There are many steps in the management of a rental property which continue well past the time the tenant takes possession. This article focuses on some of the common pain points for property managers:
- Property Vacancies: Vacancy costs are a key contributor to lost rental income and can be a major challenge for a property manager. It is important to list the property with an asking rent that reflects the market. The property is only worth what a prospective tenant will pay. Generally, we use a Comparative Market Analyses (CMA) approach when determining market rent; this process involves comparing rental statistics and adjusting the subject property for size, features and amenities. The property should be promoted and advertised to reach the right target audience. Tenant leads should be acted on quickly and agents need to be available to show the property. In today’s market, some tenant prospects will view properties virtually so having videos showcasing the property using Matterport or iGUIDE technology can be use. In terms of the asking rental price, if the property is priced too high, the listing will ‘sit’ and become stale.
- Tenant Turnovers: Further to the cost of lost revenue when there are vacant periods, there is a cost of tenancy turnovers. When one tenant vacates and a new one is secured, there invariably are some costs to ready the property for the new tenancy. Although some owners feel that the previous tenant should cover these costs, they are not responsible for general wear and tear matters and any extraordinary cleaning. However, tenants are responsible for several items including expired lights bulbs and dirty filters as well as any property damage due to tenant neglect. The turnover expenses which are an owner responsibility might include repairing some wall blemishes due to wear and tear, re-grouting tiles as required, refreshing expired detectors and batteries and re-keying the property for security purposes.
- Tenant Evictions: Evicting a tenant is a difficult, costly, and emotionally draining process that can drag on too long. The best solution is to screen tenants with diligence to minimize the likelihood of an eviction situation. In this market and current pandemic environment, there are some situations that can occur which cannot be predicted even by way of a thorough tenant screening process; these include job loss, sickness or death, and marital strife as examples.
- Maintenance & Expectations of the Parties: It is important that all parties understand the requirements and their respective covenants. A well-prepared lease agreement will outline the tenant’s responsibilities in terms of the type of lease, term, rent, inclusions, and exclusions. Some items a tenant may be responsible for are: operating utilities, refreshing furnace and other filters, cable services, tenants’ insurance, snow removal and routine yard care. A critical tenant covenant is to ensure the tenant is aware they are responsible to report any maintenance to the landlord as it arises in a timely manner. As we know, a small maintenance items can become a big expensive one if not addressed quickly. The landlord and property owner need to ensure that any conditions outlined in the lease agreement are satisfied, and the property meets all required codes and standards.
Based on the cost of property vacancies and tenant turnovers to ready the property, both should be minimized. Long term tenancies with qualified tenants therefore are highly desirable when managing a rental property.