Being a landlord isn’t easy but given the Resale Real Estate Market, many homeowners are turning their home into rentals. It can be a great idea, but, few of the owners with for rent signs are actually operating their rental in professional manner and in some cases illegally. Managing your own rental can be done, but there are many pitfalls and dangers if its not taken seriously or with care. The consequences are great and it’s your home at the end of the day that you are putting out there to be treated either with care, or vandalism. Hiring a professional Property Manager is great idea because of the experience and professional care involved.
The statement that gets me the most from wannabe landlords is, “I can’t afford a Property Manager”. Little do they know that my fee is usually less less than the gas bill and with the services that we provide, we can actually save them money - in some cases, thousands of dollars per year.
In either case, what are the things that most rental owners aren’t doing that they should be? Here’s a list in no particular order:
#1 Execute Effective Marketing Strategies
To catch fish, you have to go where the fish are, simple, right? Well not exactly. You can still see that most owners still advertise in print media. Why? I estimate that at least 25-50% of all calls we get on our ads are from people who are relocating to the Boise Area. So, again, why would they be looking in a printed paper? They aren’t!
- The internet. Most people put an ad on Craigs List, which is a good start, but its a ruckus. You get what you pay for. I advertise my rental properties on no less than 15 websites. Each rental has its own URL so it can easily be found or can be used to link to other sites, or to send to people in my network.
- Social Networking Sites. Whenever I have a new rental that needs marketing, I post it to all of the Social and Professional Networking sites. On Facebook alone, we give a call to action to over 150 “Friends” to go see the listing and notify anyone that they know who is looking to check it out!
- Real Estate Networks. I leverage my vast network of colleagues who almost always know of someone who needs a rental.
- Applicant Data Bases. I keep a track of tenants who are looking for rentals and whenever I have a new property come up, they are the first to be notified. The best part of it is, they are usually already qualifed to move in!
- Signage. Duh! Of course we use signs
Don’t think that just because you are putting your listing on Craigs List that you won’t be on page 3 by the end of the hour. Most people are listing their properties there and so should you, but realize, that it’s not Maximum Exposure. Do you want a couple of applications or a bunch of them?
Most landlords don’t even do this step! Why, because its complicated. Most screening companies have requirements that the average Joe can’t even meet.
#2 Run Credit Reports
Credit reports turn up current and past financial history and gives you a current idea of the prospects debt to income ratio which helps you determine if your applicant makes enough to comfortably pay you rent each mont. It also turns up any legal items like leins from past landlords and property managers or any outstanding collection items from utility companies.
#3 Perform an Eviction History Search
It is what it says. We run an eviction search on every applicant to see if they have ever broken a lease and were legally evicted. An eviction is a big red flag that should not be overlooked. If your applicant got evicted from a previous residence, why would you want them to be living in your place?
#4 Do a Criminal Search
While it’s illegal and unethical to discriminate against a tenant for their Age, Sex, Race, Color, Religion, National Origin, Familial Status, Pregnant Women and Handicap, it is not illegal to discriminate against a felon. We run a Criminal Background on every applicant and have found some applicants who have been charged with Vandalism, Grand Theft and even writing bad checks (probably rent checks).
#5 Verify Current and Previous Residency
We interview past landlords about the residency of the applicant in question. This turns up valuble information of you know the right questions to ask. Contacting more than the current landlord is obvious for many reasons, but more importantly, if you go back a ways, you might be lucky to find a past landlord who remembers how great the were.
#6 Verify Applicant Income
Before we even SHOW a property to a prospective renter, we verify income. There is no reason to rent to someone who will be getting laid off or getting hours cut back after the Holidays. We contact past and current employers to verify their income so that when you go to cash the checks, they don’t bounce.
#7 Disclose Lead Based Paint Hazards
If your home was build in 1978 and prior, you had better be doing this! Failure to do so will result in at least a $10,000 fine. There are Federally Required disclosures that you need to use and a Federally Approved Pamphlet that must be delivered to the tenant prior to signing the lease. Forgetting this one could have paid my management fee for years and years to come!
#8 Conduct Move-In Inspections and Documentations
When a tenant moves in, you should have a comprehensive property checklist that you and the tenant fill out to note any pre-existing damages prior to them moving in. They need to sign this! When they move out, there will be no question as to which damages are new and which ones were existing. It will also serve as evidence should you wind up in small claims court.
#9 Perform Periodic Inspections
One of the most overlooked aspects of property management. Stopping by the rental on a scheduled periodic basis helps prevent damages before they occur or get out of hand. I’ve seen tenants do over $7500 in damage in less than 30 days…Imagine what would have happened if it was 1 year! (Fortunately, these tenants weren’t associated with our rentals)
#10 Enforce your Lease
What are you going to do when a tenant lets the lawn and flowerbeds go to weeds? What happens if you have a tenant late on rent? There are a TON of things that qualify for breach of lease, but how you enforce the lease is just as important as how you identify the violation itself. Most owners get caught up in being “Mr. Guy” and letting violations happen. This reason alone is enough to pay a management company a small fee to take care of the property. Property managers are a shield between your tenants excuses and your easygoing charitable nature.
#11 Start Bookkeeping
Keeping the books organized and itemized is just as important as collecting good rents. At the end of the year or at any given moment you should be able to print out an accounting of your income and expenses so that you can claim any gains or losses on your taxes.
#12 Hire a Property Management Company
With all of the time, the potential pitfalls, legal implications and information associated with managing a rental, you’ll be far better off having a Property Management Company in your corner. While they aren’t the ones to blame if things get bumpy, they are there to prevent hitting the bumps in the first place. Southern Idaho Management was started by me and my wife out of a necessity to manage the rentals that we owned. Our real estate clients liked our real estate work and nearly demanded that we manage their rentals too. We do far more than the items on this list and take pride in our work. Our fee is cheap in comparison to you stepping on one small legal landmine and with all of the time necessary, you could be out focusing on your career, small business or time off with family.
If you or someone you know has a rental property get in touch with us to see how we can help relieve the headaches and help you avoid a serious costly disaster. Our council has saved our property owners Thousands of Dollars. We can be reached at 208-724-7602 or go to our website www.ileaseboise.com
To Read more Good Articles from this Author: 12 Things that You aren’t Doing for Your Rental But Should