Buy a rental, find tenants, and watch the income roll in the first of every month. Nothing could be easier, right? It could be a lot easier without the top challenges most, if not every, Landlord faces with residential rentals. Certainly, a property management company pays for itself by keeping tenants in rentals and keeping the rentals in good shape. A property management company also saves property owners a lot of heartache, and that’s something you can’t put a price tag on.
Here are 5 top challenges that Landlord face in good economic markets and bad.
Managing Properties: It’s the frazzled Landlord who DIYs managing their rental(s). Cleaning, repairing, screening tenants, writing rental contracts, collecting security deposits and rents, severing lease agreements, and all the other behind-the-scenes tasks that are necessary to make a property an income-producing property. That’s a lot sweat and toil!
A better idea? Know your limits and hire someone to do the work you either don’t want to do or aren’t good at doing. Take advantage of those “one-hour free consultation” offers from property management companies; be sure to do your homework and prepare a list of questions to ask. Crunching numbers + Listening to your gut = Good decision making.
Revolving Renters: The best renters are the paying kind who stay a long time. High tenant turnover drains cashflow quickly.
How to fix this? Thoroughly screen prospective renters. No shortcuts allowed. Check creditworthiness, criminal background, rental history, and references (why bother asking for them if you’re not going to check them). Additionally, spend some face-to-face time with the applicant(s), it need only to take a few minutes. Yes, that’s a lot of frontloading, but it will pay off in less tenant turnover.
Plan for renters leaving. Know your marketing strategy, be prepared to ready the rental for a new resident as fast as possible, and/or consider short-term rentals, such VRBO for in between tenants.
Property Damage: Landlords expect normal wear and tear to their rentals, such as faded paint, dirty carpet, and blinds with tangled pull strings. Property damage is different; examples include holes in the wall, pet soiling of flooring, and broken windows.
Ways to prevent this? Document, document, document. Walk-through inspections with the tenant are a must before move-in and after move-out. Use a checklist and video camera. Take care of the property with regular maintenance and follow-up with tenant maintenance requests.
Rules & Regs: It’s a safe bet to assume Landlords are familiar with the basics of the Fair Housing Act, which prohibits discrimination because of race, color, national origin, religion, sex, familial status, and disability. Then there are state laws, which are updated yearly, along with ordinances on county and municipal levels. Legally speaking, it’s a minefield with punitive penalties and lengthy lawsuits.
What can you do? Retaining a lawyer and/or deciding to enroll in law school are the most expensive options. With its vast real estate industry knowledge, a property management company will help protect income property owners. At a minimum, there’s the DIY approach of trade magazines and real estate-related professional organizations.
Squatters, Evictions, & Lawsuits: These are the results of not knowing the rules and regs governing residential rentals. Squatting is unlawfully occupying an uninhabited building or settling on a piece of land. According to praxcap.com, squatters not only can tie up a property that should be producing income, but there are legal costs for evicting them, and they can do a lot of physical damage too.
The solution? Prevent this by renting to a tenant who has been thoroughly screened and vetted.
What are your biggest challenges as a Landlord? Share your answer in the comments section. If you need help facing these big challenges with your rental properties, Place Tenants can help. Call 800-886-1193 or email [email protected].
Photo Credit: iStock/riderfoot
