7 Critical Mistakes Rental Property Owners Make: How Many of Them Are You Making Right Now?
- Are You Frustrated because your rental property is sitting VACANT for months, and your Property Manager doesn't know what to do?
- Are You Being Overcharged by Handymen, Plumbers, and AC Repairmen?
- Sick and Tired of “Dealing with Tenants" who don't pay and tear up your property?
These three issues (to name just a few) usually plague rental property owners like yourself, on a regular basis.
After all, if you are like most real estate investors who live out of town, (maybe even in another state) you can’t just jump in your car and drive over to the property. You have to rely on your property manager or the tenant to act in good faith. And we both know this doesn’t always work out in your favor.
Before we jump right into this Free Report, let me tell you a little about myself.
My name is David Lowrey, and I am a real estate investor and owner of Stress Free Property Management here in Tampa, Florida.
Over the last 12 years, I have managed over 1,873 houses, apartments, and condos in the Tampa Bay area
Therefore, I have managed every type of rental from low income duplexes, to middle class single family homes, all the way up to ultra luxury executive mansions. Which means, I have experienced just about every conceivable problem (in property management) you can throw at someone, and I’ve managed to successfully get the job done. In fact, my first property management company made Inc Magazine’s “Inc 500 List” for the 500 fastest growing, privately owned companies in America, in 2004 and 2005.
After eight years, my business partner, Chris Mercer and I, sold that business to a national company. We decided it was time to relax…but unfortunately, we got extremely bored. (I did at least try golf -- even bought the clubs and shoes) So, we started another company: Stress Free Property Management.
Here We Are A Little Over Three Years Later, Managing Over 322 Rental Properties In The Tampa Bay Area
And I am back doing what I love: managing rental properties. Which I’m sure you would agree is quite an odd profession. I think I’m a part of a dying breed of individuals that actually enjoys managing tenants.
Obviously these experiences as a real estate investor and property manager have taught me some extremely valuable lessons. Most of them I will discuss with you in this free report.
So what do you say we dig into the Free Report now, and I will show you how to avoid as many of the 7 critical mistakes as possible. I will also give you some unconventional solutions to each of them.
Costly Mistake # 1
Allowing a property to sit vacant for 3, 5, or even 7 months, hoping for a good tenant to come along.
Let me assure you about one thing when it comes to finding a good tenant:
Hope…Is Not A Good Business Strategy!
I see this mistake all the time. So let me give you my “cardinal rule” for property management:
IF your property is sitting vacant for more than a month, there is at least one thing WRONG that must be fixed, and I have NEVER found an exception. And YES, this is true even in today’s economy.
The first and most common issue is the rent is just too high and has to come down a bit. Right now, the rental market is very good. You can ask for higher rents than in the past. However, tenants are still checking to make sure the rental rate is reasonable to similar properties in the neighborhood
Therefore, it’s critical your rental rate is competitive with similar properties in the surrounding area. Your property manager must give you:
An honest, No B.S. Assessment Of Market RentIn other words, how much can you realistically rent your home for in the next 30 days? And by the way, you should be willing to drop the rent a bit below that price (if necessary) to start getting cash flow rolling in.
Without question, in this economy, renters will negotiate rent. And the reality is, the property owner who is flexible will get the best tenants for the longest amount of time.
Look, I know this is not a popular topic to discuss. After all, who likes to talk about getting less money? However, I’d rather have you know this up front rather than after your property has been sitting vacant for six months, because the rent is too high.
I’ve routinely seen rental homes sit vacant for being just $50 a month more than the going rate for similar homes in the neighborhood. So it’s extremely important you get this right.
The second common issue is something goes wrong inside your rental, after it was painted and cleaned. For example, we sometimes have unusual paint colors in certain bedrooms. The owner wanted us to try and rent the home as is and the paint looked fine. The trouble is that most of the people looking do not like the color scheme. Maybe it just doesn't match their furniture, who knows, but feedback is poor.
Or sometimes, bugs will suddenly show up. Not to be gross but a few dead roaches on the floor will scare away just about anyone. Other times, the roof, toilet, or sink might suddenly start leaking, and anyone who visits starts wondering what else might be wrong with the home. So, they pass on your rental property because they think if the owner missed these “obvious” repairs, it is just the tip of the iceberg. In their mind, there is probably a hell of a lot MORE things wrong, they can’t see.
