Learning from your mistakes so you can master your business is the key to your success.
You can learn from other people’s mistakes, so I would like to share mistakes that I have either personally made or have watched investor-clients make.
1.Being Too Quick to Fill a Vacancy
It is easy to drop your standards when a unit is about to become vacant. Like so many others, I have learned it is far better to have a few weeks of vacancy while finding the best tenant than to hurry and rent to a bad apple.
2. Treating Tenants as an Income Source Instead of Valued Customers
Having an investment property business and managing tenants as a landlord is no different than any other business. I have since learned this valuable lesson that indeed they are an integral part of the business and need to be treated as valued customers.
3. Landlords or Property Managers Trying to Become Friends with their Tenants
You want to like and trust each other but you are in a business relationship and it should stay that way. Developing a close relationship makes it difficult to manage from a logical business person’s perspective. Emotional-based decisions have very little place in running an effective business.
4. Failing to Keep Property Maintained
When talking with sellers the common theme is they want to increase cash flow and do so by ignoring repairs or simply doing inexpensive “bandages” on a property. In reality it creates unhappy tenants who move frequently, which actually results in lower cash flow. The repairs themselves that get ignored devalue the property. To maintain maximum cash flow you want to maintain a property in great condition.
5. Missing Opportunities on MultipleYear Leases
As landlords and investors, you all know that tenant turnover is the single largest expense we encounter. This is an expense you want to address and fix not just accept it. I have found great success in offering two-and-three year leases. It immediately goes to identify tenants who want to stay longterm.
6. Being a Landlord Instead of Being an Investor
The most successful investors spend their time investing instead of being landlords. Managing a property is a full-time position. To be effective at it, you need to devote full-time attention to it. Perhaps one of the biggest mistakes is trying to be effective as a part-time landlord.