Over the years, we have made some observations regarding self-managing landlords, and a few of the mistakes they make that cost them money. Today, we’re providing some landlord advice so that you don’t find yourself losing cash flow or ROI. These are five examples of how you might be leaving money on the table.
Pricing Your Property
In Grand Rapids, rental prices have gone up dramatically over the last few years. If you’re not trying to get your rents up, you aren’t maximizing your property’s potential. When new clients come to us, our monthly management fees are often paid for just by getting the rental rates up to market values. We sometimes see that self-managing landlords aren’t involved enough in the market enough to stay current.
Collecting Rent on Time
Following a systematic procedure when it comes to collections will help you earn more money. Best practices say to be consistent every month. Make sure late fees are charged on the same day every month, the 7 Day Notice goes out on the same day every month, and evictions get filed in court or sent to your attorney on the same day every month. This removes any misunderstandings or grey areas. Tenants who are behind know your procedures and what the outcome will be. This puts them in a better position because there is certainty.
Communicating with Residents
Failing to communicate your expectations to residents at the very beginning of the relationship will cost you money. This starts the first time you meet them at the property, when they are still prospective tenants. Convey to them that you are professional, you run a tight ship, and you have high standards as a landlord. That will filter out problem tenants right there. They’ll realize they can’t get away with anything, and that will make your life easier down the road.
Make sure the property is in great condition at move in. This is subconsciously expressing to the tenant what your standards are for a clean, properly cared-for unit. Don’t blow this opportunity; hand those tenants a good property, and after they move out you can hold them accountable. Take the time to sit down and explain all the lease terms and applications. Talk about what happens if they fail. It will be easier to enforce the lease. You will make more money because you’ll be confident in charging late fees or collecting for damages caused by the tenant. You’ve had this conversation in advance, and the relationship will be set up on the right foot.
Treat Tenants Like Customers
Not treating residents like customers is another good way to lose money. Remember that all money flows from tenants. Happy tenants pay rent and maintain your property. If you cannot provide an appropriate response for maintenance or other concerns, that will cost you money in the long term. Chances are, even a good tenant will react negatively if they don’t receive great customer service.
If you’re not maintaining your property, two things will happen. First, you’ll get a less than favorable tenant. There is a direct correlation between the quality of the tenant and the quality of the property. Second, there’s a correlation between tenant quality and profitability. Your cash flow will struggle if you don’t keep up with maintenance. Your tenants will notice deferred maintenance, and repairs will always be needed.
It’s hard to make money when you don’t have a great property that attracts happy tenants. These savings are unquantifiable, but you will save money if you follow this landlord advice.
Becoming a landlord is easy. Becoming a great landlord who can manage a tenant relationship or maximize a property’s potential is more difficult. It comes from experience, and those lessons are expensive. If you’re a landlord who is feeling overwhelmed, please contact us at Qwest Property Management, and we’d be happy to provide some Grand Rapids property management advice.