I work in the world of property management and my job is to interact with real estate investors all day. It’s a great job. I have many rental property owners who call me not only to ask for quotes on services, but also to ask advice on the local market and decisions they need to make. I get to hear all kinds of stories. Some are great the others and terrible. Here’s a compilation of the most common horror stories I hear in my position.
“I rented to a professional tenant”
These are the worst of the stories. In California it can be a real nightmare to get someone out of your property who refuses to leave or pay rent. You have to do what is called a Sheriff’s Eviction where the court orders a Sheriff to physically go to the property and evict the resident.
Some nefarious residents know how long and expensive this process can be and they purposely scout out properties (typically on Craigslist) to live in knowing they plan to not pay rent and eventually get evicted.
I had a great rental property owner who had a home in a beautiful gated community located on a golf course. He rented to a resident who had shared a sad story with him as to why he had no credit or proof of income. Amazingly, the owner let him live there. Right away he could tell it was a mistake. The resident was late on rent, then after the first month just decided to stop paying.
It took the rental property owner 4 months and thousands of dollars in legal fees to get him out. After this he called us and told us the story. We then took over management and got his home rented to a well-qualified resident.
“I can’t afford to fix that “
This is also a massive mistake that many property owners make. They don’t put any money into reserves to help pay for major repairs when they arise.
We had a client, we’ll call him Bob, who owned an older home on a one-acre lot. He spent some time fixing up the rental property, but he couldn’t afford to replace the worn-out roof. We mentioned he needed to replace it soon as it’s useful life was up. He said he could not afford it at the moment and just to rent it out.
As we went to rent it we noticed a leak in the roof after the first rain. He needed to fix the leak before we would rent it out and all the damage that the leak caused. He fixed it, but then it rained again, and another leak was found. He sent people out there to fix that one as well.
That winter we were never able to market the home because there were four different leaks found in the home. Not only did he have to pay for the leak patches, he also had to pay for all the lost rent. This story is still playing its way out, but eventually he will have to replace the entire roof.
What’s the moral of the story? Things break. Rainy days happen. You have to faithfully put away reserves every month to afford to fix those maintenance items when they come up.
“I don’t want to rent to college students”
I understand that typically college properties can take a beating. In my hometown of Chico this is apparent from driving through our college area. However, it’s completely illegal to discriminate based on age. To tell a group of 4 twenty-year-olds that we won’t rent to them because, well, they are 20 years old is discrimination based on age. Age is a protected class and you open yourself up to some serious legal issues if you insist on a no college student rental policy.
“I’m just going to pay my neighbor Joe to trim the trees”
By the way, Joe is not licensed or insured to trim trees. The days of having the neighborhood kids cut your lawn are just about over. If Joe falls off the ladder while trimming your trees you could be liable to pay his medical bills. That is not going to be a small bill. Therefore, whomever you use to work on your house – from landscaping to electricians – make sure they are licensed and insured.
As a property management company, we will never pay anyone who is not licensed and insured, I recommend you don’t either.
“I want you to inspect my rental property once a month to make sure everything is okay”
We drive by every rental property we manage at least once a month, and do unit-by-unit inspections once a year. During these inspections we inspect the HVAC system, fire alarms, and general upkeep of the property.
Occasionally we get a rental property owner that thinks that’s just not good enough. They would like us to enter the home once a month to inspect it. I’m sorry, that’s a little overboard. If you were renting a home, would you want your property manager coming into your house once a month? Going into your bedroom, bathroom, or closet once a month just looking at your stuff? Um, no. That’s how you lose residents. It’s a little too much and starts to feel invasive. We could maybe do twice a year, but don’t push your luck. People value their privacy, and you’re not going to win any points by micro managing your rental property and your residents.
These are some of the horror stories I hear in property management. Do you have any horror stories? I would love to hear them in the comments below!