Costly Mistakes New Property Mgmt Companies Make & How to Avoid Them

As a property management company, it is your duty to manage rental property issues for your property owners. And, as a new property management company, you will quickly learn that a great deal falls under the umbrella of “managing rental property issues.”

Gaining the skills and experience to establish yourself in your area as a reliable property management company takes time. But, as the old saying goes, if you “work smarter, not harder,” you can learn from the mistakes of others, rather than making them yourself.

Today, we will look at some of the worst mistakes you can make as a new property management company. In addition, we will provide helpful ways to avoid those very mistakes so that you can begin to build a successful business that property owners can trust.

1. Failing to be Responsive and Openly Communicate

Underestimating the importance of efficiency and open communication when it comes to the properties you manage is a serious mistake. After all, property owners hired you to handle everything related to the rental property, and tenant communication is a big part of that.

Here are some of the consequences your property management company will experience if you do not respond to tenant issues quickly or maintain an accessible line of communication:

• Tenant dissatisfaction with the ability to contact you
• Liability or legal issues resulting from mishandled maintenance or repair requests
• Increased turnover rates

In order to keep your property owners as customers, make sure tenants have multiple ways to get in touch with you if they have a maintenance or repair request, a complaint, or even a general inquiry. In addition, consider having an around-the-clock maintenance crew to address any emergencies, day or night.

2. Not Hiring Knowledgeable and Experienced Staff

From the office administrators to the property managers themselves, you should always employ people that know the rental property business inside and out. You never want your property owners or tenants to encounter someone working for you that is clueless as to how to handle even a simple inquiry.

Here are some of the key things your team should know when dealing with property owners and tenants:

• Rental property laws at the federal, state, and local levels
• How to work with diverse groups of people
• The importance of quality customer service
• How to screen tenants
• What constitutes as discrimination
• How to draft lease agreements
• The rules and regulations behind property inspections
• How to properly collect rent and security deposits
• What it takes to market vacant properties in the current market
• How to properly evict a bad tenant
• And much more

The more you and your team know, the more established your company will become. And, having a strong team from the start will help your business rise to success more quickly.

3. Not Using Reliable Contractors

Saving money is always important to your business’s bottom line. However, not using reliable and trustworthy contractors to complete maintenance work on your customers’ properties can end up costing you a lot more money in the end. In addition, it is likely you will lose the business of many property owners when they find out the type of people you are hiring to do work on their investment properties.

Stick with licensed and insured contractors, and aim to use the same ones consistently. This will allow you to build better working relationships with the contracted companies, net you better deals in exchange for consistent work, and give both you and your clients the peace of mind that the properties are being worked on safely and properly.

4. Not Thoroughly Screening Potential Tenants

Many property management companies boast super-quick tenant placement. And, while vacancies are not something to be proud of, neither is placing bad tenants in your client’s rental property.

Having a rigorous tenant screening process in place that applies to every prospective tenant is one of the best ways to ensure proper tenant placement.

Not only will proper tenant screening help prevent tenant discrimination, it will also enable you to place high quality tenants in your client’s property. In the end, this equates to tenants that pay on time, do not damage property or cause problems, and are likely to become long-term renters.

5. Not Knowing the Market

As a property management company, you have to understand the current rental property market, both locally and nationwide. You need to understand what rental rates look like for similar properties, what amenities are trending, and what type of people to advertise specific rental properties to.

In addition, you should be very familiar with the local area, so that you can convince potential tenants that this is the place to be.

You should also know the crime statistics, be able to provide information about local schools, know nearby shopping and restaurants, and even be able to recommend some of the best entertainment hot spots.

In the end, marketing your client’s property correctly is going to fill it quickly, and with the right tenants.

Though there are many other mistakes new property management companies can make, these five are some of the very worst. If you slip and make any of these mistakes, expect there to be some serious consequences. Your business may be able to survive such mistakes, but not always, and certainly not multiple times.

Seen far too often, these top five mistakes can be avoided with extra care and attention from you. Though a challenging road filled with difficult decision and lessons, the road to property management success is certainly one worth traveling.