How to Ruin the Bottom Line As a Landlord in London Ontario
1-Holding on for that “dream” deal
If the area supports it and the property is $1,750 in the current market, you can lose/waste a couple of months income chasing $1,800. How many mortgage payments, taxes, insurance etc. are you willing to make trying to get that “dream deal”?
2- Waiting to get repairs done
“I will paint the unit if it doesn’t rent in a couple of weeks”. Sound good? Not a good idea! You should always consider the tenant your place will attract. If your rental isn’t in optimal shape to attract the very best tenants in a competitive market, you will only get tenants who don’t care what their home looks like.
You may get the place rented without the cost of the repair, but it may not be the tenant you want in your unit for the next 12 months.
3- Ineffective marketing
A simple “For Rent” sign or a Kijiji ad on page 22 may be the quick end to your vacancy. Be careful, though – 99% of consumers search the internet, social media, etc., and the best applicants now come through online ads. You have to track your efforts to see what the media produces the best (not always the most) calls per dollar spent. A “free” ad can cost you days or months of vacancies if it keeps you from finding the best tenants.
Whether you choose paper or online ads, you must have a well-written ad to get the phone to ring. You also have to be priced right and have the unit available to rent. If you aren’t getting any calls, it is usually about the price. If you are too high, most people won’t even take a look. If you are getting plenty of lookers but no takers, check the home out to figure out what is turning people away.
4- Using an inexperienced Realtor or doing it yourself?
There are many reasons to use a Realtor, but if your Realtor isn’t experienced, there isn’t much benefit at all. In any primary market, there are thousands of real estate agents who want a commission. Still, very few with enough property management and marketing experience to make them the right choice.
5- Poor (or no) tenant screening
Most evictions are the result of a weak or inadequate screening process. By extension, that means most repairs, vacancies, and legal expenses are also due to approving the wrong tenant. Tenant screening is an area where you MUST do your homework and not rely on first impressions or instinct. Looks can be deceiving. Unless you have money to burn, screen well and know when to say NO.
Many people who try to manage their rentals are very trusting, sometimes even skipping the use of a basic application and background checks. An eviction notice starts the day you rented your place!
I tell all my clients. It is less expensive to keep the place vacant than to have an unsuited tenant.
6- Using a substandard lease agreement
Most leases on the market are very generic and seem designed not to scare off a prospective tenant, rather than to protect the landlord. Do some tenants refuse to sign our lease because we have a credit check clause? We sure hope so. Does our pet tolerance language discourage the owner of 3 large dogs, 14 turtles and an emu? You guessed, right. If the lease protects the tenant more than the landlord, then you are headed for trouble unless you get lucky finding the perfect tenant.
7- Lost time
Losing time is the easiest and most common mistake in real estate investing in London, Ontario. Calculate the rent value of each day on your unit. If it rents for $1,800/month, then each vacant day costs you $60! We see people all the time who cannot afford my fees but lose a week getting their ad in the paper ($420) or take a couple of weeks getting the house rent-ready ($840)or feel bad for the tenant and delay the eviction for a month ($1,800).
Managing a rental property in London, Ontario, is more complicated than it looks. Do your homework and either become an expert or hire one. Every rental property is a business and should act like one. The problems outlined here are easy to avoid but expensive to experience. Give your business the time and attention it needs, and it will pay you back very well over time.
Don’t get tricked by a suspiciously cheap management solution; by the time you find all the hidden ways that the “cheaper” guys make money, it will be too late. The more affordable a property manager looks on the front end, the more they make up on the back.
Note: I am a Realtor and not a property manager. I help clients buy condos, houses & duplexes etc. and then help them market their properties for rent and do the credit checks, confirm references and employment, do the lease and collect first and last month’s rent.
I also help many professional landlords with their tenant choices but leave everything else up to them or a few handymen or tradespeople.
PPS: The world is an echo, so make sure you know where your choices are coming from!