A lot of real estate investors or even your average real estate novice that likes to dabble in investment properties, usually think they can manage the property themselves and save a buck. And at first, maybe they find a tenant and things run smoothly for a few months or even a year. But what a lot of them don’t realize, is the risk and liability they are exposed to when things take a turn for the worst. Here are the top 5 risks to consider:
- Security Deposits: Believe it or not, some inexperienced owners never even collect a security deposit to protect themselves. But even if you do, what happens when the tenant argues about funds held back or when the security deposit is not returned within the time frame required by Nevada law or the owner spends the money and doesn’t have to pay back. Don’t expose yourself to litigation over a security deposit that a property manager would maintain and handle for you.
- Insurance: Not just ‘renters insurance’ that covers the tenants personal possessions, you want an experienced property manager that requires the tenant to maintain insurance that covers your investment. Let that tenant’s insurance be the first line of defense in the event of a fire, damage or personal injury of the tenant or even a guest of the tenant that takes place on your investment property.
- Evictions: What happens when a tenant does not pay rent on time or you can’t enforce a late fee that you are entitled to based on the terms of the lease? What are the steps in the notification and eviction process required by Nevada law, to have properly document and present to a judge when filing an eviction? Have your property manager be the enforcer, collect those late fees and manage the entire eviction process efficiently to limit vacancy loss on your investment. Speaking of vacancy loss…
- Maximizing Your Return on Investment: What is the market value of rent for your investment property? What are the Nevada laws around increasing rents on existing tenants and when that has to be communicated to the tenant? What happens when the tenant is going to move out and new tenant needs to be found? Again, have an experienced property manager, they will know exactly the amount of rent you should earn with market analysis tools, have processes in place to notify tenants of rent increases, as well as processes in place to have new tenants ready to move in within 5-7 days of the old tenant moving out – all contributing to a better ROI for you the owner!
- Fair Housing and Discrimination: If you manage 4 or more properties are you subject to exposure and potential law suits by prospective tenants that claim they were denied tenancy due to discrimination under Nevada law…YES – you sure are. What are those protective classes under Nevada Law? All things an experienced property manager is well versed in to protect you and your asset!
There is a lot that goes into property management, and when not done properly, can be very costly and seriously impact your bottom line. Not only does it cost money, but it’s going to cost you valuable time, whether researching the issue, attending court hearings or finding professionals to help remedy the situation. So reach out to your local property manager and have a talk. Maybe it’s time to hand your investment over to a professional, allowing you to sit back, relax and collect your monthly rent check with the peace of mind knowing your property manager is handling all the headaches!