Thinking about Property Management? Do Your Research First

Are you considering trying your hand at the business of property management? There’s a lot that goes into property management besides coordinating tenant screening reports  and collecting rent. You have to know what property owners in your area expect from a property manager, you have to know what your strengths are, and you have to know how much to charge to stay competitive.

First, decide what kinds of services you’ll offer, and what you’ll need in terms of staff, equipment and other resources in order to effectively offer those services. Then decide which types of properties you want to manage. Commercial properties or residential? Single-family homes or multi-family housing units? Then do some research to figure out what services are most important to those property owners and those types of properties.

Then you have to study the marketplace and figure out what is being offered and at what rates. When you find the clients you want, sell them on your ability to give them better service or more for their money than they were previously getting. Help them to understand the benefit of unloading the more stressful aspects of property ownership to a professional property manager.

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Know the Laws — and Hazards — Regarding Lead Paint

Most homes built before 1978 have some lead paint, and homes built before 1960 have the most lead paint. Even if fresh coats of paint have been put on windows, trim, doors and railings, dangerous lead paint can still be lurking underneath, and tenants are still at risk.

There are a few things you should do — and must do — if you suspect lead paint might be present in your rental property.

1. Get a lead inspection to find out if and where lead paint is located in the home.
2. Watch out for lead dust when you repair, repaint or renovate the home. Lead dust can be released from peeling or sanding lead paint, and it can settle on windowsills and floors where young children can accidentally ingest it.
3. If your rental property was built before 1978, by federal law you must give your tenants both the EPA Lead Paint Pamphlet and a disclosure of your knowledge of lead paint hazards in the rental unit, along with the lease agreement. This has to be done before a new tenant signs a lease, and before an existing tenant renews a lease.
4. Tell your tenants to report peeling paint, damaged windowsills or other painted areas, and repair it promptly.
5. Keep all painted areas in good shape. Before doing any renovations, especially ones that involve sanding, scraping or repainting, do some research about the safest way to handle such repairs and renovations in order to minimize exposure to lead paint dust. 

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Use Several Websites When Advertising Rental Property

For a long time landlords had but a few options for advertising a rental property. You could take out a classified ad in the newspaper, put up flyers around town, and stick a “For Rent” sign out front. These days, though, landlords have the Internet — an invaluable tool for finding qualified tenants and getting the word out about your property and/or your property management business.

While many landlords now use the Web to find tenant applicants, they typically use just a couple websites to do so, unaware that there are several quality websites out there that are either dedicated to rental properties or include rental properties as part of their listings. After you list your property on Craigslist and the local newspaper’s online classifieds, you should cover all your bases by making sure your listing is being cross-referenced and picked up on other reputable websites dedicated to rental properties. A few to check out are: Rent.com, HotPads.com, and Cazoodle.com.

The next time you’re in the market for a pool of qualified tenants who are searching for a property to rent just like the one you have, try one (or all!) of these services in addition to your tried-and-true internet outlets. (But don’t disregard the power of that age-old “For Rent” sign.)

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Up in Smoke: When a Tenant Smokes, the Damage Can Be Devastating

If you asked, some landlords would say they wish there was one more detail a tenant screening service could tell them about a prospective tenant — whether or not the person smokes.

Many landlords don’t like to accept tenants who smoke because of the damage that cigarette smoke does to walls, carpeting and furniture (let alone the potential for burn marks on the floors and complaints by nonsmoking neighbors who live close by and prefer to breathe smoke-free air.) But many applicants are good at hiding the fact that they are smokers.

If you ask an applicant whether he smokes and he says “only outside” or “only occasionally,” consider that answer to be “yes.” Someone might usually smoke outside, but during those long cold winter months, you can’t be sure your tenant isn’t staying curled up in his living room for a smoke instead of shivering on his porch.

