How to Deal with the Top 5 Property Management Challenges

While real estate investing offers substantial benefits, including passive income, tax advantages and long-term appreciation, managing your properties presents a few challenges. Understanding these challenges upfront can help you build a real estate investment business that is resilient, sustainable, and profitable.

To that end, let’s explore the top five property management challenges landlords face – and how to deal with them.

Challenge #1: Tenant Issues

Reliable tenants are a dream to work with. But bad tenants are a nightmare. 

You may have a tenant who pays rent late, causing cash-flow concerns when your mortgage payment is due. Or you might have a careless tenant who damages the property or disturbs their neighbors. These renters need to be handled with care to prevent the situation from escalating. 

How to Deal with Tenant Issues

The best way to deal with bad tenants is to avoid leasing to them in the first place. Attract reliable renters by pricing your units competitively, using reliable market data to determine fair rates. And establish a thorough vetting process to screen prospective tenants.

If an issue arises, invite your tenant to have an informal conversation. Get their side of the story and work with them to brainstorm possible solutions. Maintain thorough documentation of the situation until it is resolved. 

If circumstances don't quickly improve, your best course of action may be to part ways. To avoid a lengthy, expensive eviction process, you might consider offering cash for keys, in which you pay the renter to vacate. While not ideal, this strategy can help you cut your losses and find a more reliable tenant. 

Challenge #2: Resident Retention

When you find responsible residents, it’s in your best interest to keep them happy so they renew at the end of their lease term. The longer you can retain these quality tenants, the lower your vacancy losses, turn expenses, and headaches from finding a replacement for that unit. 

However, resident retention isn’t easy. Depending on your market, you may be competing with hundreds of comparable properties. So it’s important to figure out how to secure lease renewals year after year.  

How to Retain Residents

There are many ways to increase resident retention in your rental properties, including:

• Address maintenance requests promptly. Respond to service requests as soon as possible and communicate clearly regarding any issues that cannot be resolved immediately. 

• Invest in the property. Properly maintaining the structure and grounds makes the property a more inviting place to stay.

• Build a sense of community. If you own multifamily buildings, host events so your residents can get to know each other. Strong friendships help your renters feel more invested in the community.  

• Financially reward loyalty. Rather than automatically bumping the rent up to current market rates for every lease renewal, consider keeping rates just below market for the tenants you most want to keep. You can also offer lower rates for longer lease terms. 

Challenge #3: Unexpected Repairs

Unexpected repairs are a given in real estate ownership. Systems and fixtures naturally wear out over time, and unpredictable events, like natural disasters, can require emergency repairs. 

The primary challenge for real estate investors dealing with unexpected repairs is the cost. But this issue can also create challenges in terms of the time required to fix the problem and the potential impact on your renters, particularly if they need to vacate the unit while work is being done.

How to Deal with Unexpected Repairs

Unexpected repairs are inevitable, so it’s wise to have plans in place to address them. Here are some of the best ways to deal:

• Maintain adequate property insurance to help you cover the cost of qualified repairs.

• Set aside a percentage of income every month to establish a reserve fund for repair costs.

• Learn how to make minor repairs yourself to save money on labor. 

• Have a backup funding source, such as a credit card or HELOC, that you can tap into in an emergency.

• Communicate with your residents to explain how you’re going to support them through longer repair jobs and update them on the progress.

Challenge #4: Legal and Regulatory Compliance

Landlords struggle to stay current on legal and regulatory compliance because housing laws, tenant rights, and property regulations vary at local, state, and federal levels. And they frequently change.

Navigating complex legal rules, such as eviction procedures, rent control laws, and fair housing requirements, can be time-consuming, especially if you manage properties in multiple markets.

How to Maintain Legal and Regulatory Compliance

You can subscribe to local real estate publications and/or join a landlord association to stay informed about changing regulations in your area. However, you may also want to consult with a legal professional periodically to make sure your contracts and policies are fully compliant and represent best practices.

Challenge #5: Vendor Management

You can’t be expected to do everything yourself as a landlord. So, you’ll work with different vendors to handle items that you don’t have the time or experience to do yourself.

Throughout your real estate investment career, you’ll manage skilled professionals, such as: 

Finding reliable, cost-effective vendors can be difficult. Plus, managing vendor contracts, scheduling, and quality control requires constant oversight.

How to Deal with Vendors

Building a trusted vendor network and maintaining professional relationships with your vendors is crucial. Get referrals from people you already trust (like other investors, property managers, and attorneys), and research each vendor before working with them. Maintain a list of preferred vendors for each service, including at least one backup in case your primary provider is unavailable when needed. 

Use written agreements to document scope, terms, and pricing. Hold your vendors accountable for providing quality work and reward them with prompt payments and five-star reviews. 

Data-Driven Solutions to Real Estate Investment and Management Challenges

Whether you’re a new real estate investor or an experienced industry mogul, big data provides more efficient solutions to your investment and property management challenges.

With PropertyReach, you can identify profitable investment opportunities, stay ahead of renter trends, and scale your real estate success. 

Learn more about PropertyReach’s features and sign up for your free trial today!