23 Biggest Mistakes Landlords Make By Fast Forward Property Management Many landlords tend to make the same common

mistakes. Our management team of seasoned property managers regularly does consulting with property owners to help them run their businesses more profitably and efficiently. We see the same mistakes made on a regular basis by both new and experienced owners. By avoiding these common pitfalls we have helped people save many thousands of dollars and avoid many unpleasant situations that can surface in the property management business. Take the Quiz - As you read the list, give yourself one point for each area you are doing right and see how well you score at the end of this list. 1. Not Doing Background Checks And Verification Of Earnings By running background screenings you can easily see if someone has a history of criminal activity as well as see their history of paying their bills. Background checks are easy to run through local apartment associations or through a variety of web based programs. It is simple to have prospects fill out the application form that the screening service provides, and you will usually have a report within minutes. These reports typically cost between $10 and $40, and the expense can be paid by the applicant. Avoiding tenants that have not paid their rent and other bills in the past will have a greater probability of not missing their payments when they rent from you. Avoid renting to people who abuse drugs or are frequently in and out of jail because they seldom become stable tenants. [AOAs credit and eviction reports are only $10 when you order both together!] 2. Slowly Turning Over Vacancies Yourself To Save Money A significant amount of money can sometimes be saved on labor by doing the construction and maintenance work yourself if you have the right skills. To really save the money to make this worthwhile, the job needs to be completed quickly. Many owners brag about how much money they have saved in preparing a vacant unit to be rented, but the work can take many weeks to complete if they are working another job. For instance taking six weeks to do the work yourself may save labor expenses, but will result in five weeks of lost rent from the unit being vacant. Most professionals can paint a unit and replace flooring in just a few days, and then the unit can be rented. If you save $900 by doing the work yourself, but lose $1,400 in lost rent by the vacancy taking longer to fill, you have actually lost income. Depending on how you look at it, you could have had the labor done for free. Give yourself a point if it takes you less than a week to prepare a vacancy for rental.

3. Overpaying Contractors Contractors can charge whatever they choose for any job. It is always advisable to get multiple bids for a project to ensure you get a fair price. If you want a guaranteed fixed price set in advance for a job, most contractors will have to slightly overbid to account for the possibility of unforeseen expenses. To get the best value with contractors it is best to agree on an hourly rate ahead of time and agree to pay at cost for the materials. Look for these on your final invoice. In not doing itemizing materials and labor, you could potentially be paying your plumber or electrician upwards of $200 per hour. 4. Trying To Save Money By Hiring Unskilled Workers You get what you pay for. Paying someone $15 an hour that takes 10 hours to complete a job costs $150 for the job. Paying an expert $50 per hour that takes two hours to complete the same task costs $100 and the chances are that the quality of work is of a higher caliber. The bottom line comes down to value. 5. Forgetting That The Tenants Are Your Customers Although some tenants can be difficult and demanding, it is important to remember that they are your customers. If you treat your tenants well you will earn their respect and they will be inclined to stay longer and take better care of your property. It can be easy to forget that they are paying you for a service and deserve to be treated well. 6. Deferring Maintenance Maintenance is a significant expense for most property owners. Some have the mentality of If it is not broken, why fix it? Maintenance that is deferred will cost more in the long run, as well as lower your property value. Also rents will tend to be lower in buildings that have obvious areas that need improvement. Many tenants will move if their landlord will not fix things or keep their units up to date. We recommend budgeting and setting aside a percentage of the rents collected to cover both planned and unexpected maintenance expenses. The amount you choose to set aside will depend upon the overall condition and needs of your building. 7. Renting To Family And Friends If you own or manage rental property near where you live, you may be approached by family and friends who are looking for a place to live. Even if you cut them a deal, this scenario usually damages personal relationships. They will often expect you to give them a significant discount because of your personal relationship with them. Any future rent increases will usually cause hard feelings on their part. If they have disputes with neighbors or other residents, they will expect you to take their side. Friends and family expect preferential treatment even if you make it clear that they will be treated like any

other tenant. If you have a friend or relative in need it would be better for you to hand them money every month or buy them groceries rather than becoming their landlord. 8. Believing Every Story And Excuse You Hear We believe in helping people who really need help. People always come up with great excuses for why the rent is late. While many stories are valid, there are some people who take advantage and lie. While most of us were raised to give people the benefit of the doubt, we have to be discerning in this business. It is the honorable thing to show people grace who fall into hard times. We like to work with people to give them a chance, but at the same time be careful not to let people take advantage of us. 9. Not Charging And Enforcing Late Fees For most people, their significant bills charge and enforce late fees. Seldom will a late car payment, credit card payment, or utility bill waive a late fee. Late fees ensure that bills are paid on time. If you do not charge and enforce a late fee, often you will be the one who gets paid last. 10. Lowering Your Rental Criteria To Quickly Fill A Vacancy When a vacancy takes longer than expected to fill, it is tempting to lower your rental criteria of minimum income and credit score. It is usually more profitable in the long run to lower the rent to attract higher quality tenants than it is to lower your minimum rental criteria. 11. Buying Investment Property In The Wrong Areas Buying properties in undesirable areas can create many problems. Vacancies will take longer to fill, while crime and vandalism can send property values plunging. Become familiar with an area before you purchase property. Also be aware of cites with local rent control ordinances that cap rent increases and make evictions much more difficult. 12. Not Inspecting Properties Regularly We regularly hear stories of owners who have had a long term tenant move out where they find extensive damage that could have been easily prevented. It is essential to inspect units so that repairs can be done before further damage is done to your building. Deferred maintenance can often escalate and create more extensive damage if left unrepaired. Some tenants are reluctant to report maintenance issues out of fear that their rent might go up as a result. Finding and repairing a leak before it does structural damage is in everyones best interest. Inspect your units at least once per year if not more often.

