5 biggest property management mistakes
Being a property management extraordinaire involves successfully juggling prospecting, rent roll growth, inspections, maintenance, tenancy screening, and more, while always being on hand to answer phone calls and respond to emails.
Safe to say, it's not the easiest profession, but so long as you avoid the major pitfalls, you'll be setting yourself up for property management success.
Here are the five biggest mistakes property managers need to avoid.
Skipping routine inspections
As your rent roll grows, your calendar will be more and more populated with routine inspections. When work is getting particularly busy, these inspections are often the first commitment to be dropped - especially those assigned to properties that previously passed inspections without fault.
This is of course a problem.
Even if your tenants are clean and haven't damaged the property, it's still important to inspect the premises. There could be structural damage, or instances where preventative damage needs to be carried out to prevent future repairs.
Technically, the tenant should be noting and reporting these, but it's very possible they've either not noticed potential problems, or fail to properly understand why they could become an issue. Most tenants don't have as much as experience with such things as property managers.
In order to avoid skipping inspections outright, it might seem better to postpone them, but this can create its own problems. As inspections are pushed further and further back, they can quickly bunch up together. Rather than carrying out eight inspections over the course of three weeks, you suddenly have 12 inspections to do in just three days.
This results in rushed inspections, as you try to complete them all over town while still finding the time to respond to calls and emails.
Rushed inspections have the potential to be even more detrimental than skipped inspections, because noting that a property has passed without issue means any potential problems that were missed won't be reassessed until they've progressed to a worse state.
As such, if you truly do not have the time to carry out inspections on time, it's important to ask for help from the rest of your team. If nobody has the capacity to assist, it may be that your rent roll has outgrown your staff, and it's time to recruit.
Getting lazy with tenant screening
Time a property spends vacant is time a property generates no money - for the landlord and the property manager. As a result, property managers may feel rushed to secure a tenancy, but a bad tenant now is much worse than a great tenant in three weeks.
Losing three weeks' rent may seem catastrophic, but it's nothing compared to the potential costs and headaches associated with rental arrears, excessive damage, and QCAT trials.
It might seem sufficient to just call one of the references on the first tenancy application that comes through and call it a day, but if you aren't doing a detailed check, calling all supplied references, and checking the tenant on databases like TICA, then you're not doing everything you can to ensure your client's property has the best tenant you could find.
It may seem excessive, but organising a short meeting with the tenant - and possibly the landlord too, if they're willing - to have a quick conversation and get an idea of the kind of people they are. If you do so, just be sure to not become overly acquainted with the tenant, as a personal relationship could complicate any future issues that may arise.
Not screening contractors
If you wouldn't hire a tradesperson to work on your own home without ensuring they're the right person for the job, then you shouldn't do the same for your client's property.
The pressure to find the cheapest contractor may come from the landlord who is looking to limit maintenance expenses, but it's a good idea to screen properly, and if the best-suited contractor is more expensive, then that benefit needs to be properly explained to the landlord.
A few extra hundred dollars now could save the thousands that a poor-quality contractor could end up costing your landlord.
Failure to properly screen contractors may also come as a result of saving time, but again, if you're effectively choosing a carpenter, plumber, or electrician out of a hat, the time you save in the short term could be paid back threefold in the long term.
It's always worth spending the extra time, effort, and if need be, money, to ensure the best results.
Not screening landlords or their properties
Recently the REIQ asked Jamie Billerwell and Lisa Perruzza, both business development managers, if property managers should take on all properties, or exercise some fussiness. Both of them agreed that there are some landlords who are simply more trouble than they're worth.
Growing your rent roll should be one of your key goals every quarter, but growing your rent roll with problematic landlords is a recipe for trouble.
"We've terminated management agreements with landlords who pose a risk, and we've also declined business for properties that don't meet housing standards," says Perruzza.
"I think you need to be extremely selective with the landlords you're bringing into your business," says Billerwell.
Eagerness to expand a rent roll could leave property managers disinclined to turn down business, but as Billerwell says, short-term bad business is going to be detrimental down the track.
"We have to think of the bigger picture, and be mindful of the consequences of every landlord," she says.
Unfortunately, many potential problems can't be realised from initial screening. For example, there's no way to know that a landlord will neglect maintenance until it comes time to have repairs carried out.
The best you can do is get to know them on a personable level and assess whether they're somebody you want to do business with.
"When you 'appraise' a property, you need to look at it as an interview - not only for you, but for the landlord, too," says Billerwell.
Sub-par customer service
Client is really just a more professional term for customer, and so property management should definitely be considered a customer service role - it's their job to adequately serve their customer.
The wise property manager provides the same level of service to the tenant, however. The tenant is the landlord's client. Without a tenant, the landlord makes no money, which means the property manager makes no money.
As such, an all-too-common mistake made by property managers is not providing both their landlord and their tenant with high quality customer service.
Failing to provide great quality service to your landlord risks them finding a new agency to manage their investment. Failing to provide the tenant with quality service might see them find a new property, resulting in increased vacancy costs for your landlord, which can then lead to them finding a new property manager.
Ultimately, both are just important as each other.
Maintaining this high level of service means consistently keeping up communication with both the property owner and the renter. All maintenance requests from the tenant need to be relayed as soon as possible to the landlord, while any landlord requests (such as rises in rent or in response to inspection) also need to be pass on promptly to the tenant.
While the landlord is the more immediate client, it's important for the property manager to act as a mediator between the two, always communicating politely and professionally to prevent any animosity between the parties - an especially crucial task when the two fail to see eye to eye on an issue.
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