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Top Ten
Mistakes Landlords and Property Managers Make
1.
Failing
to properly screen applications for credit, rental references, and income.
Owning residential rentals
means being in business and the day to day operation should be run
professionally. A car dealership would
never allow a customer to drive off in a new $50,000 Mercedes car without first
running a complete credit and background check. Yet I have seen property owners turn over a $100,000 home to a
family that had negative credit and without checking out rental
references. Why gamble in the
management of YOUR business? Proper
screening involves having written standards that are both strict and reasonable
and then following through on checking to see that those standards are
met. Not strict enough, you will end up
with a problem later, too tough will not allow you to rent the property in a
reasonable amount of time. Be certain
to also verify the identity of your applicants prior to releasing possession.
2.
Failing
to have a written agreement covering potential problems and concerns.
If you don’t put it in
writing, who will determine what the rules are? A written rental agreement is your chance to memorialize all your
requirements and to verify that all of your legal requirements have been met. Avoid a dispute later by having all
potential problem areas covered in writing.
3.
Not
enforcing late rent policies.
As soon as you determine
that the rent is past due, you should confront the tenant and find out what the
problem is. It is unthinkable that they
have forgotten to pay, so something is going on and it must be addressed
immediately. As soon as you can, get a
3-day Notice served so that you are in control of the situation. The story may be believable, but you must be
prepared to proceed if the promise to pay is not kept. Finally, don’t hesitate to start an eviction
with an attorney that knows how to do unlawful detainers. This is a specialty that requires professional
expertise to make it go quickly and to your best advantage. Always be prepared to enter into a
stipulation that provides for a payment plan and/or move out plan. This is preferable to the alternative of a
court trial.
4.
Not
inspecting your property on an annual basis and automatically replacing smoke
alarm batteries and filters.
An annual inspection will
protect you and your resident from safety and financial liabilities. Since some residents remove smoke alarm
batteries, this is a chance to verify that the alarm is both working properly
and that it is placed in the proper location.
Also, many residents do not faithfully change their air conditioner and
heater filters. The annual inspection
will reveal this and give you a chance to change the filter before your AC unit
gets damaged. The annual inspection
will also allow you a chance to catch any lease violations and deferred
maintenance. In 1998 it is critical to
verify that all exterior doors and windows have proper locks that are in
compliance with the new “California Lock Law”.
Residents may file for civil damages in instances where locks are not in
compliance.
5.
Entering
a property without proper reason or notice.
Whether you are attempting
to perform an annual inspection, conduct a repair, or arrange for a prospective
purchaser to see the interior of your rental, you must give proper notice to
your resident. California Civil Code
Section 1954 grants the owner the right to enter for nine specific
reasons. This notice must be 24 hours
in advance. In an emergency only, the
landlord may enter without 24 hours notice.
6.
Not
using the advice of an eviction attorney when dealing with a non paying tenant.
It is simply not a good idea
to try to handle an eviction yourself.
There are too many knowledgeable tenants and too many attorneys willing
to give advice to those tenants for you to try an eviction case by
yourself. Several local “eviction”
attorneys work in our area and are priced very reasonably. These attorneys have seen every type of case
and they often negotiate with the resident at trial to reach a stipulated
agreement. This agreement avoids a
court decision and gets you your money or possession on an agreed upon date.
7.
Not
raising rents to reflect the current market value of your investment.
Postponing rent increases is
easy to do, but never wise. You should
collect market rents so that you can maintain your investment. Annual rent increases also remind the tenant
to call you for repairs that might otherwise be ignored. It is best that you get market rent and the
resident have a home in good repair.
Rent increases in the 3-5% range are usually acceptable to both
parties. Be prepared to back up your
increase with market data and possibly some increased service in the form of
repairs or carpet cleaning.
8.
Not
properly preparing your vacancy to eliminate move in problems.
A detailed inspection of the
property should be performed as each tenant vacates. Have all the work completed and then inspect again. Is there anything else that needs doing? Run
all the faucets, flush the toilets, turn on all the appliances and lights. Make sure the front and back yards look
good! It is easier to start a business
relationship when your product is 100% ready than it would be if your product
was only 65% ready. First impressions
are lasting and particularly so in a landlord-tenant relationship.
9.
Not
keeping your rental in good repair.
When your resident calls to
get something repaired you have an opportunity to show them just how good your
customer service is. In addition, it is
in your best interests to keep your investment in the best condition
possible. It may be tempting to try and
save money in this area, but if delaying repairs results in more tenant
turnover, you have cost yourself a lot of money that could have been spent improving
your property.
10. Not properly handling
deposit refunds.
California law allows you 21
days to deliver an itemized list of deductions from the residents deposit. The balance remaining must be sent to the
tenant. It is a good business practice
to document all charges and be prepared to back up all deductions so that if
there is a dispute you are prepared for court.
Small claims court is the place where most deposit refund disputes are
settled. Be sure to have reasonable
policies for deposit deductions and mail your refund before the 21 days are
up. The fine is now up to $600 for
failure to comply.
At HomePointe,
the proper management and maintenance of your residential income property is
our highest priority. First, we are
committed to the safety of
your resident and that of your investment.
Second, we are here to provide
service by knowing the latest management techniques and having the
knowledge to get repairs done quickly, correctly, and at the right price. Finally, we are here to satisfy both you and your resident with proper follow up and
timely reporting.
HomePointe…the place to be
5896 South Land Park Drive, Sacramento, CA 95822
916-429-1205
Fax 916-429-0389
Email: info@HomePointe.com
www.HomePointe.com
