Top Risks of Self-Managing Rental Properties
You’ve inherited or invested in a small portfolio of one or two properties in Riverside or San Diego County, California, and are looking forward to receiving the income they can produce. You may even be thinking of increasing your profit margin by dispensing with a property management company. Typically, investors think this is the formula for evaluating a rental property investment: Rental Income – (Mortgage Payment + Expenses) = Profit. Well…that’s part of the formula, not all of it. Before you commit to that strategy, you need to be aware of the risks and costs of self-managing properties. Those considering going down this route in Florida may first want to check out a property management jacksonville company like WaterMarke Management and head to their website to see how they could help you to protect your investments and maximize income. You may actually find that their services are worthwhile after all.
Owning a rental property involves managing standard and emergency maintenance. Are you truly aware of all day-to-day operations involved in keeping a tenant satisfied? Are you prepared to receive maintenance calls on weekends, holidays and after hours? How about what it takes to find a good renter for your property? Good advertising and marketing are some of the keys. You then need to screen potential tenants with background, employment, and credit checks. Here are a few topics expected or required of landlords: rental law enforcement and compliance, tenant turnover, inspections, raising rent, evictions, insurance, and taxes.
You should be able to deal with all kinds of tenants, whether you like them or not. Can you be compassionate and understanding of their issues but also be firm and professional in enforcing rules? If you’re someone who dislikes confrontation or loses your temper quickly, then self-managing your real estate could lose your money or be a source of trouble. This is all even more prevalent if you are going to go down the HMO (Houses in Multiple Occupation) route, as rather than just dealing with one couple or family, you will be dealing with lots of different tenants all under one roof. If you are considering HMO, you might want to search online for “Letting Agent Hull” to find the website of a HMO Letting Agent. Good maintenance and tenant management will significantly improve your bottom line.
Question to Consider: while you may save approximately $100 a month, is it worth your time and energy (emotion) to manage your property?
Running an enterprise in California demands that you navigate a myriad of laws, many of which favor the consumer. And when you decide to manage real estate, you are engaging in a business. Do you know about all the local codes and laws that affect property management? Before you even put out the For Rent sign, you need to consider all of the compliance topics that required when you operate a business, specifically a property management business
Is your property in a rent control area? That fact brings in a whole set of rules that you must follow. What happens if your tenant is either late with the rent or decides not to pay at all? How much can you charge for a late fee? What processes must you go through to evict them? If you misinterpret codes and laws, you run the risk of fines or worse. As you may have often heard, ignorance of the law is not an excuse.
Question to Consider: Are you prepared to stay up to date on vital tenant and landlord compliance laws? These topics can not only have an impact on your revenue, but also may carry legal implications.
Just as you have insurance for your home and auto, your rental properties also require coverage. You can then receive compensation if your structure is damaged or destroyed. You also need adequate coverage for liability, such as if a tenant decides to sue you or a workman is injured while repairing your building. That being said, it is no secret that navigating the complex world of insurance can be overwhelming at times. With this in mind, you might want to reach out to an insurance broker for some insurance advice tailored towards your specific needs. To learn more, head to the BST Insurance Brokers website.
Questions to Consider: Do you know what types of insurance are available and how to pick the right ones without over-insuring? Can you choose a broker that specializes in property management rather than standard homeowners’ insurance? Being inadequately insured may force you to take your rental off the market when something unexpected happens. It could be beneficial to look into an insurance company that specializes in helping insure landlords with the various policies that are necessary for your properties and business.
Wrong Team Choices
It takes many skills to manage property so that it makes a profit successfully. You need to be able to clean the rental between tenants, take care of landscaping, fix a leaky faucet, rewire a faulty connection, or install a new dishwasher. It is unlikely that anyone not in this business will have the expertise for all of these tasks. You will then have to assemble a team of competent vendors that you can depend on, such as plumbers, electricians, contractors, or handymen.
Question to Consider: How will you find qualified vendors if you have no experience with such workers?
A property management company like Rancho Plaza Realty relieves you of all these issues with our many years of expertise and experience. Rancho Plaza Realty’s property managers have made a career of understanding the rental industry. Remember, a good property manager will help with addressing vacancies, maintenance requests, lease enforcement, vendor approval and process, tenant relations, rent collection, compliance with local rules and laws, and much more. After all, your rental property investment is only as good as your tenant and management process. If you want to know how our firm can benefit you, please do not hesitate to contact us at (951) 723-1333.