Property management is an industry that just about anyone can enter – but not everyone should. If it were easy, everyone would be doing it! To be successful in the industry, it takes experience, strategy, and patience. Sometimes, even that isn’t enough.
The to-do list is never-ending. Sometimes, rather than focusing on what should be done, it’s learning what needs to be avoided. This article will dive into five mistakes that are commonly made by new landlords.
Not allowing people to have pets can alienate many potential tenants. In Houston, 41% of people own at least one dog! By not allowing pets, you are already turning away nearly half of our potential tenant pool.
Additionally, even if someone doesn’t have a pet, knowing they can’t get one down the road can be a red flag. Discouraging pets can come across as being strict and uptight, especially in today’s culture, where people want more freedom to do what they want and deal with their own consequences.
Of course, there are exceptions to this rule, but as a general recommendation, anytime you alienate potential tenants, you could lose business.
Doing Everything Yourself
Another big issue that new landlords face is trying to do everything themselves. This may be fine if you can devote all your time and resources to running a rental property. But if you’ve got a full-time job and other responsibilities, trying to add being a landlord to your plate can be unwise and, in some cases, dangerous.
Instead, use a property management company such as Green Residential. Green Residential is a Houston-based residential property company that serves the Dallas area and provides some of the following services:
- Tenant Screening – Make sure tenants are the right fit for the property.
- Property Marketing – Have multiple properties or need to find a new tenant? They can do all the work for you to find someone new.
- Rental Collection and Eviction Services – Rather than having a tenant pay you directly, a property rental company will do it for you. This includes dealing with drama and issues that may arise from the tenants. Additionally, if a tenant doesn’t pay, they will deal with eviction for you.
- Support and Help – Most companies will be happy to help out with any questions you may have.
By providing all these services, you can feel more confident in the entire process and it will save you lots of time. Yes, the services will cost you, but think to yourself, how much is your time worth, and how much is the ease of mind knowing that everything is being taken care of correctly?
Being Too Flexible
When you set up your first rental, it can be easy to want to avoid conflict and be easygoing when a potential tenant tries to negotiate. While negotiation is a common tactic, going too far can result in selling yourself short.
One way to avoid this is to set boundaries before talking with potential tenants. Consider certain conditions, such as whether you are willing to cover landscaping. What about taking $50 off a month? Is month-to-month paying fair, or is a lease necessary? Will you charge a pet fee? These are all situations landlords need to consider before speaking with a potential tenant. Otherwise, it could get costly, especially if you’re desperate to get someone into the home.
Just because anyone can become a landlord doesn’t mean everyone has success. One of the biggest mistakes new landlords make is jumping into the business before understanding how it works. Below are just some areas that should be researched before getting into the industry:
- Legal Requirements – What laws are specific to your area?
- Market – How is the market doing? What trends have recently changed?
- Communication – How to communicate with a tenant in good and bad situations.
- Finances – Is there still a mortgage? What about taxes and other expenses? You need to make sure that the difference between money going out and coming in is significant enough to cover any losses that may come up, such as a month without payments or repairs for something that may break, such as a water heater or toilet.
- Screening – There are different ways to screen a potential tenant, and knowing how to do it can protect the home from damage.
- Maintenance – Figuring out what gets covered by the landlord vs. tenant is always a battle. Learning the norms of this can save thousands.
- Emergency Plans – What happens in case of an emergency?
- Local Regulations – Understanding building codes, zoning regulations, and lease regulations can prevent high fees and let you know whether you can rent the property.
Researching and understanding all of these different topics can help prevent potential issues and help you decide whether this is an industry you really want to get involved in. It will also prepare you to answer any tough questions that may come up with potential tenants. The fastest way to lose a potential tenant is not to sound confident in what you are doing.
Like any industry, getting your name out there or getting your rental properties known in the community will take time. Search engines will almost always highlight and promote places that have been on the market multiple times or have the backing of a large company.
Have patience and know that more recognition and opportunity will come with hard work.
Getting into the property management sector shouldn’t be taken lightly. There is a lot of money to be made in the industry if done right, but that’s the key: it has to be done right. With these five tips, you can feel more confident in knowing if you should continue down the path and whether it will be successful.
Again, don’t be afraid to outsource for help. As one of the points mentioned, using a company like Green Residential could be the best decision you ever make regarding property management. Explore your options and decide what will work best for you.