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Avoiding Major Mistakes in Property Management

avoiding mistakes in property management

Property management is a challenging job and can be hectic at times. There is ongoing administrative work to be managed emails and phone calls have to be answered, and various marketing strategies have to be implemented to make sure the vacancy rate stays to its minimum. In such a frenetic schedule, chances of committing certain sizeable mistakes are high and they can prove costly. Here are some of the major mistakes that are quite common in this industry, and they must be avoided.

Avoiding Routine Maintenance

When property management is trying to keep costs to the minimum, it becomes quite tempting to ignore minor maintenance issues, such as leaking faucet or servicing of a water heater and so on. However, this is a major mistake, since a small maintenance issue can quickly turn into a major repair where you will have to spend more money on something because of your dereliction. For instance, a leaking faucet that is not attended to, can soon give way, and cause flooding in the unit, which is so much more expensive to set right. Hence, it is better to be proactive and address maintenance issues right away, even if they seem minor.

 

Unwilling to Increase the Rent

Inflation is the bitter reality, and rising costs affects everybody. However, property management cannot ignore raising the rent, just because of fear of increase in the vacancy rate. It is imperative to maintain a decent return on investment, and raising the rent is inevitable at some stage. However, the new rate should be comparable to the rent charged by other similar properties in the area. Secondly, when you plan to increase the rent, provide sufficient notice to tenants.

Not Implementing Terms and Conditions of the Lease

It is quite difficult for property management to maintain excellent relationships with tenants and at the same time enforce all the terms of the lease agreement. Most property managers tend to take the easier route of being the "nice guy", and overlook things that are in violation of the lease. Such an attitude can land property management in major trouble and legal issues that can work out quite expensive.

For instance, not charging penalty fees for late rent or allowing pets when it is violating the lease agreement. The best approach is to maintain cordial and friendly relationship with tenants, but being firm when the situations demands it, and keeping to the terms of the lease at all times.

Ignoring Important Property Expenses

Property management usually has to walk a tight rope by managing expenses, and keeping costs to a certain percentage of the rent charged. This often leads to cutting corners when the budget becomes tight or certain expenses have gone beyond the expected amount. However, certain expenses such as insurance and taxes are paramount, and a property manager cannot afford to ignore them. If the taxes are not paid in time, it will result in not only penalties, but also various legal issues.

The same goes for homeowner's insurance as well. It will be frustrating to know (and possibly a game changer) that insurance was not in force or in effect after the fire department just finished putting a fire out in the complex.    

Increasing Returns with Effective Property Management in the Present Economy

increasing returns in present economy with property management

Property management is a challenging task, especially when cost of living and inflation is on the rise. For a property manager it becomes difficult to liaison between the property owner who wants better returns and the tenants who are looking for lower rents. It is tight balancing act, where rental rates are to be kept conducive for keeping the vacancy rate down and yet manage a good return for the property owner.

Suitable Information Accumulation

The only way for managing a property optimally is to increase revenues and decrease costs. There is salient scope for keeping check on costs with clever maintenance and repair management, but usually property managers find limited scope for increasing revenues due to prevailing economic conditions. However, there are ways for doing this as well, by collecting proper data and evaluating the exact impact the economy is having on rentals.

The usual route for increasing revenue is to finding new prospects; improve marketing of the property, and decreasing the vacancy rate. While occupancy rate plays a major role in improving revenue, it is necessary to understand what an optimal percentage should be for occupancy. Having full occupancy is indeed ideal, but 95% occupancy rate would be more realistic target to aspire. Experts believe that if vacancy rate is more than 5%, then there is something wrong with the marketing or promoting of the property. However, experts also believe that if the occupancy rate is over 95% then the rental rates for the property could be too low for that specific area.

Most successful property managers follow the guideline of having the rental high enough so that the property is comparable in the top 10% available units in the area. This would be an appropriate guideline to follow for several reasons. One obvious reason is that if the property is not classified in the best 10% of the available rental units in the area, then there is something seriously wrong with the condition of the property, and only better maintenance procedures can fix such an issue.

However, most property managers make the mistake of lowering costs by forgoing required maintenance and not implementing inexpensive improvements. Such tactics might decrease costs for some time, but it proves much expensive in the end, as it will take much longer to fill vacancies.

Filling Spaces

When the property is kept in top-notch condition, it makes it conducive to retain existing tenants and to attract new ones, as well. Secondly, however, and more importantly, it becomes much easier to raise the rent when the lease expires, and tenants will be much less likely to seek other accommodation if the rise in rent is reasonable. Property management need not always look at raising the rent with trepidation, as it improves the property value, and property owners will appreciate such a strategy.

Lower Class of Tenants

However, the percentage rise in rent has to be calculated carefully, taking into account rentals of other top properties in the area and the prevailing market conditions. Too much, and the occupancy rate might dip below 95%. On the other hand if the rent is not increased, the occupancy might be noteworthy, but the value and reputation of the property might take a hit, which is not desirable. 

Evicting Tenants – Overview of Rules

Evicting tenants and rules for

Evicting tenants can become a messy business, if the right set of rules are not followed. The first step that a landlord and Gastonia property management firm has to take is to legally terminate the tenancy. Only after legally terminating the tenancy will you be able to begin the process of eviction.

How to legally terminate a tenancy?

Different states have different laws when it comes to ending a tenancy. In general, it requires giving the tenant written notice on the basis of the specifications laid out by the termination statute in your state. Filing a lawsuit to evict a tenant is the last resort that must be taken only after the tenant has ignored the tenancy termination notice. For instance, after sending the tenant the tenancy termination notice, if the tenant does not move out in time, you may file for eviction.

