Real estate investors in Hampton Roads are sometimes afraid of making mistakes. It’s scary to fail and upsetting to see the misstep that was made. There’s not always a guide or a playbook to tell you what to do because every investor’s journey is different. What works for others won’t necessarily work for you.
But, learning from mistakes is much easier when they’re not your own.
So let’s take a look at some of the most common mistakes we see rental property owners make in our area. We know that once you’ve made a mistake, it can be difficult to find a way back from that error. Especially if it’s a large error or an expensive problem to fix.
Most investors you talk to will have stories about what went wrong for them and how they fixed the problem. Let’s take a look not only at the top 10 mistakes we see property owners make - but also how to avoid those mistakes yourself.
1. Investing in the Wrong Property
A huge “oops” moment is realizing you bought the wrong rental.
It’s easy to get excited about an investment property, but if it’s a property that’s going to make you house-broke, that’s a huge mistake. You want to do the math and respect the numbers so that you’re sure you’re buying a Hampton Roads investment property that will make you money. If your rent doesn’t come close to covering your expenses or you’ve bought a beautiful property and invested extra money into it but you can’t find a resident willing to pay what you’re asking – that’s a mistake.
A lot of investors make the mistake of trying to make the numbers fit in creative ways to close a deal they just feel good about. Don’t try too hard to massage things just to make them work. You don’t want to hope you’ll get more rent and you don’t want to take a chance that maintenance will cost nothing. When you’re looking at the numbers and the historical data, remember those statistics are there for a reason. Don’t read between the lines. Your decision should be an easy one. Otherwise, don’t buy it.
2. Placing the Wrong Resident in Your Hampton Roads Rental Property
This is the number one failure with investors in Hampton Roads. When you rent out a home, you need your residents to pay rent, and you need them to help you take care of the property. If you don’t have a great resident, a lot can go wrong really fast. Avoid that mistake with a solid marketing and screening process. Make sure you’re using a thorough and consistent application, and check the credit history and an eviction history. Talk to previous landlords about their rental experience with the applicant, and make sure you verify employment and income.
Think carefully about who you place in your property. With the wrong resident living in your investment home, you’re going to be paying for that mistake for a long time.
3. Attaching the Wrong Rental Value
The wrong rental price is a huge mistake. It can lead to longer vacancies, missed income opportunities, and unqualified tenants. There are a couple of things to be aware of when you’re pricing your property accurately:
Consider your location. Use the exact location of the property you’re marketing to set the right price. Don’t look at other neighborhoods, be specific and detailed about where you are.
Size and layout matters. Are you offering an open floor plan? Is it a functional space? A three bedroom, two bathroom home with 1,100 square feet versus a three bedroom, two bathroom home with 1,800 square feet will demand different pricing levels.
Property condition. Are there recent upgrades and updates that have been made to your rental property? If so, you can price at the higher end of the local range. Tenants pay more for well-maintained, recently updated homes.
Amenities. A single-family home might be in a gated community. Condos and townhomes will have amenities in the complex. Tennis courts, a gym, and a pool will often demand more rent.
Price the property in accordance with what the market demands.
4. Selecting the Wrong Vendors for Your Repairs and Maintenance
Who is maintaining your investment? Hiring unlicensed, unskilled, and unprofessional vendors to work at your property is a huge mistake. If an uninsured, unlicensed worker gets hurt at your property, you can expect to be held liable for medical care, loss of work, and personal injury.
You need a preferred list of excellent vendors, contractors, and service providers who can be counted on to do good work, provide fair pricing, and prioritize your property when you need help.
5. Ignoring Preventive and Routine Maintenance
While we’re on the topic of maintenance mistakes, let’s talk about the importance of prioritizing preventative services. It’s a huge mistake to allow deferred and unreported maintenance tasks to gather. Those small issues are only going to become larger and more expensive issues if you ignore them.
Be proactive and responsive. Conduct drive-by inspections to catch potential maintenance issues, and make sure you’re committed to a schedule of routine interior inspections. Preventative plumbing is especially important because if you leave a water leak, it will lead to rust and potentially mold and subfloor damage. In a multifamily property, water can go from one unit to another. Preventative roofing is also important in extending its life. Have your HVAC system serviced and your landscaping professionally maintained.
You want to cut down on the potential for disruptive and costly emergency repairs. Preventative maintenance does that. Get in there and conduct your inspections so you can catch any maintenance that needs to be done.
6. Not Allowing Pets
Hesitant to let your tenants move in with their furry friends? We get it. No one wants to scrub pet urine out of the floorboards during a turnover. However, the risk and liability that comes with allowing pets is often worth what you can earn and the improved tenant quality. Allowing pets means a lower vacancy; most tenants have pets, and your property will be unoccupied for longer if you're waiting for the tenant who has no cats or dogs. You can also charge pet rent or a pet fee.
At least consider pets. A hard “no” is a mistake.
7. Legal Mistakes with Hampton Roads Rentals
Stay up to date on fair housing laws, habitability standards, leasing requirements, and security deposit laws. When you move towards evicting a tenant, make sure you do it lawfully. Don’t violate your own lease agreement. If you’re renting out a vacation property or a short-term rental, there are specific rules you need to know around those property types, too.
Legal mistakes are expensive. They’re time-consuming, and you need to know what’s expected of you. Pay attention. Work with lawyers and property managers. Make sure you’re compliant with all state and federal laws.
The thing is, laws are constantly changing. This is one of the best reasons to partner with a Hampton Roads property management team. We stay up to date on everything, and that dramatically reduces your risk and liability.
8. Not Providing (and Using) Technology
If you’re unwilling to provide things like digital keypads, video doorbells, and smart thermostats, don’t be surprised if good tenants ignore your home and rent another one instead. There’s a growing demand for smart home tech, and it’s a huge mistake not to provide it.
You also need to be using technology in order to lease, manage, and maintain your rental home effectively. You should be collecting rent electronically. Accepting maintenance requests online, and having digital copies of your lease agreements and invoices.
Make technology a priority, otherwise you’ll be trying too hard to rent out an outdated property.
9. Treating Your Rental Property Like Your Home
We see property owners make this mistake a lot, especially if you’re renting out a home you once lived in yourself. It may be the property you own, but it’s your tenant’s home. You have to think of this as a business. Don’t make emotional decisions and don’t feel like you have the right to show up whenever you want.
You can get into legal trouble if you don’t provide advance notice to your tenants before an inspection. You’ll lose good tenants if you are too strict with what they can and cannot do while living in your home.
This isn’t your home. This is an investment. Remember that so you make smart, objective decisions.
10. Neglecting to Partner with a Local Property Manager
It’s important to partner with a Hampton Roads property manager so you can access the best expertise in both the local market and the residential management industry as a whole. A property manager keeps you compliant with the laws and ensures you’re aware of market trends. You’ll price your property correctly and have access to great tenant screening. There will be technology available and you can leverage all of the data and analytics your management team can access. Most importantly, you’ll earn more and spend less.
Property management in Hampton Roads helps you avoid all of these mistakes. Let’s talk about where you’re especially susceptible to pitfalls.
Contact us at Doud Realty Services, Inc. We provide expert property management in Norfolk, Portsmouth, Hampton Roads, as well as surrounding areas such as Virginia Beach, Suffolk, Chesapeake, and Newport News.