10/01/2019
The possession of an investment property is not a "fictional" activity, far from it. Being a good landlord can take a lot of work and making mistakes on the way can cost you a small fortune.
1. Selecting a High Vacancy Zone
So many investors do that. They target an area with reputedly high returns or very low prices, but they discover that a major employer change is upsetting their tenant market or that the demand for tenants in the area is low initially. No investment is viable when months of strike without rent have taken place.
2. Forgetting the tenant population of the region
They can be called "low-socio-economic zones", "slum huts", "central-wage cities" … the list goes on. If the investor is unaware of the character of the area, the difficulties associated with disadvantaged socio-economic areas or the increased risk of intentional damage or arrears, he may experience an unpleasant shock when problems arise.
It's always a good idea to visit the place you are interested in and carefully interview the property managers about what you need to prepare, avoid and protect yourself.
Tenants who choose a property based on affordability rather than desirability are more likely not to pay rent due to financial hardship. And regions with high crime rates are just that – they are more likely to be affected by crime.
3. Choosing a cheap property manager
Investors can spend hours buying clothes and not a minute to the person who will manage their most valuable asset.
The selection of a good property manager should begin with an in-depth candidate selection process, a well thought-out interview and a host of relevant questions. If the decision is based on costs, things could go wrong.
The decision should be made on the basis of the best qualified person for the position. It is clear that value counts, but if their price is above parity and annoy you, discuss it with respect. Most property managers who feel they are dealing with a large owner will be open to the equivalence (or approaching) of a decent competitive fee.
4. To be a collateral with maintenance demands
Tenants hate being abused. There is no surer way to upset a good tenant than to refuse a reasonable maintenance request. A new lease each year will result in faster expenses than a replacement radiator or oven. Worse, any problem that could worsen without immediate attention could be much more expensive in the long run.
5. Claiming a very high rent
In a tight rental market, most greedy homeowners will eventually receive a tenant application. The problem, however, is that tenants who are rejected by reasonable homeowners will likely be forced to apply for vacant properties that are more easily achievable – and this often means that a bad tenant will pay what? it takes to secure a property at a reasonable price. high rental price. Beware of greedy homeowners: no rent is worth it as the renter comes from hell.
6. Ignore the good advice they paid
A good, experienced real estate administrator is responsible for looking after an investor's assets. They can advise the landlord to reject a request or have clever suggestions to improve the property's attractiveness in order to obtain higher rent or superior tenant quality. Ignoring their advice makes no sense if they have been carefully selected, despite the initial outlay or the extended vacation period.
[19459007 7. To be too generous with good tenants
This is what I experienced personally when my husband was too kind to a tenant he occupied at home well before our meeting. At the time of our wedding, her tenant was well settled, her rent being about 30% less than the market. Her attempts to bring her back to parity had stung her, and she quit her job maliciously after feeling like she was too heavy with her rent increase. Tenants expect annual or biannual rent increases and, when they stay at the same rent for more than two years (assuming the market continues to move), this can only be thwarted if Increase is too marked. Our civil administrator also worries about significant rent increases, so homeowners may be at risk if the tenant decides to bring them to court.
Self-managers who think they can represent themselves in court are making fun of themselves. Pay the small commission and stop being a packer
8. Decide to go it alone
Cutting out your property manager without skills or experience is a nightmare unless the ideal tenant is a guarantee.
A good property manager is paid to handle more tasks than just paying rent. They guide homeowners, make decisions about their tenants and are the landlord's best friends when a serious rental problem arises. The problems they face range from maintenance to natural disasters, from conflicts between insurers, the problems of homeowners' societies, the loss of tenant jobs or changing circumstances, death / murder / theft. tenant suicide. Self-managers who think they can represent themselves in court are making fun of themselves. Pay the small commission and stop being a tensor. Add value to your time and do what you do best: let property management experts. If your current real estate administrator is not an expert, change your manager.
9. Be creative without understanding legal aspects
From illegal apartments to council-free rooming houses, to Airbnbs stores in which residents are sensitive to short-term tenants, to crisis lodging ideas without adequate social support – these are just a few of the creative ideas that homeowners can have. And they can cost them big dollars when voluntary damage is done, the board comes to the door or the price they paid for what they thought was actually a paycheck for a performance which was not legal. Once the property has been purchased and settled, the buyer has a limited (if not void) remedy against the seller. Make it clear that what you buy is actually allowed by law.
10. Be relaxed about re-leasing
It is not a good idea that the fact that the tenant is fantastic is a periodic (or monthly) lease. All homeowners must ensure that they have a fixed-term lease that does not end with a period of low demand, especially in the coldest cities where winter rentals are unfavorable.