In case, the property management firm or landlord were trying to change a particular behavior displayed by the tenant (not paying bills on time or keeping a pet against the express wishes of the landlord), and the tenant fails to reform, an eviction lawsuit may be filed.

Primary Types of Termination Notices

There are two basic categories of termination notices – those that are sent with cause and those that are without cause.

v Termination with Cause: Termination notices that are sent by landlords owing to the tenant’s misbehavior are deemed notices with cause. Pay rent or quit, correct/cure the problem or quit, and unconditional quit (in cases where the tenants have repeatedly violated rental agreement clauses, paid rent late or severely damaged the property) are basic types of ‘Termination with Cause’ notices. Gastonia property management may also choose to serve an Unconditional Quit Termination if the tenants are found to be engaging in illegal activities like drug dealing in the rental home/premises.

v Termination without Cause: A ‘Notice to Vacate’ may be sent by the landlord or Gastonia property management even when the tenant has not done anything wrong. Such a notice would offer the tenant a 30 or 60-day period in which to vacate the home. However, these notices may only be used in the case of monthly tenancies. Even so, most tenant-friendly states and rent control cities do not allow such a notice without a reasonable cause.

Even after receiving a legitimate notice if tenants fail to leave or fix the problem, landlords and Gastonia property management can begin an eviction lawsuit, also known as unlawful detainer (UD) lawsuit.

Satisfying a Wider Range of Tenants in Property Management

Satisfying tenants

One of the best strategies in improving occupancy rate and retaining tenants is catering to specific needs of certain group of tenants. Since Millennials and Baby Boomers are the two major groups that make up most tenant pools, it makes more sense to focus on satisfying the requirements of these categories. However, keeping both these groups happy at the same time is a challenging task for property management, since their requirements are usually seen as diverse.

While marketing a property it therefore becomes important to cast a wider net and not compartmentalize the brand image. Rather than finding dissimilarities between the two groups, it is better to focus on similarities and build a brand image that does not stereotype the property that caters to only one of the groups. However, it is quite a challenging task to satisfy both categories equally. It may not be practical to provide different options to the two groups individually, but property management can present options for customization that can satisfy certain important individual requirements.

Split Differences

For instance, if one takes amenity requirements of the two groups, they are mostly the same, but there are differences in how they will be used. Both groups will be happy having multipurpose spaces and clubrooms for social activity. However, the Millennials will be more interested in attending social events, while the Boomers will mostly be hosting them.

Another challenge for property management in satisfying the two groups is having the optimum mix of units. Baby Boomers look for more space, and hence units with larger bedroom and living space will be more appealing for them. Millennials on the other hand are satisfied with smaller units, but will be particular about available storage options.

However, satisfying the Baby Boomer group is itself a challenge, as many of them have diverse preferences. This is due to many reasons, since the group could include people who have taken early retirement or people who have become parents in the age group of 55 to 58 years. On the other hand, preferences of Millennias will be more or less the same, and is much easier to satisfy as a separate category.  

The Internet is Key

Technology seems to be playing a key role, as an element that can satisfy both groups to quite an extent. Millennials are looking for environments that match their lifestyles, which are now mainly driven by technology and online social networks. On the other hand, Baby Boomers too are also becoming increasingly tech savvy, which means property management has to focus on online marketing for attracting prospects and also provide better broadband and faster Internet speeds in the units.

Even though both groups will want to inspect the unit personally, the property website has a huge impact on marketing. Studies have shown that more than 40% prospects of both groups will not visit the property if they find the website to be of poor quality or unwelcoming. Therefore, it is extremely important to make a fantastic online impression and have excellent imagery and content on the website for attracting new clients from both groups. 

Landlord Maintenance Responsibilities and Consequences of Failure

Landlord Maintenance and responsibilities

For Gastonia property management services or a landlord, it is considered a best practice to repair any issues in rental units at the earliest. This will help you avoid complaints from tenants. Problems that are serious like plumbing issues or a breakdown in the heating system need to be dealt with immediately, within 24 hours at the most. Landlords and Gastonia property management firms are entrusted with certain maintenance responsibilities that need to be fulfilled.

Responsibilities

State and local laws specify exactly which services need to be provided and maintained in a rental unit to ensure that it meets basic habitability standards. These basic requirements are the provision and maintenance of:

  1. Adequate waterproofing
  2. Heating
  3. Water and electric supply
  4. Sound structure
  5. Clean and sanitary premises

Other than these basic requirements, landlords may also be held responsible for ensuring that the minimum requirements for lighting, electrical wiring and ventilation that are set by housing codes are also met. Some additional requirements put forward by housing codes may include:

ü  Installation of smoke detectors

ü  Basic security measures like lock and key

ü  Health and fire safety requirements

If you are unsure about the exact codes that you need to follow, it is a wise and suitable idea to approach the health or fire department to get the right information on requirements and violations.

Consequences of Violating Maintenance Responsibilities

When a tenant faces a maintenance issue in a rental unit, it is within his/her right to ask his/her landlord or Gastonia property management services to conduct required maintenance. When such necessary repairs are left undone, tenants have been given some rights by the state.

Rent Hold Out

Tenants could refrain from paying the full rent amount until the repair work is done. Depending on the laws of the state, they may be required to place the amount in an escrow account. They may also choose to pay less rent, or get a professional to repair the problem area and deduct the payment amount from the rent. By calling the local building inspector, a tenant can force the hand because the inspector can and most likely will order the landlord to make repairs immediately.

Litigious Considerations

More severe options include moving out of the house, irrespective of the lease status and suing the landlord for refund of rent and/or emotional distress caused by the landlord’s inability to take action and the substandard living conditions.

A fantastic rule of thumb for the landlord and Gastonia property management services is that major repairs should be taken care of in 24 hours, and minor repairs in 48 hours at the most.

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