Mistakes are inevitable, but when it comes to the way you manage your rental property, you want to avoid them whenever possible. Most missteps are easy to correct. But what about the big mistakes that can potentially land you in legal trouble or impact what you earn on your investment property?
Avoiding mistakes has to be a big part of your investment plan. Buying the wrong property can leave you in a huge deficit. Placing the wrong tenant can lead you to court. There are other mistakes that are easy to make, like deferring maintenance and avoiding inspections. You could be late in returning your tenant’s security deposit.
One of the benefits to hiring a professional Nashville property management company is that you’re protected from many of the common mistakes that rental property owners tend to make. You can benefit from the experience and systems that come with professional management.
As property managers and experienced investors, we’ve already made those mistakes, and we’ve learned from them. We have processes in place that will protect you from the most common errors we see.
In today’s blog, we’re looking at some of those common mistakes, and we’re offering a gentle warning against them. We’ll also share some tips on how to avoid making them yourself.
Before You Buy: Investment Mistakes Nashville Real Estate Investors Make
You have to buy the right property.
One mistake we hate to see is when investors jump right into the market without understanding it. That usually results in some pretty big investment mistakes, which are hard to recover from. Take the time to understand the basics of investing and the local Nashville real estate and rental market. You need to know how to determine fair market value and you need to estimate accurate rental projections. You need to know the cost of ownership and which neighborhoods are the best for rental properties.
It’s also a big mistake to think you can get rich quickly with real estate. This is a long term investment strategy, and it’s important to be prepared. This is not the stock market and you cannot get in and get out of real estate investing on a whim. It takes time. Real estate investments are not liquid.
An investment plan is crucial. Understand what you want and why you’re investing in real estate. By establishing and following investment goals, you’ll make good decisions.
Deferred and Unreported Maintenance
Deferred maintenance describes any repairs that you put off. Maybe it’s because you don’t want to spend the money right now or perhaps it’s just that you cannot give that particular issue any attention at the moment. Unreported maintenance is when your tenants do not immediately report that something is wrong at your rental property.
Both of these situations are mistakes which can create problems and increase your expenses.
If you put off repairs or you don’t hear about a leaking sink for a few months, the problem you’re called upon to fix will ultimately be more expensive and complicated thanks to the passage of time. Your property will deteriorate faster and you may threaten its value.
Here is how we help owner avoid deferred and unreported maintenance mistakes:
- We explain to tenants the importance of reporting repair needs right away. Help your tenants to understand that everything should be documented and reported, even if it’s small. Maintaining your rental home is a partnership.
- We conduct thorough, well-documented inspections during the move-in, move-out, and at least once during the tenancy.
- We invest in preventative maintenance. Put together a preventative maintenance plan so you can have all of your major systems and functions inspected and serviced. Have the heating and cooling system inspected and serviced annually. Get the roof and the gutters cleaned annually. Hire a pest control service to do routine treatments.
Responsive maintenance can help you avoid the mistake of deferred maintenance. Preventative work can keep costs down.
Placing Unqualified Nashville Tenants
Placing the wrong tenants is a mistake that you’re stuck with for the term of the lease. Unless you’re required to evict them, which is time consuming and sometimes expensive.
Good tenants pay rent on time, take care of your property, and contribute to a successful and stress-free rental experience. You don’t want to chase down late rent, pay for lingering damage and deferred maintenance, or find yourself in a very long line at the courthouse trying to evict your resident.
Tenant screening is one of the most important things you’ll do as a landlord. It’s a mistake to skip over it or run a basic credit check and feel like you’re done.
- Don’t trust your gut.
- Don’t choose a tenant arbitrarily or because you “like” them.
Instead, establish standard rental criteria and document your process. Check national eviction and criminal databases, look at credit and financial stability, and verify income and employment. Check rental references.
Don’t avoid rigorous tenant screening.
Surround Yourself with Professionals
It’s a huge mistake to try to do everything yourself.
Please don’t make that mistake.
Put together a strong team of partners and mentors. Work with a good CPA or financial planner. Always have a good broker or agent as well. Who you surround yourself with matters a great deal. Do not invest in a bubble all on your own.
Your property management partner is especially important. Don’t wait until you’ve already invested in a property to consult with a management company. We will lease, manage, and maintain your property, but we can also add a lot of value when you’re looking for the right investment. A good property management partner can help you understand how much rent you’re likely to collect and what kind of repairs will be needed to get the property ready for the market.
Let’s avoid all the mistakes. Contact us at TCS Management, and we’ll help you have a better investment experience.
TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, Nashville, Tennessee and the surrounding areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.