood of having a tenant who will be responsible, reliable, and likely to stay long-term.
While it is very important to have a courteous relationship with your residents, we recommend not to become too friendly. It often happens that homeowners who become too friendly with their tenants begin to give these residents preferential treatment. This is a big mistake because you don’t want your tenants to become too relaxed and careless. They may not take your guidelines and expectations seriously. Also, if you become too close to a resident, you might find it difficult to penalize them for late rent payments or evict them in case of no payment at all.
You need to make sure you understand the market before you decide on a rental price. If you price your property too high, you'll soon realize that vacancy will become your biggest cost.
This is another very common mistake. It is very important to make everything clear to your tenants before they move in. There are certain guidelines and certain rules that they must follow while they are occupying your property. Make sure you go over the rental agreement with your tenants BEFORE they move into your property.
It is always best to settle any disputes with tenants as soon as possible. Generally, the laws are tilted in the tenant's favor. Even if your tenant cannot afford a lawyer, they often have access to legal aid lawyers who will make your life very difficult. You should ensure that if there is any dispute with a tenant that it is resolved as soon as possible. There is no harm in negotiating a deal or coming to an agreement without involving the courts and lawyers.
If you are a property owner, you should remember that saving money when resolving maintenance related problems could prove to be costly in the long run. Not only will a delay in repairs upset your tenants, but they could also make the problem worse. This will just cost you more in repair/replacement costs. Don't try to save money by avoiding maintenance issues. Failing to resolve your tenant’s maintenance requests could ruin your reputation as well as increase your maintenance costs.
You should never let your tenants deal with any repairs on your property. Don't do it to save money. Don’t do it because you "know' the tenant. Just don't do it.
If something happens to your tenant while in the process of fixing something, you can be held liable for the accident.You don’t want to get into this headache. That is why it's important to hire a professional to handle all repairs.
In short, buying an investment property might be the most sensible decision you’ve ever made, but you must make sure you find someone reliable to manage your property. Don’t take on this task unless you have significant experience in property management. Let professional property managers do their jobs so that you can sit back and enjoy the steady and reliable income.
If you're currently looking to hire a professional property management company in Miami, we would be happy to speak with you and see if we would be a good fit for your rental property. Don't hesitate to give us a call at (305) 251-5561 or send us an email at firstname.lastname@example.org.