Managing your rental property in Sarasota, FL can be very rewarding: a supplemental income, saving for retirement, or putting aside money for your kids to go to school. But being a single-property landlord can also be very challenging.
It’s not uncommon to bite off more than you can chew, especially when it comes to the do-it-yourself approach. The following are common mistakes landlord’s make when they try to take the DIY approach too far. If you find yourself attempting these same things and it’s all too overwhelming, a property manager may be the most natural and most cost-saving solution.
Common DIY Mistake #1: Setting Rental Rates Without A Market Analysis
The Misconception: With single occupancy rentals you set the rate to cover the cost of the mortgage and expenses
The Real Deal: Setting rental rates may seem straight forward, but you’re doing yourself a disservice and could end up losing a ton of money if you don’t conduct a thorough market analysis and base your rate on that information. A comprehensive market analysis requires you to find the average rates specific to your area, the price per square foot, how many rental homes are in your market, what services and amenities they’re providing, and specifically finding comparable rentals (or comps) to your own. It would be easy if it were just covering the mortgage and expenses, but you may price yourself out of the market, and your rental will stay vacant. If you price yourself too low, though, you can lose money. With a rental rate, you have to find that Goldilocks amount: just right.
Conducting a market analysis requires a lot of research and general know-how of where to find useful information. For example, trying to find comps within Sarasota, FL isn’t specific enough because some neighborhoods have houses valuing at $600K on average and some only around $100K – that’s a huge difference. Local property managers will know the market inside and out, find comps local to you, and set a rental rate just right for your investment.
Common DIY Mistake #2: Not Screening Tenants Properly
The Misconception: If I’m fair, empathetic, and well-intentioned when it comes to screening tenants I’ll find honest and reliable renters and won’t show any bias that could get me into trouble.
The Real Deal: Screening for tenants can be beyond difficult. The difficulty lies in the legal ramifications of tenant discrimination as well as being able to discern a good tenant from a bad tenant.
Tenants rights are federally mandated under the FHA and HUD. If a potential renter feels you are discriminating against them, you could face a lawsuit and a fierce legal battle. For example, a potential renter uses a cane to move around. If your main entrance is up a large flight of steps, you may try to redirect them somewhere else. Though this may be out of kindness, you are actually breaking a discrimination law.
Aside from the legal complications, you have to be capable of discerning a good renter versus an unreliable renter. This can be accomplished if you make sure to get reliable financial information from your renters and base your decision on this. However, you may want to make exceptions for someone if they seem to have the right vibe when you meet them. This doesn’t always backfire, but when it does it could lead you to sign a lease with a “professional tenant;” essentially someone who knows how to work the system and not pay rent for months at a time.
If you are at all uneasy about this process or don’t have the time to dig into anti-discrimination laws, a property manager is your best route. Sarasota, FL has a diverse population in age, ability, and ethnicity and Real Property Management Sarasota and Manatee have put together a proven method of screening tenants legally and ethically, navigating anti-discrimination laws as well as avoiding those professional tenants.
Common DIY Mistake #3: Performing Maintenance You’re Unqualified to Do
The Misconception: Hiring someone else is too expensive and utilizing my know-how, and tutorials online will allow me to fix pretty much anything around the property.
The Real Deal: This should be more obvious as a mistake, and an expensive one at that. The situation is different when you’re dealing with your own home, but as the owner of a rental property, you should always have a qualified technician available to you and your tenants. This, of course, will come with additional costs but not having someone on call or knowing who to contact in an emergency or specific situation can cause more damage to the home and cause you to lose your tenants and reputation as a landlord.
Property management teams have a considerable advantage when it comes to maintenance. They can hire a maintenance crew and keep specialists like electricians and plumbers on call for cheaper because they can spread the work out across multiple sites, possibly even garnering discounts for the consistency of work.
Common DIY Mistake #4: Unrealistic Financial Expectations and Underestimating Expenses
The Misconception: Owning a rental property is an easy way to make some extra cash and all you have to do is get the rent to cover expenses and a little bit more, and you’re set!
The Real Deal: This misconception ties all of the other DIY mistakes together. As discussed with setting rental rates, the amount you charge should be based on market analysis and won’t necessarily cover your expenses. This is usually the basis for miscalculating what you hope to make from this venture. From there, trying to cut costs by doing things yourself when you may not have the skill or resources necessary can end up costing you more than hiring those who are trained in that profession. This is true of tenant screening and dealing with tenants overall, maintenance, and other aspects we haven’t listed here like marketing, rent collection, and leasing documents.
However, owning a rental property in Sarasota, FL can be an easy way to make some extra money if you work with a property management team like Real Property Management Saramana. It’s been highlighted above how a property manager can overcome these common mistakes efficiently and effectively. Managing a property is a full-time job, but in the right hands, it can be gratifying. Avoid the hassle of trying to manage your Sarasota property on your own and download our free Guide to Finding the Best Sarasota Area Property Manager.
About the Author
John Michailidis, JD, is a graduate of the Northwestern University School of Law in Chicago and is the Broker/Managing-Member of Real Property Management of Sarasota & Manatee, a Sarasota, FL based residential property management company. Real Property Management of Sarasota & Manatee provides both Full-Service and Lease-Only services to greater Sarasota, Bradenton, Venice, and North Port area landlords. If you own residential investment real estate anywhere in Manatee or Sarasota counties, do feel free to reach out to our team at 941-216-0005, or through our website.
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