Being a property manager comes with multiple responsibilities. And if you are new to property management, mistakes can cost you money. Whether you want to avoid making those or just upgrade your knowledge, this guide will help you.
Here are the ten things you should avoid when renting your properties.
1. Using An Inconsistent Screening Process
A good screening process can save you from costly evictions later. But changing the screening process from tenant to tenant could land you in legal trouble. According to the US Fair Housing Act, it is illegal to discriminate against tenants based on race, color, origin, religion, sex, familial status, and disability.
What You Should Do: Acquaint yourself with tenant screening laws and have the same screening process for every tenant. You can automate the process by using software such as Yardi ScreeningWorks Pro. It can collect and verify documents, run background checks, and access credit history to give you low-risk, reliable tenants.
2. Collecting Rent by Check
Receiving rent by check is risky for both the tenant and the landlord. The tenant’s check could get lost, or their financial details could end up in the wrong hands. A landlord has no guarantee that the tenant’s account has funds to cash the check.
For millennials, checks are outdated. A Money Magazine report states that just 15% of millennials and 40% of seniors pay their bills through the mail.
What You Should Do: Online payments are a secure and convenient way of rent collection. Through automation, tenants can schedule payments beforehand. You can also send payment reminders to tenants on the due date. It also becomes easier for you to follow up on missed payments. Payment automation is the best way to collect rents on time.
3. Letting Tenants Go Off-Lease
As a landlord, you will often have good tenants. But just because they are well-behaved, pay rent on time, and help with maintenance, doesn’t mean you should be lenient with the lease terms.
Getting your tenant to sign a new lease term every year or increasing the rent can be time-consuming. But letting your tenant go off-lease can pose a greater risk to you. A tenant can leave on short notice (usually 30 days), which can leave your property empty for a long time. It can also remove your chance of increasing the rent, which reduces the overall profit.
No matter how good the tenant is, not signing the lease agreements and missing payments should be off the bounds.
What You Should Do: Keep a professional relationship with your tenant. Stick to lease agreements and rent due dates and renew the lease every year. Property management software can help you with managing lease agreements while also being a favorable landlord.
4. Changing Terms in the Middle of the Lease
While making a new lease or renewing existing ones, property managers can change the terms of the lease. But, there are limitations to changing the lease terms when it is ongoing. Even with new additions to your property, you have to check if you are legally allowed to modify the rent or change the agreements.
What You Can Do: Be aware of the rules of the lease agreement and make changes only during renewal. Upload lease agreements to a tenant portal so both parties can be informed of any changes. Assetsoft offers lease abstraction services to help you out.
5. Putting Off Maintenance Issues
Maintenance issues are best addressed quickly. If ignored, they can lead to much bigger problems. A minor leak can flood the property significantly if not repaired in time.
Just because a tenant has reported the issue only once does not mean it isn’t important. Timely repairs can save more of your property from being damaged.
Regularly inspecting your property for any maintenance issues can help keep your property in good condition. A well-maintained apartment attracts better tenants and shows your competence as a property manager.
What You Should Do: Use a tenant portal like MRI Tenant Connect to quickly check on any maintenance requests. They can also serve reminders in case a request is left unattended for a long time. Routinely inspect your property to keep it well maintained.
6. Assuming Your Property Will Always be Rented
One of the most common mistakes property managers make is not planning their finances realistically. If you have taken a loan for your property, you should be able to pay the mortgage for some time if the property stays vacant. Having a financial plan to cover unforeseen situations can save you from a lot of worries.
An excellent way to attract tenants to your property is to price it fairly. Evaluate market listings to decide the right price for your property. Be flexible with the cost of the property and negotiate with interested leads.
What You Should Do: Use property listing portals to attract better tenants. Prepare a financial plan that covers the mortgage when your property is not rented out.
7. Mismanaging Security Deposits
Collecting a security deposit is standard practice to cover minor damages during the tenancy. Most property managers do not give it much thought except on how much to collect. Many states have laws for security deposits covering two points: how much deposit can be collected and where it can be used.
Most laws do not allow using security deposits for normal ‘wear and tear.’ But, in case you spend money on repairs and maintenance, you can deduct the amount from the deposit. In any case, you will have to document the use of the deposit.
Sometimes, landlords feel entitled to the entire deposit if the tenant breaks the lease. But, this can be a violation of law in some states.
Skipping the security deposit entirely is not a solution. It is important to collect a reasonable amount. This amount can also be used in case the rent is unpaid.
Most laws set a limit on the deposit you can collect. Check with your state laws and adjust the deposit amount accordingly.
What You Should Do: Maintain all documents and records related to the security deposit meticulously. Understand the laws on where you can use the deposit and return the remaining amount to the tenant once they move out.
8. Not Having it in Written
Many rookie property managers make the mistake of verbal agreements. Though these are valid in some cases, they cannot be proved. It can cause problems with security deposits, lease renewals, and rent collection. A written agreement is more effective when documenting the terms of the lease.
Written lease agreements can also make your tenant-owner relationship better. You can discuss any details in the contract such as who is responsible for repairs, or how tenants can contact you in case of emergencies.
What You Should Do: The best way to legally protect yourself is through a written agreement. The agreement should be in accordance with the state laws. Make sure the contract is customized according to your rules. If you do not allow pets or charge a late payment fee, include that in your agreement.
9. Evicting Renters Because of a Sale
Just because you sold your property to someone else, you can’t evict the current occupants before the end of their lease. It is best to sell the property when it is vacant. If it is sold in between, make sure the new landlord doesn’t evict the tenants before their lease ends.
What You Should Do: Use digital platforms to keep owners and tenants informed of any changes. Easy access to lease agreements can also help both parties to clear any misunderstandings. Make sure the sale of the property doesn’t violate the tenant’s lease agreement.
10. Treating Rental Property as Your Own
Even if you own the property, tenants are entitled to privacy. Dropping in at odd times without informing the tenants is a violation of their privacy. Once the lease agreement is signed, you have to give prior notice if you want to drop in for maintenance or inspections. You can’t use your keys to enter the property without their consent.
What You Should Do: Use communication tools such as email and text to convey any visits to your tenant. Online portals are another great way to keep them updated on any upcoming inspections or repairs. You can submit quick notices to tenants and obtain their consent before visiting the property.
Bottom Line
Using the best property management practices can not only get you good tenants but also protect you from legal hassles.
Automate your property management when you can. Whether it is online portals, tenant screening, or even online payments, finding the right tools is crucial.
Assetsoft can help you integrate the necessary tools to build the right property management system for you. We can help you manage your properties better by addressing all your needs through ERP software solutions like Yardi, MRI, UiPath, among others.
Integrate all data together. Process invoices and tenant issues seamlessly. And do it all from one dashboard. Talk to us today to know more about how we can make property renting easier.