Top 7 Property Management Tips For Residential Landlords in California
Top 7 Property Management Tips For Residential Landlords In California
Real estate investment is the best way to grow your money in 2018. Real estate prices have almost consistently risen year after year for most of human history, and is one of the few investments where demand never drops.
Couple this with the semi-passive nature of real estate investment, it’s no wonder why so many people are drawn to this industry. Many investors go into real estate investment and management thinking they can just sit back, collect rent and maybe call a handyman once or twice a month.
Sounds pretty great, right? Easy money.
That is one of the pitfalls of property management. Most people have no idea what goes into investing and maintaining properties. This is an easy way to lose money, a lawsuit, or both.
So, to save you a few headaches, here is a list of 7 tips property management tips every residential landlord in California should know
1. Know the local laws, and stick to them. Most people know the major ones-you can’t discriminate based on race or religion, have to provide a habitable living area, cannot arbitrarily raise rents etc. But there are several more minor ones that could trip you up.
For example, security deposits. In almost all jurisdictions, security deposits must be returned within a short period of time. In California, this is 21 days. Any deductions must be itemized.
Think you can fudge the date a little bit, maybe try to squeeze a bit more interest out of the deposit (you are holding it in an interest bearing account, right?) Well, then you’ll be on the hook for treble damages, or three times the amount of the deposit.
2. Be consistent with policies. Everyone falls on hard times at some point in their life, and as decent humans it is in our nature to help each other. It is tempting to allow someone to pay a few days late every once in a while, or maybe let a property with loud parties have their fun. However, this means you have to let each one of your tenants enjoy the same leniency. It doesn’t sound like much at first, but you don’t want to open yourself up for any lawsuits due to perceived discrimination. Either everybody plays by the same rules, or nobody does.
3. Create systems. When you only have 1 or 2 properties, or perhaps 4 or 5 units, it’s easy to “wing it” when it comes to administrative tasks. Rent collection, advertising vacancies, or fulfilling maintenance requests are simple enough to just handle them as they come, but what happens when you scale up and suddenly have 10, 20, or 50 units? Not preparing is an easy way for things to fall through the cracks, costing you time and money. Start mapping out systems and processes for these tasks as soon as possible, to avoid any problems in the future.
4. Set boundaries. Too often we have seen landlords act more as a friend renting out a room than a businessperson managing an investment. This leads to a blurring between business time and personal time. That’s why it is so important to set clear boundaries. Try setting definite office hours, such as Monday-Friday 8am-6pm, when the tenant is free to call you for questions or requests. Outside of that, calls would be answered only for emergencies. As for phone calls, consider getting a separate number just for your tenants. Google voice offers free phone numbers that go right to your cell phone, so you never have to give out your personal number.
5. Piggybacking on the above, refrain from renting to family or friends. By not having your business and relationships separate, you cannot guarantee that you’ll make logical, emotionless business decisions. Just don’t do it.
6. Become a jack of all trades, but know when to outsource. You want to save all the money you can, so it’s tempting to try to do everything yourself. And much of it you can do. Light maintenance, rent collection, and so forth. Some, though, is best left to the pros. Plumbing and electrical work are often beyond the skills of most landlords though, and landlords should never try to navigate legal documents on their own. It may cost more in the beginning, but hiring professionals for skilled work like this will save you money in the long run.
7. Be honest. This should go without saying, but so many landlords believe that, since they provide the housing, they hold absolute power over their tenants. However, since your investments ultimately rely on your tenants, keeping good relationships with them is most important. Too many times, we have seen good tenants driven away from properties due to the dishonest or attitudes of the landlord.
Following these tips should set you on a course to profitable real estate investing. This is only a small part, though.
To really get the most out of your investments, give Cutting Edge Property Management a call and see how we can help you.