Common Real Estate Management Problems
When you think of property management issues, you probably envision the ones that are always in the spotlight such as lawn-care, or dealing with non-paying tenants. However, property management is a larger animal, so it must be handled like one. Let’s take a look at some common property management problems that you likely have yet to consider.
Emergency Rental Expenses
When you first got into the rental game, you probably planned for the everyday expenses such as utilities and so forth. But did you stop to consider that things break? If your property includes appliances, then you are responsible when they fail to work. Air conditioner units, fridge, stove, etc. These are often unplanned expenses by newer landlords, and overlooked more than not. In addition, there are other major appliances that are important to the functioning of the house or apartment. An example would be the hot water heater or furnace.
Emergency expenses that are not planned for can create problems for investors. If the landlord is unable to financially handle such matters, they can end up with vacancies. Even worse, they can end up being sued by their tenants and forced to perform. Such situations can result in the owner getting behind on mortgage or tax payments, and facing foreclosure.
It’s important to plan for the emergency expense contingencies if you are planning to become a landlord. When these expenses are planned, financial ruin can be avoided.
High Vacancy Rate
No landlord enjoys the prospect of unit vacancies. If the unit is empty, then it’s not making money. If the vacancy rate overcomes the expenses, then financial problems ensue. What is causing these units to remain vacant though? Is it an issue of quality, location, or incentive?
- Quality: The style of the unit is outdated, or there are old appliances. There may be an issue with insects such as ants, roaches, or flies.
- Location: The unit is located in a rough part of town. It may be located next to a business, or train tracks.
- Incentive: The rental policy doesn’t reward on-time payments with a small discount. The tenant can’t pay their rent online.
There are many potential reasons for units that lay vacant, and they need to be hashed out. Of course, some issues are easier than others to handle. For instance, allowing a tenant to pay online is as simple as using a service like PayLease, or setting up a website with the ability to accept credit cards or PayPal. Other issues such as location are not as easy to manage and should be considered before purchasing the property. An apartment next to the train tracks may need to be discounted to reflect that issue.
We’ve seen it many times…Landlords who live far away from the property in question and don’t have a solid management company in place. An absentee landlord can face a difficult time without management. For example, traveling for eviction filing, and then again for eviction proceedings.
When investing in real estate outside of a normal driving distance, having great management staff is the key to your success. In small towns, this may mean that you will work with a small brokers office or even an individual. It’s important to screen your management team just as you would your future tenant.
Often times, we help absentee owners out of a difficult financial situation for these exact issues. Over time, such issues can result in negative cash flow, resulting in foreclosure.
Getting into the business of being a landlord is a big decision. You may be working a full-time job, which makes property management a difficult task. Trying to break free of the 9-5 can be costly if you are unable to set aside the time for lawn maintenance. It can be hard to take a day off of work to go to court for an eviction because of a tenant refusing to pay the rent.
Unless you can manage the time for income property investment, then property management may not be for you. Unfortunately, most people find this out the hard way, and in that case, we are here to help.
Do you have property management issues?
National Cash Offer is ready to tackle whatever property management problems you are having. We will take on investment properties with bad tenants, needing appliance replacement, broken windows, and many other items. Give us a call or fill out the form, and get a fast cash offer in just hours!