Just like trading in the stock market is not for everyone, not everyone are good in managing rental properties as well. Dear landlords, does it sounds familiar?
4 common reasons for mismanagement of Rental Property
1) Lack of knowledge and expertise of the local market. – This often results in charging rental that are above or below market rates. When you are charging too little, you could be making a monthly loss. While when you charge too much, you could find it tough to find tenants.
Many homeowners and investors take the time to look at national data to make their investment decisions. But in terms of real estate for the individual investor, local data is more relevant than at a national level. Focusing on local data ( transactions within the district of your property ) can also help you to identify niches that are hidden from the masses. It is not surprising to find that the rental you are able to essentially charge with stability is very far off from the national average.
2) Failure to positively respond to tenant requests – Well, stop dreaming !!! It is not realistic for a landlord to collect recurring rental without having to do anything. This is because other than the “behind the scene” tasks which you have to routinely complete, you also have to attend to tenant calls which can come at any time of the day. Some stuff could appear insignificant to you, but it could mean an emergency to a tenant. For example, you might have no fear of lizard. But for some people, the sight of a single lizard can cause them a mental breakdown. Solving tenant issues is your responsibility as a landlord.
If you are not a people person with patience, you could be looking at a miserable career as a landlord managing rental property.
3) Negligence.- Maintenance issues can snowball to much bigger problems when left unattended. Imagine yourself failing to change the engine oil of your
precious car for 3 years. Very soon the engine will break down and you are faced with a bigger problem like overhauling of the whole engine that will cost you a bomb.Now , do you feel the pain?
Common maintenance that you should conduct includes touching up the paint, pests control and checking for leaking pipes and seepage, etc. If you had managed to actually rent out run down apartments, there is also a likelihood that tenants who are willing to put up with these shortcomings to negotiate terms and conditions in their favour. And most likely, your tenant would probably return your property in ” not a very good state ” .
4) Failure to collect rental on a timely manner or take legitimate steps to evict non-paying tenants – Cash flow is the life-blood of operating rental property profitably. Late payments not only causes you cash flow problems, but they can cost you interest charges as well. You are not running a charity here. Allowing 1 week of lateness opens the door for tenants to stretch to 2 weeks, then 3 and 4 and so on. Pretty soon you find that you have effectively forfeited a month’s worth of rental. You cannot let tenants get away with this.
According to the terms and agreement in the lease agreement, there are many legitimate reasons that give you the right as a landlord to evict tenants. When your patience has finally run out due to late payment of monthly rental, your best option could be to start the eviction process as soon as possible. The longer you go without payments, the more losses you make. It is advisable to keep track of everything so that you have documents that legitimize your actions.