One primary reason that keeps people from investing in real estate is property management. They want to be real estate investors, but they aren’t eager for the headaches that can come with being a landlord.
It’s understandable. No one wants the landlord-tenant nightmares you sometimes hear about. But some of those nightmares are self-induced; landlords make mistakes that lead to problems. Here are five costly landlord mistakes and how to avoid them.
- Renting to tenants who don’t pay on time
Probably the No. 1 complaint from owners of residential rental properties is having tenants who don’t pay rent on time. Especially if you own property in a high-priced area such as Santa Clara, making your monthly mortgage payment on time without collecting rent can be difficult.
One way to avoid such a problem would be to better screen potential tenants. Hiring a Santa Clara property management company would typically include careful tenant screening. Experienced property managers do a deep dive into tenants’ financial histories, making slow-paying tenants less likely.
- Renting to tenants who will damage the property
Just as you don’t want non-paying or slow-paying tenants in your expensive property, you also don’t want tenants who will damage it. And it’s not always easy to ensure you’ll attract tenants who will take care of your investment.
It often requires a different type of screening, beyond what a financial history can provide. It involves asking for past landlord references, then interviewing those landlords. It might involve criminal background checks and searching through court records for any civil procedures for property damage. It can be a lot of work. Again, a property management company will take care of this for the property owner.
- Not having a rock-solid lease
Sometimes, landlords stumble into problems that might have been avoided had a lease been more clear. Sometimes, they get into trouble with tenants because terms of the lease don’t align with local or state ordinances.
No real estate investor wants to wind up in court. Getting sued is no fun. If you rent a property in Santa Clara, you might consider hiring a local Santa Clara property management company that understands the state and local laws and has specific lease agreements that are updated to stay on top of any changes. A professional, airtight lease can protect landlords from plenty of problems.
- Not immediately responding to problems
No property owner wants to get a phone call at midnight about a clogged toilet, but not following up on problems in a timely manner when they occur can lead to bigger problems in the future.
What if you don’t pick up that midnight phone call and there is a catastrophic event? Maybe a clogged toilet turns into a flooded bathroom with structural damage. Perhaps the sound your tenant heard was shingles coming off the roof, and now you have water damage upstairs because it wasn’t taken care of promptly.
Having someone else manage a property for you should mean having an around-the-clock response to any problems your tenants might report. A good property management company will also routinely inspect a rental property to ensure potential maintenance issues are fixed before they become a serious issue. By using property management services a rental owner can rest easy knowing someone will handle problems for them in a timely manner.
- Not having a network
Every property requires at least some ongoing maintenance and, every so often, potential repairs. An individual investor might not know where to turn when these needs arise.
A property management company, though, will have a network of qualified contractors and service providers they routinely use to maintain properties. When an outside contractor is required, they have relationships with those they trust. When you hire a property management company, you’re hiring a network of industry professionals that most individual property investors will not have.
Valley Management Group provides trustworthy and affordable property management in San Jose and Santa Clara and has been providing management services for 40 years. They have many high ratings from both rental owners and tenants and offer one free month of property management services for rental owners who sign up for their services.
Reviewed and Approved by Lloyd Kipp
Property Manager and Owner of Valley Management Group