You can be an experienced investor and still make the mistakes that are easy to make when it comes to Santa Rosa rental properties. New investors are in danger of pitfalls, too, and it can be demoralizing to run into problems when you’re just getting started.
Investing in Santa Rosa rental homes requires that you be strategic and intentional, but ready to move quickly. The best advice we can give to investors is to know your goals. Put together an action plan that will help you reach those goals. And always surround yourself with professionals who can support you and provide experience and resources.
These are some of the most common pitfalls that are a risk for everyone – new investors and experienced rental property owners. Don’t let them derail your investment plans.
Preventative and Routine Maintenance is Non-Negotiable
Not making the needed upgrades on rental properties is one common pitfall that’s easily avoided.
Preventative maintenance will protect the condition of your asset and ensure you’re not overpaying for larger repairs later. You have to take care of larger items and address repairs as well as upgrades. Pay attention to what the competition is offering, and make sure you’re keeping up. You don’t necessarily have to do a complete rehab between every tenant, but maybe some updates and upgrades are necessary. You might want to replace appliances. Put new paint on the walls.
Routine maintenance and preventative maintenance are no-brainers. Don’t let yourself settle for an outdated and deteriorating property. Bring your rental home up to the standards of a competitive market.
Maintaining your home includes knowing what will add value. Granite counters are nice, but they may not be necessary. However, changing your old and dated appliances to energy efficient models can bring in a little more money every month.
Pricing Pitfalls and Santa Rosa Rental Homes
A lot of investors make mistakes when they’re attaching a rental value to their property. Each area of Santa Rosa is a little different, and the rental value of your property will depend on location. It also depends on the strength of the market and the condition of the property.
Maybe you know what the average rental price is in Santa Rosa. That doesn’t mean much if your specific property is much smaller or has different amenities. A huge pitfall in the rental market is vacancy. A property that’s not priced correctly will be vacant for longer.
The Pitfalls of Poor Tenant Placement
Not screening residents properly is a huge investment pitfall and can have dreadful consequences.
Some of the investors we work with will have impossibly high standards for their tenants. They’ll want a 750 credit score and a six-figure income. That’s going to be hard to find. Other investors are far too laid back. They barely run a credit check and don’t do any digging into rental backgrounds or income verification.
Criteria that’s too strict leads to vacancy while criteria that’s too loose leads to terrible tenants.
Follow all fair housing laws and screen your tenants carefully and consistently. It will impact your investment experience because good tenants pay rent on time and take care of your property.
Always Budget for Variable and Fixed Expenses
Forgetting certain expenses associated with a rental property can be a big pitfall.
There will always be costs associated with leasing, maintaining, and managing a rental property. In fact, those costs will likely be more than you expect – so plan for that. We often encounter investors who forgot to factor in the cost of vacancy or tenant turnovers. Or, they don’t think about the costs involved in routine maintenance issues and even emergencies.
You’ll have to pay property taxes and insurance. Make sure that you do some budgeting that includes all these expenses you’re not anticipating. Evicting tenants, for example, isn’t likely, but you should still have a reserve fund for potential legal issues and tenant disputes.
Avoid Investing in the Wrong Santa Rosa Rental Property
Sometimes investors can get emotionally involved in the properties they’re buying. A common pitfall is trying to buy a home you’d like to live in yourself. As an investor, you have to remember you’re not looking for your own home. You’re looking for a property that tenants will find appealing, so you have to think like a Santa Rosa tenant would. They are looking for clean, well-maintained homes close to good schools, work, and recreation. They don’t care as much as you do about stainless steel appliances and tile floors.
There are dozens more pitfalls we can talk about. If you’d like some help making smart investment decisions, contact us at Redwood Residential Property Management. We would be happy to serve as your Santa Rosa property management resource.