The only time a periodic lease is acceptable, that is when the owner plans to issue a notice of departure (for whatever reason) or that the rate of rent increase every six to twelve months remains positive.
All homeowners should ensure that they have a fixed-term lease that does not end with a period of low demand, especially in colder towns where winter rentals are unfavorable
11. To have insufficient insurance
Only when a brick fence poses a security risk or if a tenant commits malicious damage and is unaware that an owner wishes to purchase title insurance or homeowner's insurance. For a relatively small cost, no one has any excuse for leaving this to chance.
Check with your carrier or insurance attorney before settling and never relax if your property manager has neglected to ask you questions about homeowners' insurance . Finally, make sure your building insurance covers all areas of concern and offers the proper coverage. Many stratum policies are obsolete and I often see that construction insurance coverage is totally inadequate for today's reconstruction costs.
12. Failure to Supervise Your Property Administrator and Tenant
If you completely outsource the task and pay no attention to the management of your property and to the satisfaction of the tenant, you risk unpleasant surprises.
Property management is hard work, and not everyone in the role is able, nor able to withstand the pressure. If you have a property manager late, you will not know if "no news, good news" applies or if no news, mismanagement. You have a duty, through your investment, to stay in touch with your real estate administrator and express yourself when problems arise.
13. Have fun with the renter
I remember that my husband gave his cell phone number to a tenant. She has called with every tiny teenager application and complaint, including a diabolical one when her young neighbor is partying. What should have been a police call became our problem at 1am. If you pay a real estate administrator, let him deal with 1 hour problems, if any. They are better equipped and have no allegiance to fear.
14. Regular sending of evaluators
Sending an appraiser to a property to access equity for the next project should not be a problem – unless the tenant feels that the owner is considering selling (or is being pushed by the bank to sell).
It's always a good idea to reassure a tenant when an assessment simply relates to equity. No investor wants that a good tenant asks to leave his position by invoking the false assumption that it will be at an inconvenient time.
15. Expecting a perfect and linear growth
Each city has its own historical capital growth chart, and this chart is never linear. In other words, the growth trajectory never follows a perfectly straight line, showing a growth of X% per year.
We have ups and downs and sometimes static graphics. Those who hyperventilate in slowdowns and bet on the farm during a race are stupid. Real estate is a long-term game and the expected growth of long-term capital growth, based on strong growth drivers, should underpin the decisions of every investor. If an investor is looking for quick returns, he should turn to faster-growing, higher-risk asset classes.
16. Trying to sell with a fixed lease in place
Homeowner buyers will not necessarily hesitate to buy a rented property, but they will certainly take the rental agreement into consideration when comparing with other properties.
Some buyers may be subject to time constraints when moving into their newly purchased property. In this case, the rented property will no longer be an option. Others may simply feel emotionally enthusiastic (as often do first-time home buyers) and prefer vacant properties comparable to yours.
And those who are completely uncomfortable with the idea of ​​signing a lease will completely prevent themselves from withdrawing from the race.
If you completely outsource the task and do not pay attention to the management of your property … you risk unpleasant surprises
Selling a property with the option of vacant possession or lease is a better option, but only if the tenant assists in the sale process. When I consider all the difficult negotiations that I have tackled, the lowest prices have often been met when an annoying tenant has resisted private inspections and misrepresented the property. Never take tenant support for granted: a gift card, subsidized rent and honest conversation are the best ingredients for a positive sales experience.
17. Purchase of the house next to …
Or on the road, or in your subdivided yard. Who really wants to live next to / from the road / next to his tenant? Enough said.
18 Assuming you're stuck with a bad property manager
This error is common. We often tell people, "If you are not happy, change". Such a large number of homeowners mistakenly assume that their lease binds them to their property manager, whereas in fact it only binds them to their renter.
The critical commitment period to which an owner is liable to his property manager relates only to the period of the lease. For example, if the exclusive tenancy period is 60 days, the landlord is required to stay with his manager for 60 days or until the property is rented (whichever is first).
No landlord should feel stuck if the service is of poor quality after a tenant is set up, although we always recommend an honest conversation about any issues that may arise before the property manager be declared "surpassed".
Homeowners who give their current property manager a reasonable opportunity to solve problems and obtain limited solutions should breathe a sigh of relief if the confrontation makes them anxious. The new manager will coordinate the dissolution on his behalf by a simple request for preparation and collection of the file within a period of about a day.
Cate Bakos
is the agent of a Victorian Authorized Buyer
and Qualified Real Estate Investment Advisor,
works proudly with his team
of three women in west-central Melbourne
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