There is no denying that owning rental property is a strategic financial investment.
You might have landed on this article because you’re be wondering if:
– it’s worth managing your property yourself.
– if you should hire a professional Reno property management company.
We want you to be prepared for the many complexities involved in managing properties.
In this article, we explain 9 common mistakes that Nevada property owners and landlords can easily avoid.
1. Doing it yourself.
New property owners in Nevada, often ask:
The short answer is “Yes.”, and the long answer is “How much do you value your time?”.
The benefit of managing your property yourself is that you have control and get to keep most of the rental income.
However, property management takes a lot of work, much more than many people realize. It is usually cost-effective to just let someone else to manage the property for you if you lack the time or experience to do so.
To help you decide whether you are up for the challenge, try asking yourself the following questions:
- How will you market your property and deal with vacancies?
- How will your emotions impact your decisions as a landlord?
- Will you be able to keep up with market trends?
- Would you rather collect rent, or just have it arrive in your mailbox?
- How will you vet and place new renters into your property?
- How would you deal with midnight maintenance calls?
2. Not knowing Nevada’s landlord-tenant law.
This is another mistake many new landlords and some property managers usually make. Not knowing or understanding these laws can get you into a lot of unnecessary legal trouble.
Each state has their own legislation that structures rent collection, security deposits, landlord entry, and tenant evictions.
In Nevada, for example, you must provide your tenant with at least a 24 hours’ notice prior to accessing their rental unit. You must also provide them with a valid reason for the entry and the timing you’re proposing.
If you blatantly ignore this rule, your tenant could sue you for harassment.
3. Discriminating against tenants.
It goes without saying that treating all tenants equally and fairly is key to a successful rental business.
According to the Federal Fair Housing Act, landlords should not discriminate against tenants based on certain protected classes. The classes are race, color, national origin, age, disability, sex, and religion.
Additionally, Nevada state law also prohibits discrimination based on:
- Sexual orientation
- Opposing unlawful employment practices
- A credit report or credit information
- Gender identity or expression
- Use of service animal
- Lawful use of any product when not at work
4. Ineffective tenant screenings.
This is another common mistake that too many Nevada landlords often make. Screening tenants helps filter the good tenants from the bad. The last thing you want is having to evict a tenant because they are unable to pay their rent.
You should begin the screening process the moment a prospective tenant begins to call you to view your rental. Pre-screening questions can help you save the time of having to show your property to tenants who won’t be a good fit.
Examples of pre-screening questions include:
- Do you have any pets?
- Have you ever been evicted?
- How many people will be living in the apartment?
- Will you have the security deposit and first month rent upon move-in?
If the tenant passes all these pre-qualifying questions, move on to the next part of the screening process. But if they don’t, then move on to the next applicant.
Of course, room for compromise can always exist. A tenant with a pet snake, for example, is not automatically a bad tenant because you are afraid of the animal. You just have to be clear of your boundaries as a landlord and be willing to meet in the middle if the tenant seems like a great fit apart from a small detail.
5. Underestimating maintenance expenses.
The prospect of owning a rental property is exciting, no doubt. The plan is to fill the property with a good tenant and then to simply start collecting rent each month.
It’s a great plan that usually works out well. However, there is one expense that many landlords in Reno often forget: property maintenance and repairs.
As a landlord, it’s your responsibility to ensure your property is properly maintained. Not only does this help keep tenants happy, but it’s also a legal requirement.
How much should you expect to pay in maintenance costs per year? Generally speaking, maintenance expenses take up about 1% of the rental property’s value.
For instance, if your rental property is valued at $300,000, you should expect to spend about $3,000 in maintenance expenses annually.
6. Treating your rental business like a hobby.
Are you treating your rental business like a “side project”? If so, then you need to stop unless you plan on losing money in the process.
Treating your rental property like the full-time business it is involves doing things like establishing a separate account, keeping track of income and expenses, and taking classes to keep yourself educated on established standards and pricing.
7. Skimping on insurance.
Getting the proper insurance coverage should be a priority for any landlord. Sadly, many landlords in Reno fail to do this.
The issue is usually twofold. You could forget to get the proper amount of coverage, fail to get the right type of insurance coverage, or a combination of both.
Ideally, every landlord should have property insurance and liability insurance. Property insurance helps protect against property damage. Liability insurance protects against things that you can be blamed for. For example, a claim of negligence from your tenant claiming that they fell in the rented property due to a water leak.
8. Not enforcing lease terms.
Have you outlined that late rent payments would incur a late fee? Do you have a “no-pet” policy? Have you noted on your lease that you don’t permit subletting or subleasing?
Whatever your lease says, enforce it. If you just put it on paper and don’t actually enforce it, chances are your tenants won’t abide by it or much else in the agreement.
9. Delaying an eviction.
Delaying an eviction can be a disaster. If your tenant seriously violates the terms of their lease, it might be in your best interest to evict them. Usually, the sooner the better.
If you are unsure of your rights or how to go about evicting your tenant, hire a property manager or an eviction attorney as soon as you can.
These are the 9 common mistakes that rental property owners often make. With this knowledge, you are prepared to enjoy a successful rental property business. If you need any help with the task, contact us today and we would love to manage your property professionally!