Whether you're looking for an additional source of income, investing for the future, or having trouble selling your home, there are many reasons people consider becoming landlords.
From meeting daily expectations to resident challenges, it's no secret that investment property owners need to have the right set of skills, knowledge and interpersonal abilities to be successful in this role. At the end of the day, holding the title of do-it-yourself (DIY) landlord is more about managing people than properties.
In an effort to help landlords navigate one of the most challenging parts of being an investment property owner – screening prospective residents - the Real Property Management franchise, the nation's leading full-service property management organization, announced today key findings from a study that may reveal key areas to improve a do-it-yourself landlord's bottom line. The survey, conducted in January 2018 among a national probability sample of 290 DIY landlords, posed thought-provoking questions designed to uncover how often key property management activities are conducted. The study was implemented by Liminality, Inc., a Boston based research company.
The study asked nearly 300 landlords to answer a series of questions focused on how often each activity was completed for their property– always, sometimes or never. Included were things that either the landlord did themselves or that a property manager or other third party did on their behalf. The survey uncovered the following information in the key areas of screening prospective residents:
- 55 percent of DIY landlords report that they never or only sometimes require renter's insurance which puts them at greater financial risk not to mention the additional time and resources required to deal with the problems this creates
- Approximately 57 percent of DIY landlords never or only sometimes conduct credit checks. Without confirming credit worthiness, the likelihood of leasing to irresponsible residents with late rent payments, and possible eviction increases. This can lower the return on investment of your property, by creating more frequent vacancies, and non-payment issues.
- Approximately one in four DIY landlords never allow pets in their rentals which means they may be missing out on the best residents or be inadvertently reducing the potential rental income from the property. Pet friendly properties can often charge more.
- Although 44 percent of DIY landlords responded that they "sometimes" allow pets, these landlords could be opening themselves to discrimination lawsuits because subjective judgment is used instead of set policies that distinguish between pets and service animals.
- 27 percent of DIY landlords report that they do not use an enforceable lease. One that is legally compliant, covers important obligations and rights, and protects both the landlord and the tenant.
- 45 percent of DIY landlords do not always or never enforce sections of the lease. This lack of consistency opens the door to discrimination lawsuits for inequitable treatment of residents, and could risk the entire lease agreements' standing in court.
"The results of this study unveiled many opportunities for DIY landlords to strengthen their prospective resident screening process," said Kent Frogley, Vice President of Marketing. "From being more diligent on requiring renter's insurance to performing more stringent credit checks and utilizing leases that are enforceable, investment property owners can save themselves time, money and grievance by hiring professional property managers such as a Real Property Management office."
Real Property Management is the leading property management franchise in the nation, with more than 300 offices in North America that manage assets worth $13 billion.