Being a landlord can be strenuous, stressful, and challenging at times. But if you learn how to master the details, it can ultimately become a highly-profitable activity that provides fulfillment on multiple levels.
The first step is to avoid costly mistakes that hamstring your efforts, so you should know what those are.
Avoid These 6 Property Management Mistakes
You don’t have to be perfect to be a successful landlord. You do, however, need to avoid committing as many substantial blunders as you can. In terms of the property management side of things, this means avoiding errors such as the following six.
- Doing it On Your Own
Although it’s technically possible to manage your rental properties on your own, this can become very difficult and time-consuming as you add further doors to your portfolio. Continuing to handle all of it on a DIY basis will eventually strip you of all your time and energy.
Hiring a property manager to handle all of those small but time-consuming tasks can free you up to focus on the bigger picture.
- Scaling Without Systems
As you add to your portfolio, try to be intentional about systemizing every facet of your business (whether you hire a property manager or not). Scaling without systems in place will eventually lead to everything unraveling. Growth is great, but growth without guardrails can be costly.
You need systems for every aspect. This includes marketing your listings, screening tenants, onboarding tenants, collecting rent, handling turnover, maintaining properties, finding new properties, securing financing, and so on.
Anything that happens more than once in your business probably should have a system for handling it each time it happens. And each system should have a set of standard operating procedures (SOPs) so the practice can be handed off to someone else without missing a beat.
- Poor Tenant Screening
Tenants make or break your investments. If you have the right tenants in your properties, you’ll be successful and profitable more times than not.
If you have the wrong kind of tenants in your units, you’ll experience costly breakdowns and failures. (Even if the numbers continue to add up on paper.)
Proper tenant screening is an art form. You can develop your own system over time, but it takes a lot of experience and learning from your mistakes.
So this is another reason we recommend using a property manager. Such pros typically already have their own airtight screening procedures in place.
- Acting on Emotion
There’s no place for emotions in property management. That’s easy to say, but difficult to remember in the moment.
Since we’re humans, we can be highly emotional creatures. So you have to be firm about making sure objectivity reigns supreme in your approach.
One of the best ways to avoid emotional decision-making is by making smart use of time. If you receive a text message from a tenant that really frustrates you, focus on something else and allow 10 minutes to pass before responding.
This kind of buffer can serve to calm you down and process the situation logically. (If it’s something really serious, sleep on it.)
- Letting Small Things Slide
It’s tempting to let things slide from time to time. For example, perhaps you have a good-natured tenant who misses his rent payment. While your first inclination may be to ignore the issue and hope that it’ll work out, this sort of passive approach will eventually come back to bite you.
If you have a late payment penalty built into your lease agreement, you have to execute it. Otherwise, your tenants gain the upper hand and become the ones who call the shots.
- Neglecting Inspections and Maintenance
No landlord wants to spend money on repairs, but an inevitable expense. No matter how good the property’s condition is when you buy it, it will eventually require some kind of maintenance. The vital question is: Will you get ahead of the maintenance?
Or will you be reactive? An investment in preventive maintenance can go a long way. It may seem costly on the front end, but it’ll save you a lot of time and money on the back end.
You’ll also reduce your odds of encountering massive surprise costs. It puts you in the driver’s seat.
Adopt the Kaizen Mentality
There’s a principle in Japanese culture called “Kaizen.” It’s the idea that big gains happen through small and consistent progress.
In other words, incremental growth over a period of time produces substantive results. The principle is based on the notion of constant and never-ending improvement.
When you’re a landlord, you can benefit from maintaining a Kaizen mentality. You should never be satisfied with the status quo. Always look for ways to improve your property, processes, and relationships with tenants.
If you do so, you’ll become a person that people can trust and depend on. And it’s through this authority that you’ll evolve into a profitable real estate investor.