6 Common Property Management Mistakes
In real estate, as in any business, mistakes can cost time and money.
The following is a list of the six most common mistakes landlords make when maintaining and making repairs to their property, according to San Francisco’s Fast Forward Property Management team:
1. Overpaying contractors
Contractors can charge whatever they choose for any job. Therefore, to ensure a fair price, it is always advisable to get multiple bids for a project, rather than settling for the first one. To get the best value with contractors it is best to agree on an hourly rate ahead of time and agree to pay at cost for the materials.
2. Trying to save money by hiring unskilled workers
On the other hand, trying to save money by using unskilled workers can backfire. Genaro Mendoza of Fast Forward Property Management explains, If you pay someone $15 an hour for a job that takes that person 10 hours to complete, that job cost you $150. If you pay an expert $50 an hour to do that same job, but it only takes him or her 2 hours to complete it, you only spent $100 on work that is most likely of a higher caliber and therefore less likely to require repairs in the near future (which would cost you even more money). The bottom line comes down to value. A higher rate doesnt always equal a higher final bill.
3. Personally performing time-consuming repairs to save money
Landlords with the proper skills can save a significant amount of money on labor by doing construction and maintenance work themselves. In order to save enough money to make this worthwhile, however, the job must be completed quickly. Many owners brag about how much money they saved in preparing a vacant unit for rental, but not all of them do it swiftly, in which case the money saved in labor expenses would have been negated by the weeks of rent lost due to the vacancy.
If you save $900 by doing the work yourself, but lose $1,400 in rent by not filling the vacancy promptly, you have actually lost income, .said Mendoza. Most professionals can paint a unit and replace flooring in just a few days, and then the unit can be rented.
4. Allowing tenants to do repairs themselves
While it is common practice to give a tenant some money off of their rent for making a repair, it exposes landlords to great risk. If someone falls from a ladder or gets injured while hired to do work, and the landlord does not have workers compensation insurance for them, then the landlord could be held personally responsible for paying for their medical bills and loss of income.
5. Not inspecting properties regularly
We regularly hear stories of owners who have, after a long-term tenant moved out, found extensive damage to a unit that could have been easily prevented, says Mendoza. It is essential to inspect units (even the rented ones) regularly so that repairs can be done before further damage is done to your building.
6. Deferring maintenance
Maintenance is a significant expense for most property owners. Some landlords have an If its not broken, why fix it? mentality, but deferred maintenance will cost more in the long run, as well as lower property value. Additionally, rent in buildings that have areas in obvious need of improvement tends to be lower, and many tenants will move if their landlord will not fix things or keep their units up to date. Few things frustrate tenants more than landlords who do not respond quickly to service requests. Neglecting maintenance to save money now will cost more in the future.
This information provided by Fast Forward Property Management, a property management firm in the San Francisco Bay Area that specializes in managing apartment buildings, HOA, and commercial properties, offering more than 40 years experience.
With AAOA, landlords have resources at their fingertips. Check out our Landlord Forms page.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.