The key is to get feedback from tenants after they look at your rental, so you can spot this stuff early and fix it. We are constantly quizzing tenants who visit one of your properties to find out why they didn’t rent. Based on their feedback, we make any necessary repairs to your rental, immediately. For example, the carpets may need to be steam cleaned again, because some stains showed back up, or the maid needs to clean the bathroom again, because she forgot to wash down the tub. You get the idea.
Although this may sound very simple, this is extremely uncommon in the property management industry. Most property managers don’t own rental properties of their own, and therefore, haven’t had the painful experience of their own rental property sitting vacant because of one of these issues.
Regardless of the reasons, we have learned (the hard way) that well over 65% of all tenants who look at a typical rental property, are turned-off, instantly. They are turned off because either the rent is too high in comparison to similar properties in the neighborhood, or one or more things are wrong inside the home, like bugs or leaks. Think about it, haven’t you experienced the same negative first impression, looking at places to rent when you were younger?
We have learned to carefully and objectively research the real world, rental rates of properties we manage for our clients. We check online and in newspapers to see what properties are currently available for rent, in a specific neighborhood or zip code.
Our goal is to find 4 or 5 similar properties so we are comparing apples to apples. If you price your rental $75 above what other similar properties in the neighborhood are priced at, it will sit vacant… a long time.
Is it a bit more complicated than this? No, not really... However there are a large number of things inside your rental that need to be checked carefully so tenants are not turned off.
We also carefully inspect your home with our unique 67 point “Ready to Rent” Checklist.
This checklist was developed from years of trying to figure out why certain homes rent quickly and others do not.
My inspection staff checks everything, from ensuring the closet doors are hung properly in the bedrooms, to looking under the sink for any water leaks. It is vital we are thorough, because each of these 67 areas will either offer a positive or negative impression to tenants.
My operating philosophy is if my mom wouldn’t be 100% satisfied with the cleanliness and condition then the rental is not ready to rent.
However, the average property manager or landlord often just does the minimum to get a house ready for rent. This is a mistake and results in the property sitting vacant for months, and eventually, renting to a lower quality tenant, who typically pays the rent late and doesn’t take care of the home.
Costly Mistake # 2
Your Property Manager is not responsive to people calling about renting your property
Here is what I mean by that statement: Let’s face it, finding quality, responsive professionals in any service business is an up-hill battle. And in today’s economy, your property manager BETTER be hungry for business, answer their phones, and return messages quickly, OR people will go elsewhere.
Here is the simplest way to find out if your property manager is responsive to tenant inquiries: Call them up at different points in the day, and see if they actually answer the phone.
If You CAN’T Get The Property Manager On The Phone (Consistently) Neither Can A Possible New Tenant!
Let me put it this way: if more than half the time your phone calls (to your property manager) go straight to voicemail, you are losing a boat load of tenants that could have rented your property. Why? Because when a tenant calls in to get information, they are in the mood, RIGHT NOW, to get some answers and go look at places to rent!
When that voicemail turns on, half these people just hang up the phone and call the next landlord on the list. You just potentially lost your next tenant, and your home continues to sit vacant, with cash flowing OUT of your wallet instead of INTO it.
And here is an even scarier thought: If your property manager cannot be counted on to answer their phones consistently, can you count on them to put up rental signs? Or run quality classified ads? What about doing proper background checks, or making potential new tenants feel valued and important?
What I am trying to say is (as I said earlier) when someone is doing a couple of things wrong…they are generally doing loads of things wrong. And, there is no way you’re ever going to know because you’re not there. You live out of town. You can’t easily check up on them, and therefore, they have no real accountability to you.
Obviously, the solution to this problem is pretty straight forward: Find a Property Manager that enthusiastically responds to tenant inquiries!
At our company, we answer well over 94% of all calls within the first 3 rings. I know this because I check periodically to see how many calls go to our voicemail on a given day.
However, we have also created a very special system for specifically handling tenant calls.
We call this system our “11 Hour Straight Talk”
We have dedicated cell phone numbers on all of our advertisements. This way, any person calling about renting your home reaches my leasing staff, directly from 8:00am till 7:00pm. Let me emphasize that after we close, my leasing staff continues to answer these tenant calls or return messages until 7:00pm, 7 days a week.
The bottom line is that you are not losing tenants because your property manager is closed at 5:00pm or unwilling to answer calls on the weekends.
Costly Mistake # 3
You are Falling prey to unscrupulous or inefficient repairmen.
If you have owned your property awhile, I am sure you remember the annoyance of being over charged by one of these guys.