When you advertise your property, be sure to include that you’re looking for nonsmoking tenants only; that should help weed out many regular smokers. And even if the tenant you find says he or she doesn’t smoke, include the rule in the rental agreement that there will be no smoking on the premises, and make sure they initial it. You might even want to stipulate that if smoke damage is found on the premises, the needed cleaning and repairs will come out of the tenant’s security deposit. 

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Taking on Rental Property Isn’t an Easy Paycheck

On TV it seems simple, right? Buy a house, make a few improvements, find a tenant and start reaping in the cash. In reality, though, the business of property management is not quite so easy. Sure, there are rewards, but there are risks too, and the wise investor considers both before making an investment.

The first step is, of course, to buy the right property in the right location at the right price. This is no small feat, though with the plethora of properties on the market these days it’s easier than it has been in quite some time. The second step is to really think about whether you want to be a landlord. Becoming a landlord is not a magical way to get a check in the mail every month. Landlords work for that money, even when there’s a good tenant in place and no maintenance concerns lurking.

Ask yourself if you enjoy working with people, meeting new people and getting to know and trust them (to some extent, anyway) with your investment. Are you a good judge of character who is also astute enough to not go on emotions but to use an impartial service to screen tenants? Are you comfortable with fielding maintenance requests and hiring professionals when necessary? Do you have enough in savings or other investments to cover the considerable financial risks associated with property management? Are you a shrewd businessperson who can keep accurate and thorough records of all transactions and correspondences with tenants and service professionals?

Be honest with yourself about what kinds of skills are needed to be a good landlord; that honesty will either save you tons of money and hassle, or feed your dreams of becoming a property manager. 

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Know Fair Housing Laws

When landlords are new to the business, there are two things they need to learn right away. One is the value of using a professional tenant screening service to screen their applicants and give them crucial information on an applicant’s credit, employment, criminal record and rental history. The other is the importance of familiarizing themselves with the Fair Housing laws in their area and their state.

Fair Housing laws are in place to protect both tenant and landlord, but in order to be protected by the law, you have to know what that law is. Landlords can’t plead ignorance when it comes to Fair Housing issues, because it is their duty to learn and uphold the law when doing business.

In essence, fair housing laws are put in place to ensure there will be equal access to housing for all people. There can’t be any discrimination on the basis of race, color, religion, gender, national origin, ancestry, sexual orientation, age, familial status, children, marital status, veteran status or membership in the armed services, the receiving of public assistance, or physical or mental disability.

To learn more about the law, landlords should visit the U.S. Department of Housing and Urban Development (HUD) website. Also check your state’s Housing Department for state regulations and possible training classes on the law. You can also check with your county’s government seat for any local laws regarding Fair Housing issues. Remember that ignorance on this subject will not get you off the hook if you’re ever faced with a complaint or lawsuit accusing you of violating Fair Housing law.

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Rental Applications Can Have Pre-screening Warning Signs

Tenant screening is hands down the best way to tell whether a prospective tenant is qualified to rent your property or not. That way you will get detailed information on the person’s criminal record and employment history, obtain a credit report on the person, see if they have any previous evictions on their record, check their name against sex offender registries … the list goes on.

While the screening itself is invaluable and necessary in today’s world, there are some red flags on an actual rental application that could signal a problem tenant before the formal screening process begins.

First of all, check for incomplete information. If the tenant can’t think of three people they know who aren’t related to them and would give them a positive recommendation, chances are you might not find them to be recommendable either. Also look for mistakes on the application – phone numbers that don’t work when you try them, address numbers missing or inaccurate. Mistakes like that could be an intentional attempt to hide their past, could be a sign of identity theft or a troubled rental history.

Be wary of a tenant who doesn’t have a bank account. Nobody these days deals only with cash and money orders. Just about any responsible adult will have a checking account. Similarly, if they can’t verify a current address with a utility bill or phone bill, they might be hiding something. They might have a bad rental history and don’t want to disclose the name of their current landlord.

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