Following from part one, here are more property types that you would do well to avoid adding to your rent roll.
#7- Default Landlord Property
This is an easy one to understand.
The owner of a property has just been told by his boss that he’s being transferred away from the area and now he needs to rent out his family home, and he’s stressed out about it!
Naturally, not all owners who fall into this category are an issue, but when you meet the owner at the listing presentation and they seem unreasonable regarding the definition of ‘fair, wear and tear’, and have a long list of unusual requests for the tenant to abide by, pay attention!
The issue isn’t so much what happens during the tenancy but more what happens when a highly-strung owner moves back into the property later on. With their emotional attachment and photographic memory, they can cause a lot of trouble and stress for everyone concerned after the final inspection with the outgoing tenant.
If they should not be the owner of a rental property and do not have the right expectations, you should not be assisting them!
#8- Wrong Type of Property
There are certain types of property that simply have a high chance of attracting the wrong type of tenant.
It can be a multi-storey block of flats or former government housing that can only typically attract a low-grade tenant. These typically also fit into the low rent property category anyway and are therefore low income generating.
If the property type is likely to get you the wrong type of tenant, it should be avoided.
#9- Furnished Property
I call this one the ‘F-word!’
When we’re dealing with typical suburban residential property, the type of tenants that we want will have their own furniture, so we are limiting our tenant reach by having furniture in the property.
Aside from the issues that come with lost, soiled, and damaged furniture, the human nature rule is that people are not as likely to look after someone else’s stuff as if it was their own. Just avoid managing furnished properties unless you specifically deal with a niche type of property such as executive short-term, holiday, or student housing.
#10- Eviction Property
I’ve learned this one from too many years on the job.
When a self-managing owner has got themselves into trouble with a tenant that needs evicting, taking on the management to do the dirty work of the eviction process for them just to obtain the new management isn’t such a good idea!
Stress and problems can be the result and when the tenant doesn’t pay up and ‘shoot through’ it can be financially a bad business decision.
Sometimes they work out, more often than not they don’t!
#11- Leasing-Only Property
Not everyone will like my opinion on this one!
When a self-managing owner only hires you to find a tenant for them, it isn’t so much of an issue – until things go bad!
For example, if a tenant is a few days behind in rent as an agent we will take action.
The self-managing owner may not act for weeks and therefore has a higher eviction chance with that tenant.
When the tenant gets evicted the owner thinks that, not only has he got a bad tenant but also a bad agent that gave him that tenant. Therefore your reputation can take a hit due to bad word of mouth.
We cannot afford to be creating businesses that cause burnout and undue stress for property managers.
If the PM turnover and disallousionment are to stop, we must address the issues that are causing it.
Having a property listing criteria minimum standard goes a long way towards that.
Your people and rent roll are worth it!