Professional property management is like your insurance policy. You pay your landlord insurance policy faithfully every year, knowing you’re covered. When you consider the added value you receive from professional management of your property in addition to this policy, the real value you receive is a bargain for the price!
When you manage your own investment property, it’s essential to consider the risks. Whether you’re an experienced investor or a new one, no property comes without risks.
The three greatest risks you incur from having an investment property are county and city compliance, improper lease documents, and finally—as well as the costliest—a bad tenant.
There are many reasons to consider professional property management to reduce your risk when investing in something as large as a property. One of them is the incorporation of software systems to manage your property with ease.
This includes management of all the data related to tracking things like mechanical equipment, HOA rules and regulations, insurance compliance, pet compliance, and your utilities during turnovers.
Highlighted below are some additional services that’ll benefit you when taking advantage of a property management service for your investment:
Accounting reports for your income and expenses to use for tax purposes.
A pool of verified and vetted contractors with negotiated pricing.
Local resources to handle a multitude of problems.
Experience to communicate with you and the tenant to avoid problems.
Dedicated systems to help mitigate risk and maintain your property efficiently.
Property inspections which identify potential risks of the property including those in regards to health and safety.
Swift and timely processes.
Now, let’s discuss these three pitfalls in a little more detail so you can better understand your risk and take the necessary steps to get your property professionally managed.
County and City Compliance
The first pitfall we mentioned is proper compliance with county fair housing and regulatory rules and regulations. Ensuring that you comply with these standards and rules can often be a complicated task, which can put an owner into an expensive and time consuming problem-solving process.
Improper Lease Documentation
The second biggest pitfall is improper lease documentation. You’ve heard it said that getting your agreement in writing is everything—and we couldn’t agree more.
However, we’ve seen many leases obtained off of the Internet which don't comply with state coding regulations nor do they provide the needed protection for the owner.
These documents are not only incorrect but dangerous for your investment—in combination with a bad tenant and a bad lease, it can be a challenge to defend yourself in court should a problem arise.
Getting a Bad Tenant
The final and biggest pitfall for an owner managing their own property is a bad tenant. Often, tenants are not properly screened to include criminal, credit, eviction, and the ability to make payments based on many financial factors which are crucial to a successful approval process.
We are often contacted by landlords with a defaulting tenant to discover their lease doesn’t even comply with the correct code nor was the tenant properly screened. The monies lost in a situation like this could have covered property management fees for two to three years let alone the lost revenue and anxiety of an eviction.
As you can see, the idea of an investment property can quickly turn into a disaster if your property isn’t professionally managed. Even experienced property investors can make mistakes with leasing paperwork, proper tenant screening, and complying with city and county codes.
In order to ensure your investment property stays exactly that—an investment—you need seasoned professionals who miss no detail when getting you the perfect property, airtight paperwork to protect you in court, and the best tenants who’ll pay their rent and take care of your place.
Interested in finding out more about professional property management to minimize your investment risk? Find out more here.