FAQ Owners


Common Mistakes for Property Owners

 

Overpaying contractors


Contractors can charge whatever they choose for any job.  Therefore, to ensure a fair price it is always advisable to get multiple bids for a project rather then settling for the first one.  To attain the best value with contractors it is best to agree on an hourly rate ahead of time and to offer to pay for the materials.

 

Trying to save money by hiring unskilled workers

On the other hand, trying to save money by using unskilled workers can backfire.  Genaro Mendoza of Fast Forward Property Management explains, “If you pay someone $15 an hour for a job that takes that person 10 hours to complete, that job cost you $150. If you pay an expert $50 an hour to do that same job, but it only takes him or her 2 hours to complete it, you only spent $100 on work that is most likely of a higher caliber and therefore less likely to require repairs in the near future (which would cost you even more money).”  The bottom line comes down to value, and a higher rate does not automatically equal a higher final bill.

 

Personally performing time consuming repairs to save money

Landlords with the proper skills can save a significant amount of money on labor by completing construction and maintenance work themselves.  In order to save enough money to make this worthwhile, however, the job must be finished quickly.  Many owners brag about how much money they saved in preparing a vacant unit for rental themselves, but not all of them do it swiftly, in which case the money saved in labor expenses would be negated by the weeks of rent lost due to vacancy.  “If you save $900 by doing the work yourself, but lose $1,400 in rent by not filling the vacancy promptly, you have actually lost income,” says Mendoza.  Most professionals can paint a unit and replace flooring in a few days and then the unit can be rented out immediately after with no significant losses due to vacancy.

 

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 landlords to great risk.  If someone falls from a ladder or is injured while hired to do work and the landlord does not have workers’ compensation insurance for them, then the landlord could be held personally responsible for paying their medical bills and loss of income.  Thus, it is better to be safe than sorry.

 

Not inspecting properties regularly

“We regularly hear stories of owners who have, after a long-term tenant moved out, found extensive damage to a unit that could have been easily prevented,” says Mendoza. “It is essential to inspect units (even the rented ones) regularly so that repairs can be done before further damage is done to your building.”

 

Deferring maintenance

Maintenance is a significant expense for most property owners.  Some landlords have an “If it’s not broken, why fix it?” mentality, but deferred maintenance will cost more in the long run along with lowering your property value.  Additionally, rent in buildings that have areas in obvious need of improvement tends to be lower, and many tenants will move if their landlord will not fix things or keep their units up-to-date.  Few things frustrate tenants more than landlords who do not respond quickly to service requests and neglecting maintenance to save money now will simply end up costing more in the future.

 

Not hiring a prudent and honest property management firm

Landlords often have the misconception that they could end up saving money if they do all the management responsibilities themselves.  However, what they fail to realize is that a professional management company could have the contacts for handymen and trades people that will reduce repair costs significantly.  In addition, depending on what company you hire they could possess the expertise to increase the rental revenue of your property (thus putting more money in the owner’s pocket) a lot quicker than the property owner could by themselves.  They usually have a team of workers to handle turnovers only in 2-3 days, often obtain workers compensation for your property at a significantly lower cost, and provide other useful and cost-efficient services.

 

Link: http://www.american-apartment-owners-association.org/blog/2011/03/07/6-common-property-management-mistakes/