This article has a list of the top 10 mistakes property management companies make that end up costing you a fortune.
Most of these are just systems mistakes because the property management company just doesn’t know better. A person just doesn’t know what they don’t know.
#1 – Poor Tenant Screening Practices
Poor Tenant screening is potentially a huge liability. If a property management company puts a tenant in the property that must be evicted, it’s going to be expensive: you are looking at lost rent, repair costs, and filing fees. For example, on a property that rents for $600 per month, you’ve lost about $1,800 if the damage is minimal, or around $5,000 if the damage requires just painting and new carpet.
Therefore, your property management company needs to use a rigorous tenant screening process. That way, you can minimize the potential problems that might come up later with tenants.
On the other hand, a property manager can be too strict on screening practices. Especially if the property is in a mediocre neighborhood or if he property has some type of defect that makes it less desirable.
A few blemishes on an application may not mean the applicant will not be a suitable tenant for the property. It always comes down to a case-by-case basis. That’s why we will always take a look at those situations.
It certainly doesn’t make sense to save 1% per month on your management fees just to lose $5,000 on an expensive eviction.
#2 – Not Being Responsive Enough to Tenant Requests
When a tenant feels like their issue issue isn’t being handled quickly enough, they are not happy.
I recently had a heater go out in the winter in one of our Edmond properties.
We got temporary heat out their immediately (it was the weekend), and got our heat and air technician out Monday.
The tenant immediately started looking for another property.
This is not the norm. Most understand that maintenance isn’t a 10 minute process.
The key is get the repair done quickly and effectively so whatever it was doesn’t break down right away.
When this happens, It usually means you’ll pay less for maintenance and repairs because you’ll catch problems quickly before they expand into a massive, expensive headache.
Why worry so much about being responsive? Let me explain that one.
Studies show that 19 out of 20 dissatisfied customers will become loyal customers again if their complaints are handled well and quickly. When your property manager handles tenant complaints well and quickly, it almost always means that tenants will stay longer. Less turn over for you means you have a more profitable property.
#3 – Behind the Times When it comes to Technology
Almost every function of our office uses some internet-based application to add convenience to our customer service. Here is a list of items:
- Advertising on the websites where tenants are looking for a property to rent.
- An automated system that allows tenants who are interested in viewing a property that allows them to immediately schedule an appointment. And, they go see the property right away, not whenever the property management company is able to get back to them.
- Online application process. It’s so much more convenient to type in their information to fill in an application for a property.
- Multiple online rental payment options. Most tenants who use banks don’t like being forced to go to our office every month to pay rent. They would much rather log onto their banking and pay it online.
- A database that keeps all of the financial and any other information about your property.
- An owners portal that allows owners 24/7 access to check the financial status of your account.
#4 – Taking too long to lease properties
When you have a vacant property, it should be a race to get it ready to rent. That doesn’t mean do a sloppy job, it means to get it done quickly because every that it sits vacant it costs the owner money. Your property management company neeeds to have a tested system to obtain qualified tenants to lease them. If the property is ready to rent, it’s properly advertised, and properly priced, it should take no more than 30 days to lease. Ready to rent means that the make ready is 100% done, including deal cleaning.
#5 – When The Property Management Company Doesn’t Specialize in Property Management
Some real estate offices offer property management services. The problem is when you don’t focus on it, you usually don’t do it well. There is a big difference between listing homes to sell or showing homes to first time home buyers and property management.
Most real estate offices that offer property management as a service don’t want to miss out on the extra income. The truth is that they do a much better job selling properties. They would be better off in sticking to what they know.
#6 – Not Doing Periodic Inspections
Some tenants take great care of properties, some do not.
If a tenant is tearing up a property, you need to get them out of the property as soon as possible.
The longer they are in the unit, the more it’s going to cost you when they move and you have to do the make ready.
That’s why it’s important to do a periodic inspection of the property.
We recommend within the first 6 months of when a tenant first moves into the property.
And after that, at least once each year.
There are some basic maintenance items that should also be tied to this inspection.
#7 – Overspending on Make Readies
Some property management companies treat make readies as a big profit center.
That’s a mistake.
Make ready costs must always be minimized.
We break down make readies into ones that one maintenance tech can finish in one day, and bigger jobs that are going to take more than one day to handle.
We have our maintenance technicians handle the ones that can be done in under one day.
Based on our experience, it’s much cheaper to get a bid on the bigger jobs.
And on $10,000 plus jobs, it makes sense to get multiple bids.
#8 – Overcharging for Maintenance
Some property management companies charge between $50 and $80 per hour for normal maintenance. They see maintenance as a huge profit center. However, it’s too much when you consider they are paying most of these guys $15 per hour. It’s just not fair to the property owners.
You property manager should always keep you in the loop on maintenance and repairs. We recommend that the property manager should consult you if they expect to spend more than $200 for a repair to get your authorization before doing the work.
#9 – Not Offering Properties on Section 8 When Appropriate
Some properties are much, much easier to rent if they can be offered on Section 8. Not all property management companies offer Section 8. That could be hurting your bottom line.
#10 – Not Putting a foot down when Appropriate
There are times when a property manager needs to put down their foot. For example, if the tenant hasn’t paid rent. Or, if they are breaking their lease in some other way. That’s the time when you have to be strict.
For more information about OKC Home Realty Services, LLC, an OKC property management company.