Welcome back to the DNS Property Management blog. In our last article, we discussed the finer points of what you should do when attempting to execute successful multi-family residential property management. In this entry, we’ll explain the following behaviors you should avoid if you’re hoping to operate your residential property in a profitable fashion.
Dont Over-Improve the Property
Over improvements to a property can cost an investor thousands of dollars. This is because the landlord spends more money on improvements than what the property’s rent can bear. Whenever undertaking a renovation, always ask yourself: “If I add this, will I be able to charge a higher rent?” If the answer is no, then maybe the upgrade does not make financial sense. Thus, investors must be mindful of the cost of their renovations and the associated rent premiums that can be charged.
Don’t Be Afraid to Flush Out Bad Tenants
Bad tenants that create a nuisance must be dealt with as it can negatively affect your investment’s performance. A problem tenant can cause other residents within the dwelling to vacate, thereby forcing the landlord to incur unnecessary turnover costs. Additionally, problem tenants will often vandalize the property, and will force the landlord to incur more additional repair costs. Problem tenants can be dealt with by either not renewing their lease or executing an eviction.
Don’t Wait To Execute an Eviction
Evictions are usually a last resort when dealing with problem tenants. With that being said, allowing tenants to fall behind on rent and accruing large account balances will negatively affect the profitability of the property. Investors must not forget that at the end of the day, their investment property is a business, and should be operated as such. It must be understood that in order to own investment property, a landlord must be willing to evict problem tenants when need be. Otherwise, your tenant may sink your investment.
Don’t Run the Property as a Cash Machine
Obviously, the purpose of owning investment real estate is to preserve and create wealth. With that being said, property owners should have a minimum standard of quality that they hold their properties to. Cutting costs on repairs and maintenance will upset the tenants and increase the likelihood of vacancy. Remember, it is only because of the paying tenants that your property is profitable. Additionally, investing in reasonable property related improvements will not only increase resident satisfaction, but will also increase the revenue and thus, your bottom line.
Don’t Allow Tenants to Move Other Individuals In Without Screening
Sometimes, the resident moves in and then two weeks later, you find out they have moved in several other people. This opens the landlord up to possible liability because the unknown individuals may have a violent criminal record or may possibly be a registered sex offender. More often than not, the unapproved occupants are not criminals, but it’s better to be safe than sorry. Additionally, we have also seen tenants move their entire family into a one-bedroom apartment. This can cause issues, as the number of people residing in the unit may violate HUD occupancy standards. We advise all landlords to check with their local municipality regarding their local occupancy standards.
Contact DNS Property Management
As Broward County’s premier residential property management company, we take pride in making our client’s properties profitable. With the right keen eye, any property can become a real estate investment instead of a leech on your wallet. Contact us for all of your inquiries about multi-family residential property management, as well as real estate investment and community association management. We’re excited to hear from you and start turning your property into profits.