As Real Estate heats up and more individuals get into the industry, many of them will proceed to enter the world of Property Management. Many Realtors© have entered the field of rental property management as a way to increase their income. Just like I did when I first got started in real estate. If done properly, it will increase your bottom line, plus it will introduce you to other areas of real estate, I consider a requirement…
But like everything else, learning a new industry or trade it is not easy, you always have to be careful and walk before you run. So below I will list some of the biggest liability mistakes most common, that I run into in day to day operations. And if you are among those who haven’t yet learn the ropes and you are reading this… Pay attention, it will save you a few headaches and grey hairs…
- Not having a written property management agreement. Even if you’re just helping out a friend, family and managing the property for free, you’re walking on thing ice if something comes up, like the need for evicting a tenant, collecting rent or ordering repair services.
- Using a makeshift lease agreement. These agreements are easy to find on the internet, maybe too easy. If the agreement isn’t thorough, or if it doesn’t include sections that required by your state law you’re leaving yourself exposed to headaches during eviction, access to the property or even get property insurance.
- Not depositing the security deposit in a proper trust account. The proper place for the money isn’t with the owner or a realtor’s account. In some states, the trust account money must be in separate property management trust accounts and not in the brokers general sales trust account.
- Not having the tenant sign a Move-In and Move-Out form. This form includes a property condition disclosure. Without it, you have little re-course if a unit is damaged beyond the usual wear and tear.
- Trying to incorporate a Lease – Purchase arrangement in to a lease agreement. There’s nothing worng with doing this, but it’s complicated and lots of details have to be disclosed and agreed to. If not done properly , you could invite trouble.
- Not checking with Policy and Procedures of your Brokerage. This must be the most common and forgetful of them all. As a sales associate, you are under the supervision and must conduct business based ion the policy and procedures of your real estate brokerage. you must check with your broker or brokerage manager and confirm if the brokerage you work for allows property management services. Not doing so, can get you in trouble.
Making sure you keep these tips in mind, will save you headaches and will guarantee a much easier and smooth transactions.