Sacramento Property Management

Top 10 Mistakes Landlords and Property Managers Make

1. Failing to properly screen applications for credit, rental references, and income.

Owning residential rentals means being in business and the day to day operation should be run professionally. A car dealership would never allow a customer to drive off in a new $50,000 Mercedes car without first running a complete credit and background check. Yet I have seen property owners turn over a $100,000 home to a family that had negative credit and without checking out rental references. Why gamble in the management of YOUR business? Proper screening involves having written standards that are both strict and reasonable and then following through on checking to see that those standards are met. Not strict enough, you will end up with a problem later, too tough will not allow you to rent the property in a reasonable amount of time. Be certain to also verify the identity of your applicants prior to releasing possession.

2. Failing to have a written agreement covering potential problems and concerns.

If you don’t put it in writing, who will determine what the rules are? A written rental agreement is your chance to memorialize all your requirements and to verify that all of your legal requirements have been met. Avoid a dispute later by having all potential problem areas covered in writing.

3. Not enforcing late rent policies.

As soon as you determine that the rent is past due, you should confront the tenant and find out what the problem is. It is unthinkable that they have forgotten to pay, so something is going on and it must be addressed immediately. As soon as you can, get a 3-day Notice served so that you are in control of the situation. The story may be believable, but you must be prepared to proceed if the promise to pay is not kept. Finally, don’t hesitate to start an eviction with an attorney that knows how to do unlawful detainers. This is a specialty that requires professional expertise to make it go quickly and to your best advantage. Always be prepared to enter into a stipulation that provides for a payment plan and/or move out plan. This is preferable to the alternative of a court trial.

4. Not inspecting your property on an annual basis and automatically replacing smoke alarm batteries and filters.

An annual inspection will protect you and your resident from safety and financial liabilities. Since some residents remove smoke alarm batteries, this is a chance to verify that the alarm is both working properly and that it is placed in the proper location. Also, many residents do not faithfully change their air conditioner and heater filters. The annual inspection will reveal this and give you a chance to change the filter before your AC unit gets damaged. The annual inspection will also allow you a chance to catch any lease violations and deferred maintenance. In 1998 it is critical to verify that all exterior doors and windows have proper locks that are in compliance with the new “California Lock Law”. Residents may file for civil damages in instances where locks are not in compliance.

5. Entering a property without proper reason or notice.

Whether you are attempting to perform an annual inspection, conduct a repair, or arrange for a prospective purchaser to see the interior of your rental, you must give proper notice to your resident. California Civil Code Section 1954 grants the owner the right to enter for nine specific reasons. This notice must be 24 hours in advance. In an emergency only, the landlord may enter without 24 hours notice.

6. Not using the advice of an eviction attorney when dealing with a non paying tenant.

It is simply not a good idea to try to handle an eviction yourself. There are too many knowledgeable tenants and too many attorneys willing to give advice to those tenants for you to try an eviction case by yourself. Several local “eviction” attorneys work in our area and are priced very reasonably. These attorneys have seen every type of case and they often negotiate with the resident at trial to reach a stipulated agreement. This agreement avoids a court decision and gets you your money or possession on an agreed upon date.

7. Not raising rents to reflect the current market value of your investment.

Postponing rent increases is easy to do, but never wise. You should collect market rents so that you can maintain your investment. Annual rent increases also remind the tenant to call you for repairs that might otherwise be ignored. It is best that you get market rent and the resident have a home in good repair. Rent increases in the 3-5% range are usually acceptable to both parties. Be prepared to back up your increase with market data and possibly some increased service in the form of repairs or carpet cleaning.

8. Not properly preparing your vacancy to eliminate move in problems.

A detailed inspection of the property should be performed as each tenant vacates. Have all the work completed and then inspect again. Is there anything else that needs doing? Run all the faucets, flush the toilets, turn on all the appliances and lights. Make sure the front and back yards look good! It is easier to start a business relationship when your product is 100% ready than it would be if your product was only 65% ready. First impressions are lasting and particularly so in a landlord-tenant relationship.

9. Not keeping your rental in good repair.

When your resident calls to get something repaired you have an opportunity to show them just how good your customer service is. In addition, it is in your best interests to keep your investment in the best condition possible. It may be tempting to try and save money in this area, but if delaying repairs results in more tenant turnover, you have cost yourself a lot of money that could have been spent improving your property.

10. Not properly handling deposit refunds.

California law allows you 21 days to deliver an itemized list of deductions from the residents deposit. The balance remaining must be sent to the tenant. It is a good business practice to document all charges and be prepared to back up all deductions so that if there is a dispute you are prepared for court. Small claims court is the place where most deposit refund disputes are settled. Be sure to have reasonable policies for deposit deductions and mail your refund before the 21 days are up. The fine is now up to $600 for failure to comply.

At HomeRiver Group® Sacramento, the proper management and maintenance of your residential income property is our highest priority. First, we are committed to the safety of your resident and that of your investment. Second, we are here to provide service by knowing the latest management techniques and having the knowledge to get repairs done quickly, correctly, and at the right price. Finally, we are here to satisfy both you and your resident with proper follow up and timely reporting.

HomeRiver Group® Sacramento...the place to be.