13. Paying Too Much For Insurance Shopping your insurance annually can save thousands of dollars each year for many owners. We get multiple bids for property owners and can usually save 20% to 40% on annual premiums. We see wide ranges in premiums for the same amount of coverage between different companies. 14. Not Making Repairs Quickly Few things frustrate tenants more than landlords who do not respond quickly to service requests. People get fed up and move out of places when their landlord does not make prompt repairs. The tenants that do put up with it are usually paying way below market on their rent. 15. Not Buying More Property We regularly consult with many people who regret that they did not buy more property while they had the chance. It is a fine line to make sure you grow your portfolio without over leveraging your financing. Our recommendation is to buy quality buildings that are well located at a good price where you will have a positive cash flow. 16. Buying Property That Is Too Far Away If you manage your own property, it is important that it is in close proximity to you. If you live more than an hour away, it is advisable to hire a property management company. Otherwise it is draining on your time and gas to drive out every time a vacancy or maintenance request arises. 17. Not Staying Current On Rental Laws Rental laws are constantly changing. Legislation is constantly being updated and new laws are constantly being written. In some complex areas such as evictions, not following proper legal procedures can cause months of delays. Not knowing the law inside and out can expose you to excessive liability. 18. Poor Recordkeeping It is important to keep good records for tax and legal reasons. Keep a file of lease documents, background screenings, insurance, financial statements, service requests, walk through inspections, and receipts for repairs and improvements. 19. Allowing Tenants To Do Repairs Themselves While it is common practice to give a tenant some money off of their rent for making a repair, it exposes you to great risk. If someone falls from a ladder or gets injured while hired to do work for you and you do not have workers compensation insurance on them, then you could be held personally responsible for paying for their medical bills and loss of income.

20. Not Appealing Property Taxes The appraisal process is subjective and includes factors such as the income a property produces, comparable sales in the local area, and the cost to replace the structures. These variables change often and your tax bill can be negotiated with county tax assessors, or the board of appeals that resolves differences between owners and assessors. We regularly see 10% to 40% reductions, especially if the market has declined since the time of purchase. 21. Paying Utilities For Your Tenants Many owners pay for their tenants water, electricity, gas, and garbage expenses. If you can make these expenses the responsibility of your tenants you can potentially save over a thousand dollars per year on each unit. People tend to consume more utilities when they are not responsible to pay the bill. From a psychological perspective most tenants would prefer lower rent without these perks than a high rent that is all inclusive. From a marketing perspective you will have a clear advantage if you can keep your advertised rents low as a result of not paying your tenants utilities. One option is to install individual meters, but it is often more cost effective to divide the monthly expenses between the tenants each month. 22. Inadequate Checks And Balances With Site Staff We have consulted with many owners that have caught site staff stealing money from them because of a lack of accountability. There are so many ways that money can be stolen from property owners by site staff. A few examples include stealing quarters out of laundry machines, keeping late fees while reporting them waived, reporting vacancies for a month or two while they are filled with cash paying tenants, buying supplies for themselves at the hardware store with the owners money. Adequate checks and balances to ensure accountability need to be in place. 23. Automatically Going To Court Going to court to settle your disputes should be a last resort. Legal fees are very expensive and most judges tend to favor the tenants. Do all you can to negotiate and settle without going to court. Often it is cheaper to forgive some debt or refund more of a security deposit than it is to go to court and pay legal fees. Use mediation or arbitration if you cannot settle a dispute on your own before going to court. Scoring Give yourself a point for every area you do right in managing your property. 21-23 - Great job! You know your rental business well 18-20 - You manage your property well, but there is room for improvement

14-18 - There are many areas where you are paying too much and exposing yourself to liability Below 14 - You have the potential to make much more money in the rental business This article was written by Fast Forward Property Management. The staff has over 40 years experience in property management. Fast Forward Property Management specializes in managing apartment buildings, HOA, and commercial properties. Fast Forward Property Management can be contacted at 620 E. Washington St, Suite 100, Petaluma, CA 94952 Phone: (707) 766-8100 www.FastForwardPM.com, Email: contact@fastforwardPM.com .