Special Reports


How to Avoid the 10 Most Common Mistakes Rental Property Owners and Managers Make.
RMA specializes in single-family homes and for more than 25 years has helped hundreds of owners manage their homes and small rental properties. Over the years we have found that owners make similar mistakes when managing their own property. We put together the following report on how to avoid making the top ten most common mistakes, in order to help you become a better rental property owner.

1.   Not Screening Each Applicant.
Screening some applicants and not others is a Fair Housing violation. Owners who do not properly screen prospective tenants are headed for trouble. Selection of the best possible tenants is crucial to an enjoyable rental-property investment. Each prospective tenant should complete an application, which provides history on credit, prior rental or ownership, income, income stability, and criminal background. To be in compliance with the law, each applicant must go through the same screening process.
2.   Not Following Fair Housing Laws.

Rental owners lose millions of dollars every year because of ignorance and blatant violations of the Fair Housing Laws. It is against the law to discriminate against anyone based on race, color, religion, sex, national origin, handicap, or familial status.

3.   Not Keeping Up on the Rental Market.
Most rental owners determine rent value by looking in the newspaper to see what other owners are charging for rent. This is certainly not the best way to make a determination. Without the experience and data gathered from renting hundreds of properties, an owner does not have the experience to set the most appropriate rent value. Setting the rent value too high will result in prolonged vacancy and reduced cash flow. Setting the rent value too low will result in loss of potential income.
4.   Not Signing a Lease or Rental Agreement.

Whether considering a lease or month-to-month tenancy, having a written and signed agreement is always the best policy. Such an agreement will protect you in the event of litigation.

5.   Not Doing a Move-In Condition Report.

It is important to have proof of the condition of the property prior to the tenant moving in and again after the tenant moves out, in order to justify withholding money from a tenant's security deposit. Proof of condition can be in the form of a written report, photos, and/or videotape. Without such proof, the owner will be defenseless in case of litigation.

6.   Not Giving Your New Tenants Title X Information.

On December 6, 1996, the Lead Based Paint Disclosure Law went into effect, which states that every owner with a property built prior to 1978 must give all new and renewing tenants a disclosure and pamphlet on lead paint. Failure to do so could result in a $10,000.00 fine.

7.   Not Having the Property Ready for New Tenants.

Good tenants expect to move into a clean, well-maintained property. If your property has not been cleaned, repaired, and painted before a tenant moves in, you are asking for more calls and complaints and fewer lease renewals. By taking care of these items before the tenant moves in, you will enjoy a happier tenant and fewer turnovers.

8.   Not Maintaining the Property.
It is easy to defer maintenance when you are too busy or do not have the funds to do it. However, down the road it will cost a lot more when the item becomes a problem. Set up a preventative maintenance schedule to change furnace and A/C filters, clean gutters, caulk bathtubs and floors, test smoke detectors, clean under and behind refrigerators, drain water heaters, and for general upkeep of your property. It doesn't have to cost a lot to maintain a property, but it will surely save you a lot in the long run.
9.   Not Properly Handling Security Deposits.
Owners consistently violate security deposit laws and end up losing in court. Even if you are entitled to withhold a tenant's deposit, you are required to give the tenant an accurate accounting of the withholding within twenty-one days after the tenant moves out.
10.   Not Documenting.
It has been said, "He with the most notes wins." In today's litigious society, this is very true. The simple handshake or verbal OK just doesn't do it anymore. Have written rental agreements, document your conversations, document your property condition upon move-in and move-out, keep records of denied applications, and keep accurate records of income and expenses. Your organized documentation will pay off. Just one legal dispute over incomplete documentation could cost you a lot of time and money.

Contact RMA today, to learn more about hassle-free rental property ownership.

Realty Management Associates, Inc., CRMC®
Phone: (208) 377-8889   Fax: (208) 377-2966
www.RentalsInBoise.com