For example, your Plumber shows up to fix your leaking toilet, charges you $75 to drive out, $85 to fix the toilet, and $35 in parts for stuff that costs $8 at Home Depot. OR…
Your AC repairman comes out to fix your system. And after just 20 minutes of looking over your AC unit, he tells you it can’t be fixed, and you need a brand new system. You’re left wondering if he is really looking out for your best interest… or his own.
Does any of this sound familiar? After a couple of years of experiencing this type of service, I decided to do something about it. We created…
Our own 24/7 Zero Overhead Repair Service
We went searching for and found electricians, plumbers, and AC repairmen that are 1 or 2 person businesses. They are licensed and insured and operate out of their work trucks. There is no office space, fancy trucks, expensive advertising, or employees, so their over-head is next to nothing.
These guys constantly suffer from inconsistent business: a typical “feast or famine” cycle. So when they find us, we give them steady work which smoothes out that annoying problem. In other words, we can instantly fill 50%-75% of their time, and they never have to spend any advertising dollars to keep this business. We simply insist they do quality work, and our clients receive discounted rates.
For example a typical electrician might charge you $125 an hour, $75 trip charge, and a 300% markup on parts. On the other hand, our electrician charges us $60 an hour including the time it takes to drive to your property and zero mark-up on parts. He comes out ahead because he is NOT just fixing your house that day. We have also given him one or two other electrical jobs at other properties.
Keep in mind, the electrician we hired spent no money on advertising, office rent, receptionist, or any of the other significant costs. Therefore, he is earning more “take home” money compared to the electrician working at a large electrical company, with far less headaches. Can you see how this would work for him (and you), in a positive way? The net result is:
Your Cost To Repair Electrical, AC, Or Plumbing Issues Is At Least 50% Less Than You Will Pay Working With Other Property Managers
Our ballpark estimate of what our typical clients saves in repair costs is $875 a year per property.
More importantly, you typically don’t need to hire an electrician, plumber, or a contractor for minor repairs. A well trained, responsible handyman can easily handle 80% of repairs that typically come up. Our company actually has 4 of these handymen on our payroll. You end up saving even MORE money on these types of repairs.
For example, any handyman (worth is salt) knows how to quickly repair broken or leaking toilets and sinks. You don’t have to hire a plumber for that kind of stuff. If you do, it is simply an overkill and much more expensive. It’s like visiting the emergency room for a migraine headache and getting a prescription. The visit would probably cost you around $700 while your neighborhood walk- in clinic could provide the same thing for $75.
Obviously, any type of serious repairs will be handled by our licensed and insured plumber, AC tech, electrician, or contractor. But, the fact of the manner is that most repairs are minor and do not fall in that category.
Be leery of any property management company that just hires repairmen from large companies driving fancy trucks. You end up “paying through the nose.” The property manager is paying top dollar to companies with huge amounts of overhead.
Not to mention, these repairs are being completed by an over qualified technician, which (more often than not) could be repaired by a competent handyman, at a fraction of the cost.
Costly Mistake # 4
Your Property Manager Doesn’t Own Any Rental Properties, and therefore, doesn’t share your perspective
This is THE ONE question you must ASK before you even think of hiring a Property Manager. I am sure you would agree, if I haven’t “walked in your shoes” as a property owner, how can I understand your pressing need to find a good tenant. Or just how vital it is to keep maintenance costs reasonable?
It’s like asking a guy for parenting advice, who is a 40 year old, confirmed bachelor…He just doesn’t have your frame of reference.
Did You Know That Most Property Owners Are Losing At Least $1500 A Year Of Income On Each Rental Property...
which could have (just as easily) went into their wallet. Why? Because of lack of urgency of their property manager -- who has never owned more than one or two rental properties in his life (if that many). He or she just doesn’t understand the need for passionate attention to detail in marketing, screening for good tenants, or finding high quality, inexpensive repairmen.
My business partner, Chris, and I live these issues everyday with our own rental properties. We own over 20 single family homes. In order to meet our mortgage payments, property taxes, insurance, and repair bills, we had to figure out how to solve these problems, and do so quickly.
In fact, it is from learning how to make our own rental properties profitable that we developed our marketing, tenant screening, and maintenance systems. These systems now form the core of our business: Stress Free Property Management.
Without question, there is nothing like the necessity of having to pay over 20 mortgage payments each and every month to provide inspiration and desire to get better and better, as a property manager.
