Property management is a challenging job and can be hectic at times. There is ongoing administrative work to be managed emails and phone calls have to be answered, and various marketing strategies have to be implemented to make sure the vacancy rate stays to its minimum. In such a frenetic schedule, chances of committing certain sizeable mistakes are high and they can prove costly. Here are some of the major mistakes that are quite common in this industry, and they must be avoided.
Avoiding Routine Maintenance
When property management is trying to keep costs to the minimum, it becomes quite tempting to ignore minor maintenance issues, such as leaking faucet or servicing of a water heater and so on. However, this is a major mistake, since a small maintenance issue can quickly turn into a major repair where you will have to spend more money on something because of your dereliction. For instance, a leaking faucet that is not attended to, can soon give way, and cause flooding in the unit, which is so much more expensive to set right. Hence, it is better to be proactive and address maintenance issues right away, even if they seem minor.
Unwilling to Increase the Rent
Inflation is the bitter reality, and rising costs affects everybody. However, property management cannot ignore raising the rent, just because of fear of increase in the vacancy rate. It is imperative to maintain a decent return on investment, and raising the rent is inevitable at some stage. However, the new rate should be comparable to the rent charged by other similar properties in the area. Secondly, when you plan to increase the rent, provide sufficient notice to tenants.
Not Implementing Terms and Conditions of the Lease
It is quite difficult for property management to maintain excellent relationships with tenants and at the same time enforce all the terms of the lease agreement. Most property managers tend to take the easier route of being the "nice guy", and overlook things that are in violation of the lease. Such an attitude can land property management in major trouble and legal issues that can work out quite expensive.
For instance, not charging penalty fees for late rent or allowing pets when it is violating the lease agreement. The best approach is to maintain cordial and friendly relationship with tenants, but being firm when the situations demands it, and keeping to the terms of the lease at all times.
Ignoring Important Property Expenses
Property management usually has to walk a tight rope by managing expenses, and keeping costs to a certain percentage of the rent charged. This often leads to cutting corners when the budget becomes tight or certain expenses have gone beyond the expected amount. However, certain expenses such as insurance and taxes are paramount, and a property manager cannot afford to ignore them. If the taxes are not paid in time, it will result in not only penalties, but also various legal issues.
The same goes for homeowner's insurance as well. It will be frustrating to know (and possibly a game changer) that insurance was not in force or in effect after the fire department just finished putting a fire out in the complex.