Landlords have a lot to remember and a lot to do. Everything from finding a tenant, vetting, upgrades, communication…the list goes on and on. Just as importantly, however, is remembering NOT to do certain things. The following “Don’t List” will keep you out of financial trouble and in good standing with your tenants.
Don’t Forget To Save
You probably already have a personal savings account for a rainy day. That’s great! However, that’s not the same thing as saving for your property. Big problems requiring immediate repair can happen at any time. Consequently, you should be saving a much higher percentage of your monthly cashflow. It’s tempting not to. A vacation in the Bahamas looks like a great place to spend the money instead…but DO NOT.
There are numerous maintenance costs associated with renting a property. When it comes time to pay the piper, “Oh shoot, I don’t have the cash right now” isn’t going to cut it. You need to be prepared for several rainy days, and they may come all at once. Have an expense checking account for each property that you put money into each month. The peace of mind this creates its worth more than any vacation or new car.
Don’t Put Off Repairs
Not saving + delayed repairs = nightmare.
There is no time to save once something goes wrong. Anything roof or plumbing related has to be dealt with right away. Delay makes problems worse and tenants angry.
Cosmetic repairs should also have a sense of urgency. While seemingly futile, these issues can get worse over time causing good tenants to turn sour. If that happens, you have a vacancy on top of the repairs.
Keeping good communication with your tenants, especially during inspections can go a long way in avoiding hassle. Make a list of their complaints, then over the course of a year address them when finances allow. This will make the tenant feel appreciated and you don’t have to break the bank.
Don’t Ignore The Property
Some landlords (of course not you) can get a little lazy in the management part of property management. All properties should be visited twice a year, at the very least.
Inspections give you a chance to catch problems before they spiral out of control, causing the previous two points to come into play. Don’t count on your tenants to tell you every problem, especially if they haven’t heard from you in a while.
Stopping by also keeps tenants accountable. You get to make sure there is no subletting happening under your nose, smoking, damage, or other lease violations. If renters expect frequent visits they’re less likely to try and sneak stuff.
It’s also just a good idea to keep up tenant relations and show them that you care about the well-being of the property, AKA their home.
Don’t Get Money Hungry During Turnover
When a tenant leaves you are allowed deduct damages, but not wear and tear. For example, a hole in the wall is damage. A small nail hole is probably wear and tear. What if the nail caused slightly larger damage to the wall? This gets into a grey area that gets some landlords into trouble.
First of all, you must have a detailed move-in report that denotes the state of the unit when the new tenant arrives. This report is what you will use to compare the condition of the property when the tenant leaves. Without it, the renter can just say “that was there when I moved in.”
Let’s say you have that. Next, you have to decide what is worth fighting for in court. Often tenants know their rights and expect to get a large chunk of their security deposit back. If you nickel and dime them, a dispute could erupt. How much time, effort and money are you willing to put forth in order to charge for a slightly larger nail hole?
Don’t Forbid Pets
I get it, you want to avoid the hassle and potential damage of having pets in the building. Unfortunately, almost two thirds of households have a pet. Do you really want to close yourself off from two thirds of the market? Maybe if you live in Los Angeles the demand is high enough where you can afford to be picky. Even then, you may be missing out on amazing tenants.
All you need to do is charge a non-refundable pet fee or a refundable pet deposit. You could also charge a small monthly fee. This way you protect yourself from incurring excessive costs. Regulate the types of pets you want, charge accordingly and all of a sudden your renter pool is three times higher.