Are you interested in real estate management in Birmingham, AL? Owning and operating your own rental property can really help you earn that extra income to go toward the things you want to do! But a lot of first-time landlords make a lot of first-time mistakes that end up costing them time, money, and a lot of frustration. Don’t make the common mistake of thinking you will be the exception. At Specialized Property Management Birmingham, we’ve met too many DIY landlords who start out confident, and then realize they’re in way over their head. Before you get started in the rental property industry, take the time to review the top 10 mistakes most landlords make and learn how to avoid them.
Birmingham Real Estate Management Mistake #1: Poor Property Selection
Picking the right property can make all the difference when it comes to a profitable investment. If you start out selecting a property that is over 25 years old and falling apart, you may end up putting more time and money into it than it’s worth. You’ll want to look at a few key factors when choosing a rental property:
- The Location: Choose a property close to public transportation, grocery stores, and other amenities like gyms, restaurants, and parks.
- The Schools: Your potential tenant may or may not have a child in public school, but oftentimes schools that are highly rated set the tone for the neighborhood and entice renters to stay longer.
- The Neighborhood: How do neighbors treat each other? Is there an HOA and does it charge fees for violations such as an uncut lawn or trash on the property? Get to know the feel of the neighborhood before you buy.
- The Crime Rates: A potential tenant can be turned off from a home if the area around it is subject to lots of car break-ins, vandalism, etc.
- The Average Rent: Choose a home in a neighborhood with lower vacancy rates, higher rents, and where values are appreciating.
- The Layout: Avoid homes that are on a busy street, have an unfenced backyard, an unusual layout, are older than 25 years old, and are less than 1000 sq feet. Instead, choose a home that’s less than 15 years old with 3+ bedrooms, 2+ bathrooms, a fenced yard, and a standard layout.
In general, pick a property that is appealing to families and pet owners, since families tend to stay longer in a rental than single tenants. Also, choose a property that is easy to maintain, both on the inside and the outside.
Real Estate Management in Birmingham, AL, Mistake #2: Ineffective Advertising
You can’t just stick a “For Lease” sign in your front yard and call it a day. Failing to advertise your property effectively means your home may sit vacant for weeks or months on end! You need to take the time to showcase your property on as many websites and platforms as possible to make sure you’re attracting lots of potential tenants. The first thing to do is hire a professional photographer to cast your rental property in the best possible light. Get rid of clutter and be sure the home is clean and beautiful before it is photographed. Open doors and have the photos taken from a wide angle to highlight the space inside.
If you have the capability to do a video tour, tenants love that, too! Talk about the perks of your property and why people would want to live there. Post your ad on sites like HotPads, Zillow, Rentals.com, Rent.com, and ApartmentHomeLiving.com.
Once you’ve put your rental property out there, respond to interested tenants quickly and set up appointments for them to come and view the home with you or a professional real estate agent. Take it from us; good marketing and advertising makes a huge difference in how fast your rental property gets leased, so don’t skimp!
Mistake #3: Inadequate Tenant Qualification
The next step toward successful real estate management in Birmingham is requiring all potential tenants to fill out an application that asks basic questions like their name, their employment history, their rental history, etc. Your qualifications for each and every applicant should be the same, and they should be in writing. Decide what minimum credit score you’re willing to accept, be sure the applicant makes at least three times the rent, and also ask for positive references.
You’ll want to be sure to conduct thorough credit and background checks on each and every tenant so you’ll get someone who is responsible and will pay the rent on time each month. Call former landlords as they are a great source of inside information about the tenant and can give you an idea of what kind of behavior to expect.
Mistake #4: High Tenant Turnover
It’s a lot of work to place reliable tenants in your rental property, so treat them how you would like to be treated to entice them to stay and avoid lots of tenant turnover. The more turnover you have, the less money you’ll make. Establish a positive, respectful relationship with your tenants and respond to their needs quickly. Do your best to make your property attractive and comfortable. Tenants will appreciate your effort and respond by renewing their lease or at least giving you adequate notice before moving out.
Don’t let emotions get in the way of conducting business. If a tenant fails to respond to an email or text from you, give them the benefit of the doubt. Give tenants plenty of notice about regular property inspections and respect their privacy. Don’t try to be best friends with your tenants, but don’t make enemies of them either. Keep it professional so you can maintain a positive relationship for many years to come.
