Owning a rental property isn’t a guaranteed road to riches. Without proper diligence on your part, there is a myriad of things that can kill your profits and sink your investment. That’s why UpkeepMedia.com shares four things that can kill your rental property profits.
1. Failing to act on tenant maintenance requests early.
If you want your rental investment to succeed, you need to up your game when it comes to maintenance requests. Failing to respond quickly enough can put you in jeopardy.
For one, you risk facing a lawsuit. Remember, as a landlord; you are obligated by law to provide your tenant with a safe and habitable rental property. The following are some of the conditions that make a property ‘fit’ for occupancy as per the law. [Civil Code Secs. 1929, 1941].
- Locks that are up to code.
- Railings, stairways, and floors are properly maintained.
- A sufficient number of garbage receptacles.
- Sanitary appurtenances, grounds, and buildings that are free from vermin and debris at the time of lease signing.
- Properly maintained electrical lighting that’s compliant with the applicable law at the time of installation.
- Properly maintained heating facilities that are compliant with the applicable law at the time of installation.
- Water supply that produces both hot and cold water and is compliant with the applicable law.
- Properly maintained gas and plumbing facilities that are compliant with the law at the time of installation.
- Adequate weatherproofing and weather protection of both the roof and all exterior walls.
Secondly, depending on the state you are in, your tenant may decide to withhold paying rent until you resolve the problem. And thirdly, you may end up losing the tenant once the lease expires.
2. Having trouble filling your vacancies fast.
A rental vacancy is every landlord’s worst nightmare. Besides, meaning that there is no income at the end of the month, it also means that you may have to look elsewhere to pay your property expenses like property insurance and taxes.
A vacancy also has the potential to heighten your stress levels. And when your stress levels go up, you may find yourself making some rather emotional decisions. For example, you may lower your screening criteria and accept tenants that you wouldn’t usually take.
Understand that, with a rental property, there are times that you will have to deal with a vacancy. So, the best you can do is prepare for that time well in advance.
3. Poor communication with your tenant.
Rental property management is a service industry. To some extent, its success depends on how well you can communicate with your tenants. If you are slacking in this department, your tenant can take their business elsewhere.
Setting proper expectations at the beginning is extremely important. Essentially, this gives your chances to tell your tenant what exactly it is that you expect from them. This goes a long way in minimizing any confusion or misunderstanding along the way.
Examples of such expectations include:
- Expectations in regards to the lease terms. What is allowed and what is a big no-no, and each party’s responsibilities.
- Expectations in regards to maintenance. For instance, how repair issues should be handled and reported.
- Expectations regarding the rent collection. For example, the amount of rent, when it’s to be paid, how it should be paid, and what are the consequences if it becomes late.
Once you have made your expectations clear, the next thing is to set up a direct communication channel. Ensure that your tenant can easily reach you. Research has found that younger tenants may prefer communicating via text, while older tenants may prefer talking over the phone.
Also, remember to respect your tenant’s privacy. While communication should be clear and open, the last thing it should be is being intrusive. So, avoid calling or messaging your tenant around the clock or “pop-in” to discuss an issue.
Your tenant has the right to quiet enjoyment of their property. This means that you cannot barge in on them as you like. If you do, among other things, they may have a right to break the lease without facing repercussions.
4. Not having your goals and strategy aligned together.
This is also another thing that can kill your rental property profits. Sadly, some people buy properties and don’t even know why they even bought it in the first place.
For example, an investor buys thinking that it is a good deal. But the next thing you know, the property, due to mismanagement, has become a money pit and is consequently driving them further from their goals.
Real estate can be lucrative. But, as with any other investment, it needs proper guidance to succeed. These four things are some of the things that can kill your rental property profits on your journey to earning a passive income stream. If you would like further guidance on how to manage your property or would like more time to yourself for other activities, contact RPM Diversified to get started.
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