Purchasing an investment property and securing tenants does not mean that one has achieved all that is required when attaining investments goals. Effectively management of the property and avoiding all regular financial mistakes is as significant as it is in all other investments. According to Carolyn Parella who is an insurance executive in an insurance firm many landlords fall into financial traps and the ways in which they can be avoided which include;
1. Too high or too low rent
Carrying a thorough research is required to help the landlord to determine the best rental price. This should be done before purchasing an investment property. When high prices are set, very few prospective tenants are interested leaving the property empty for a long period. Setting the prices too low, attracts unbefitting may limit the income earned from the property hence placing the landlord under financial pressure.
Landlords are advised to get proper rental guidelines from property listings with similar properties in the area. Property managers are able to advice on the appropriate rent.
2. Failure to monitor arrears
The dates that tenants rental payments ought to be paid should be set with strict deadlines. This ensures that tenants do not have arrears as this can be very costly for the landlord and could exhaust their finances. How a landlord acts when a tenant falls into arrears depends on the tenancy laws. Some introduce a penalty while others issue a termination notice requesting vacation. The arrears should be monitored on regular basis and ensuring that the tenants are issued with appropriate notices promptly as this would help in alleviating any financial loss.
3. Attempting to self-manage a property
Landlords who attempt to manage their properties themselves get a lot of problems especially if proper resources and time are not committed. People are sometimes tempted to save rental income by managing the rental property but if this can be outweighed by appointing another party to manage the property.
Properties managers have proper systems to conduct inspections on regular basis, find, and weed out future tenants, identify maintenance issues. They have access to records with tenant lists and a history of rent payment defaulting cases property damages and evictions. These managers are well informed of the relevant procedures and legislation’s that help in solving disputes with the tenants.
4. Inattention to maintenance
It is the responsibility of the landlord to act or authorize his property manager on any maintenance issue that he is alerted on. Maintenance issues that are not quickly fixed may make the landlord lawfully liable for any damages caused to the tenants. They should also ensure that correct standards are maintained and that maintenances done are completed.
5. Ineffective insurance
There are many risks associated with owning a rental property and a landlord should acquire an insurance cover that should protect him from these risks. His insurance can cover property owner from accidental damage, loss of rental income due to tenant absconding or property damage, legal liability for incidences that lead to body injury or death.