Costly Mistake # 5
Your Property Manager Doesn’t Own Any Rental Properties, and therefore, doesn’t share your perspective
Gone are the “good-old days”… of just throwing out a rental sign in the yard, on Wednesday, and the home would be rented by the end of the weekend. There is just too much competition out there, at the moment.
Let’s Face It, Finding Quality Tenants Fast, In This Economy, Is Extremely Difficult
If it was easy, you and I wouldn’t be having this conversation.
There is no way anyone can successfully manage properties -- especially a large volume of properties -- unless they have a proven system for finding quality tenants quickly. My business partner and I have spent the last 12 years creating, testing, and refining our marketing system. We call it our “Instant Tenant Attraction.” I know that sounds a little "hokey" but we have to call it something memorable, and it generates 5 to 7 times the amount of tenant calls as the traditional rental signs on the property and ad in the newspaper.
Let me discuss a few of them now, but keep in mind, all these methods are trade secrets that my competitors would love to learn. Therefore, I obviously can’t reveal all my strategies so I will only highlight a couple of them.
- We generate 532% more responses than a newspaper ad using a little known but highly effective website for advertising rentals. I know this sounds unbelievable, but we have tested this over and over again, with the same results. Nowadays, tenants simply prefer looking for rentals online, rather than the newspaper (as evidenced by many newspapers, around the country, struggling or going broke recently).
- A rapid process for qualifying good tenants, and getting them to put down a deposit on your rental, quickly. Most managers take 3 or 4 days to approve a rental application. By that time, the tenant has often found something else.
Now this is not to say that we aren’t being picky, WE ARE. For example, we have found that about 30% of tenants are lying (a little or a lot) on their rental applications. They might use their friends as their landlord or employer, give a false social security number, or are currently under eviction at their present address. There are dozens of scams that horrible tenants use to try and slip under the radar, and move into your home.
However, the reason we focus on completing the background checks for a possible new tenant -- within 24 business hours -- is extremely important. When you think about it, the tenant is still out there… looking at other properties. IF he or she appears to be a quality tenant, we want them off the market by signing your lease, sooner rather than later.
At last count, we had over 17 different methods for attracting quality tenants. This stuff took years of testing and refining all sorts of ideas, to find the ones that actually work.
Costly Mistake # 6
You hired a Realtor, who sells homes for a living, rather than a Property Management Specialist.
If you stop for a moment and think about this, most realtors (in fact most people) do not enjoy being property managers. In fact, if someone didn’t choose to specialize in property management, he is in affect choosing to do it part-time. Therefore, how good can he possibly be? It’s kind of like an accountant selling mortgages, or a high school teacher selling life insurance on the side.
Not to mention, if someone is just doing something to pay their bills, when their regular income is slow, what happens when their business picks up? You would have to think your property would become less of a priority, right?
Sadly, for most realtors, who dabble in property management, this is exactly what happens. He or she is really only passionate about writing contracts and collecting BIG Commissions, from selling homes and NOT renting them.
No question, Realtors are happy to rent out your home, BUT there is a big temptation to just put the first “live body” that comes through the door. It is a lot of work to market your rental effectively, answer phone calls, and do proper background checks. Not to mention, all the work servicing your tenants, once they move in.
When you think about it, most Realtors’ long term success is not based on your rental property performing well. Selling houses is really what their after.
When you are dealing with someone like us, we have the same “vested” interests. I want to rent your home quickly, to a good tenant, because that’s the only way I make money. Our focus is not selling homes, but managing rental properties (like yours) for the long haul.
This is what has made us so successful, and it is why 99% of our property owners remain our clients, year after year.
The end result is you get a property management specialist who lives and breathes this stuff as their chosen profession, rather than a typical realtor just managing homes, until sales pick up.
Costly Mistake # 7
Paying Unnecessary Fees to your Property Manager
- A Set-up/Processing Fee of $250-$400 simply to set up your rental property in their computer system? To be blunt, this fee is completely bogus.
In the real world, it only takes about 5 to 10 minutes to type in your information into the computer. Okay, to be fair, it might take a few more minutes to pull out a filing folder, label it, and put the management agreement into it, but that 15 minutes of work doesn’t justify this fee.
- Charging the Leasing Fee UP FRONT – This practice is absolutely absurd. Normally, all management companies earn 50% to 100% of the first month’s rent, to find you a qualified tenant (i.e. leasing fee). This fee should only be paid once they do (in fact) find you a quality tenant. NEVER pay this fee in advance, because there is no incentive for the company to make the extra effort to find a great tenant quickly.
