Don’t Make These Common Mistakes for your Home Rentals
Being a property owner and investing in homes for rent in the Tri-Cities would seem to be an ideal way to earn money. But property management does require a certain amount of knowledge and experience in order to be a successful landlord.
There are definite pitfalls and landmines, such as a careless approach to maintenance and failing to set the correct rental rates for your house for rent that could jeopardize your tenure as a property manager. You can make what can be an ambitious and, at times, a challenging job, easier by learning from the mistakes and mishaps of others.
So, we take this opportunity to help you avoid the mistakes that typically compromise the profit potential of property management in the Tri-Cities. We are presenting some of the most common errors that you, as a property owner, should avoid so you and your tenants remain happy and satisfied.
Not Adequately Screening Renters
While you can exert influence over many aspects of your property management world, you don’t have control over the people who rent houses from you. So it is critical that you thoroughly screen renters and be somewhat discriminating when choosing people who will rent your homes.
We understand that it can be tempting to get as many renters as fast as possible to turn a profit after all the investment you’ve made in your houses. Although you might get houses occupied, this approach could cost you significantly in the future, and sooner than you might think.
Here are some useful recommendations for how to go about selecting your renters to ensure you have good quality people occupying your houses:
Run a Credit Report – A casual introduction with your potential renter, and having a good feeling about that person, is not sufficient during the screening process. By doing a credit check, you will learn about a person’s poor money and debt management habits.
Thoroughly Check References – It is essential that you contact numerous references for a renter prospect to capture a full and complete picture of their character and their habits.
Examine Their Rental History – As a property owner, it is in your best interest to know exactly how a possible renter conducts themselves and if they could be a potential liability for your house rental. One key bit of information you should be on the lookout for is evictions.
NOTE: You can rely on Jerry D. Abrams Company, Inc. to thoroughly screen prospective renters for your house rentals in the Tri-Cities.
Establishing the Wrong Rental Rate
If you set a rental rate that is not in line with your community or that cuts into your profit margin, you’re finished before you even begin as a property owner. If the rental rate is lower than it should be, you will be denied the ideal return on your investment. Set it too high, and you price yourself out of the ability of people in your community to afford your rent.
You want to make sure you entice as many people as possible to rent your house, but you also need to be mindful of making the rental rate competitive so you can maximize the return on your investment.
Here are some common mistakes to avoid when it comes to establishing the appropriate rental rate for your house:
- Failing to do a thorough market analysis – It is incumbent upon you as the property owner to examine single-family and multi-family units that offer similar amenities in your community, and this should include access to the same quality schools.
- Over-pricing newly-built or updated units to help recover expenses – While you might want to recoup as much as possible with a higher rent, doing so will backfire as you will price yourself out of your local market. If people can’t afford you rental rate, you will have unoccupied houses. That sinks profits faster than anything.
- Underpricing to secure renters quickly – Instead of setting your rental rate too low and draining your profit in the process, focus on optimizing your marketing to attract quality renters. Showcase the beauty and attraction of your homes, and you should draw sufficient numbers of people interested in renting your house.
Underestimating Maintenance Expenses
Property owners are obligated to maintain livable and safe houses, so factor in an adequate budget for maintenance. It is smart to designate plenty of money to properly cover a wide array of maintenance jobs. Renters will not be satisfied renters very long if you are not responding in prompt fashion to their requests for making the necessary fixes and repairs.
Assuming Your House Rentals Will Always be Occupied
As a necessary precaution, if you have taken out a loan to purchase your property, you should be prepared to pay a mortgage for some months if the house remains vacant indefinitely.
As mentioned earlier, be flexible in setting your rental rate – avoid adhering to a fixed price. You might also consider rethinking your pet policy for prospective renters to reach a wider audience.
You could also adjust your demands during the screening process, but make sure you don’t compromise so much that you are overlooking important aspects of prospective renters such as money management habits and a record of evictions.
Treating a Rental House as Your Own
Novices at house renting tend to make this mistake. You get wrapped up in the details of the house – and its condition is very personal to you as it represents your investment – so you begin to think of it as your residence. Then you proceed to make decisions based on your preferences and opinions, when instead you should ensure your house has mass appeal.
Avoid relying on your own personal choices when it comes to selecting colors and design influences for the home, for example. You want to decorate your property in ways that will satisfy a variety of tastes. With this in mind, choose neutral colors and classic or modern furniture, as this will improve your chances of finding interested renters faster.
Full-Service Property Management with Jerry D. Abrams Company, Inc.
Jerry D. Abrams Company, Inc. is uniquely focused on providing an ideal experience for the owners and tenants of commercial and residential real estate. We give owners and tenants this great experience by using over forty years of property management and leasing expertise.
We aggressively work toward reducing operating expenses and increasing cash flow for our clients. Our team of professionals has the experience of managing investment properties for more than 40 years.
Our objectives include performance excellence, professionalism, communication, responsive/personal service, and attention to detail.