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7 Mistakes to Avoid When Managing Rental Properties

20 August 2015 One Comment

canstockphoto14687997Real estate can be a lucrative business, provided you take necessary measures to make sure you don’t lose money. Unfortunately, many people that start off strong wind up losing a great deal of the income because of improper procedures. Managing properties, whether you own an apartment building or a series of houses, requires more than simply accepting monthly payments from your tenants. There is a great deal of work that needs to go into the entire process if you want to remain successful.

Know the Law

Familiarize with the tenant laws in your area. Not every location has the same governance, and what is legal in one city may not be in another. Take the time to know what you’re getting yourself into. You don’t have to be a lawyer, but this research will help you when faced with difficult decisions.

Legal Contract Development

Once you’ve developed a contract, it may be worth the investment to have a lawyer give it a glance. This can protect you in the event that a tenant contests the document. It can also prevent you from making mistakes that could cost you a great deal of money. Things that you may think are common sense may not be legal in the eyes of the courts.

Screen Your Tenants

Don’t take everyone’s word for who they are. A proper background check can give you pertinent information about a potential tenant. Too many owners will simply pocket the background check fee without conducting a real investigation into someone’s history. This often leads to accepting an individual that will leave your property in critical condition.

Heart-breaking Stories

Renting properties should be viewed as running a business. Everyone has a sob story to tell, but you need to stay firm when it comes time to evict. Otherwise, you’re operating a flop-house that is costing you money. There’s nothing wrong with helping tenants find solutions to rental problems, but letting people live rent-free is not conducive to the success of your business.

Documentation

Any time there is a change regarding your rental properties, get it in writing. Even if it’s an agreement about Internet usage, it could be instrumental in legal procedures later on. Many problems could have been addressed if renters and tenants had documentation in clear language regarding various expectations.

Inspections

Always complete inspections when a tenant leaves. Structural damage is easy to conceal which may put your next renter in harm’s way. It will also give you a chance to ensure the property is in prime condition and find what needs to be repaired. Before releasing the cleaning deposit, make a thorough examination of the property.

Operational Costs

Too many renters believe that any money they make can go directly into their own bank accounts. Keep in mind that rental properties will need regular maintenance at your cost. Keep a secondary bank account for monies used to make repairs. It may also be a good practice to put any deposits you receive into a separate account in case you need to refund them or use them for the cleaning process.

Organizations such as Kenny Slaught Investec Real Estate have developed success by creating strong methods and procedures conducive to continued development. While some things may seem like a bit of a hassle, it can protect you and your property should something happen. Real estate rentals have potential to make you a great deal of money, as long as your willing to protect your assets.

One Comment »

  • Tammy D said:

    These tips will surely come in quite handy for those who are currently managing rental properties as well as for those who are planning to get started in the business. I only have one thing to add. You need to purchase enough liability and other property insurance. This can protect you from lawsuits by tenants for injuries or discrimination and from losses to your rental property caused by fire, storms, burglary and vandalism.