As a property owner and landlord, it is your responsibility to keep the buildings in good, operable condition.
Common Mistake #1: Neglecting, Deferring Maintenance
It has been my experience that deferred maintenance is the No. 1 most common problem.
As a property owner and landlord, it is your responsibility to keep the buildings in good, operable condition. Not only is this necessary for its value, but also for the safety and satisfaction of your tenants. Happy tenants are long-term tenants. One of the most common problems in commercial building ownership is deferring too much of the maintenance, from simple repairs to major structural ones.
This is why an owner (or management company) should be looking at that building every month. Sometimes a problem, when caught immediately, can be a minor expense. But if left too long, it can begin to require major repair. It’s just like having routine medical checkups. You need to catch problems ahead of time and fix them before they get worse. The same rule applies when a tenant reports an issue. A tenant shouldn’t have to request maintenance more than once.
COMMON MISTAKE #2: INCOMPLETE, LACK OF, OR CONFUSING RECORD KEEPING
There are a few ways that owners drop the ball with paperwork. One of the biggest problems is when you don’t get adequate information from tenants. This can be because of simply overlooking it, or just being lazy. Whatever the reason may be, a landlord must properly screen a tenant. How can that be done with little to no information on them? I have seen the lack of proper tenant information and screening lead to legal issues for owners. It could also wind up costing you more than a vacant property would.
Often, a landlord becomes very lax in lease agreements and renewals. I have seen so many lease conflicts that could have been avoided had proper lease documents been used. Additionally, every agreement, eviction, notice or contract should be saved. You don’t know when you may need documents for court.
You should always have separate documents for each agreement. This will make any potential legal issue much easier to sort if it comes to court proceedings.
COMMON MISTAKE #3: NOT BEING CLEAR AND CONSISTENT WITH TENANT RULES
Tenants need to have clear and concise rules and boundaries. I have landlords who hire our services simply because they have become “friends” with the tenants, and now, those boundaries are so blurred they find it difficult to enforce any of the lease terms or rules of their building. All rules and expectations should be in writing and signed by the tenants. If it is not in writing, it does not exist.
COMMON MISTAKE #4: FRIVOLOUS FINANCIAL MISTAKES
One common costly financial mistake with property management is putting security deposits into your account and then using those funds for operating expenses. Technically, that security deposit still belongs to the tenant. The agreement to return the tenant’s security deposit is contingent on them fulfilling their end of the lease agreement. Even the IRS handles rules for deposits the same way at tax time.
That’s one of the reasons you should always place security deposits in a trust account. If you don’t, the deposit becomes part of the operating funds. That means you risk not having the funds available for moving tenants you rightfully owe them to. You might also have to pay taxes and interest on the money for not following accounting rules.
Pay attention to repair estimates; there’s a fine line between going too cheap and saving a penny, only to spend a dime later to fix costly mistakes made by the first vendor. It is imperative that you build a strong relationship with repair vendors who are reputable and will stand by their work.
COMMON MISTAKE #5: NOT HAVING PROFESSIONALS IN PLACE
Property management is a huge responsibility, with many moving parts. If you’re growing overwhelmed from handling the responsibility on your own, it may be time for you to hire a company to do your management. You need time to focus on the investment portion of your business. Hire experts in the business to help you operate smoothly, accumulate wealth, and continue to flourish.
When managing a property, you should use what you’ve learned and be thorough with your processes. The best way to avoid common property management mistakes is to learn from those experienced in the commercial management business. QCBN
By Cooper Anderson, QCBN
Cooper Anderson at Bloom Tree Realty is a realtor, commercial property manager and leasing specialist in the Quad Cities area.
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