- Advertising Fees of $500-$700 to “market” your rental – The bottom line is this should be a cost of doing business for the property manager (not you). You shouldn’t be charged a dime for this. It’s like going into a grocery store, and the check-out clerk tacking on an extra 15% “advertising fee,” once she rings you up. It just doesn’t make any sense.
Here Is What We Are Looking For
In A GOOD Client And Rental Property:
- The rental must be in a decent blue collar or middle class neighborhood (or better). I will consider a house in a working class neighborhood, but only on a case by case basis.
- The rental must either be a single family house or a Newer condo. While we love managing older single family houses, we would prefer only managing condos built after 1980.
- We are looking for property owners with a reasonable expectation of rent. For example, if you have a house with a fair market rent of $1,200, but you feel it’s a McMansion and should rent for $1,800 a month…we probably are not for you.
If you want to find out if your property qualifies to have Stress Free manage it, fill out our online Property Owner Inquiry Form in just a moment.
After you submit your application, my assistant, Kiml, will call you within 1 business day (usually sooner) to set-up an appointment to speak with me on the phone.
By setting up an appointment, we both can concentrate on your unique situation, so I can answer all your questions without interruption. Fair enough?
Just to recap, any property owner that uses our management services receive the following:
- 67 point “Ready to Rent Checklist” - This will ensure the property is properly cleaned, painted, and all necessary repairs are completed PRIOR to putting the property on the market for rent. As I mentioned before, this is the number one reason why properties sit vacant for 3 to 7 months, instead of 30 days.
($764 Average Savings By Renting Your Home Faster)
- “11 Hour Straight Talk” – My trained leasing staff answers calls from prospective tenants from 8:00am to 7:00pm Monday-Friday. They even answer the majority of phone calls from 11:00am-7:00pm on the weekends.
($575 Average Savings By Getting A Qualified Tenant Out To See Your Home Quickly)
- 24/7 Zero Overhead Repair Service – 80% of repairs that may arise will be handled by 1 of our 4 well trained handyman at a fraction of the cost of hiring your typical repairmen out of the yellow pages or newspaper. When we need to hire a licensed electrician, plumber, or AC tech, we have already negotiated extremely low rates by finding the folks with no overhead, and giving them a ton of repeat business.
($875 Average Repair Savings, Annually on Each Property)
- “Instant Tenant Attraction” System – Developed after 12 years 2,138 + tenants. This advertising system generates 5 to 7 times the amount of tenant calls, compared to traditional rental signs and ads in the newspaper. Even better, you don’t pay an extra dime for all the extra advertising we perform to find you a good tenant.
($550 Average Savings By Getting A Quality Tenant Much Faster)
- No Unnecessary Fees – you DO NOT pay an advertising or set-up/processing fee. You don’t (in fact) pay us anything up front. We get paid only after we find you a good tenant and collect the first month’s rent from them. “Paid for Performance” is the way it should be.
($300-$800 Value Compared To Our Competitors)
These 5 different programs and guarantees are provided to all of our property management clients. You can’t find a SINGLE competitor offering this level of service or guarantee, anywhere in the Tampa Bay area.
If these are the kinds of control you want to have in place…if you want a property manager to take charge and get the job done, then the next step is to see if the properties you own are a fit for us. The most effective and efficient way we found is to fill out our Property Owner Inquiry Form.
Yes, David, I would like to stop all the headaches and negative cash flow. Let me complete your Property Owner Inquiry Form now. (Click Here)
Okay, that about does it for this Free Report. I hope you enjoyed reading it, and learned some valuable insights about the most common mistakes property owners make.
Owner of Stress Free Property Management
4501 E. Columbus Drive
Tampa, FL 33605
P.S. - Our Fees: I like to be upfront with them so you don’t have to guess or wonder.
- 10% of the rent collected monthly, as a management fee. There is no management fee if vacant.
- A leasing fee of 50% of the first month's rent, when we rent your property to a qualified new tenant.
- That’s it. There are no set-up fees, cancellation fees, advertising fees, or any other hidden fees that are so often not mentioned, unless you read the fine print.
- You also receive the benefits of our:
- 67 point “Ready to Rent Checklist”
- “11 Hour Straight Talk” Process
- 24/7 Zero Overhead Repair Service
- “Instant Tenant Attraction” System