Mistake #5: Inefficient Rent Collection
You can’t make money in Birmingham real estate management if you don’t collect it! Too many landlords make the mistake of giving their tenants too much leeway when it comes to rent collection. Set the standards early and let your tenants know what to expect if the rent is late.
You should have an automatic late payment fee in place and a collections process set up so that there is no question about what happens if a payment is missed. Allow tenants to pay rent online rather than mess with checks and cash or payments in person. It’s also helpful to send out an automatic email a few days before rent is due as a friendly reminder to your tenants. If your process is straightforward and simple, rent collection should be an easy process for both you and the tenant.
Mistake #6: Overlooked Maintenance
One of the most common reasons why tenants leave or move out early is due to overlooked maintenance of the rental property. When a rental property manager doesn’t address their maintenance requests and concerns, tenants feel ignored and irritated. Don’t try to save a few dollars by putting off small repairs. They’ll only turn into more expensive, larger repairs a few months later.
Successful landlords respond quickly to tenant maintenance requests to keep their tenants happy and keep the rental home in great shape. It’s also wise to set aside about two months’ worth of rent money at the beginning of the year to budget for repairs that are bound to be necessary. Talk to your tenant at lease signing and make sure they feel comfortable calling you and reporting their maintenance issues. If there is a specific process you want them to follow, such as a form you want filled out beforehand, let them know.
Mistake #7: Costly Regulatory Violations
You’re probably not a lawyer, but you’ll still need to know all of the laws, codes, and regulations that go along with real estate management in Birmingham. Become familiar with Fair Housing laws, habitability laws, confidentiality laws, The Americans with Disabilities Act, federal and state laws, and municipal codes before renting out your property. For example, the Fair Housing Act states that you can’t deny someone housing based on:
- Race
- Color
- Religion
- National Origin
- Sex
- Disability
- Familial Status
Even just advertising your property by saying it’s “perfect for families” can be considered discrimination, so be careful how you market your rental! Failing to comply with landlord-tenant laws in Alabama can land you in court, so take the time to learn them to protect yourself.
At Specialized Property Management Birmingham we have an in-house legal team of experts that can advise you on all laws and regulations to keep you in compliance.
Mistake #8: Neglecting Inspections
A lot of landlords don’t schedule regular property inspections, which means their rental home isn’t getting the attention it deserves. Routine inspections should be conducted at least twice a year to ensure that the rental property is in good condition and that all appliances are functioning properly.
Proactive attention shows your tenants that you care about the property and want to keep it comfortable and safe for them. Things like overgrown tree branches and exposed electrical wires are easy for tenants to miss, but a licensed inspector will be on the lookout for them and give you a heads up before they become a bigger problem. Be sure to schedule the inspections with plenty of time and give your tenants reminders a few days beforehand.
Mistake #9: Devaluing Your Time
Your time is precious! Too many landlords get caught up in the day-to-day grind of operating a rental property and forget that they got involved in this business to earn a profit, not to work another part-time job. While your tenants deserve careful attention, they shouldn’t be a constant annoyance and hassle. If you feel like you’re spending too much time taking care of your property and tenants, then maybe it’s time to hire professional Birmingham real estate management.
Mistake #10: Failing to Choose a Property Manager Carefully
At Specialized Property Management Birmingham, we know you have a lot of options when it comes to professional property management. When shopping around for your management company, don’t just hire the first company you meet with. Carefully consider if they have the right experience, tools, and proven processes to meet the needs of you and your tenants. The saying really is true that you get what you pay for. Don’t just look at the price, look at the services they offer as well.
They should have local expertise and be highly reviewed on popular websites like Yelp and Google. Their management fees should be fair and reasonable, and you shouldn’t have to worry about hidden costs in the future. Most importantly, a property management company should make things easier for you, and you should feel confident trusting them to make the best decisions for your rental home.
Choose SPM Birmingham
Many first time landlords want to manage on their own because they think they’ll save money. But real estate management in Birmingham can come with high vacancy rates, terrible tenants, late rent, potential evictions, legal trouble, and many other complications that you’re not familiar with. You’ll end up spending more money fixing your mistakes than you would be spending on professional management fees.
At Specialized Property Management Birmingham, we have the experience and expertise to manage your rental property professionally and consistently. Our comprehensive services ensure you and your tenants are well taken care of. Zillow.com Research shows that Birmingham, AL is one of the most affordable markets for renters, with about 24% of household income being spent on rent. This makes it a great place to own and manage a rental property! Give us a call today to find out how we can help save you time and money on your investment!