Owning and operating a rental property involves a number of costs. As a landlord, you need to be aware of the expenses you need to pay, especially those that recur monthly. But not all costs are expected.
As a rental property owner, it’s crucial to know where you spend your money. Unfortunately, there are some costs that can easily add up without you noticing. As proper accounting is essential to prevent overspending, we at Taylor Street Property Management have put together a list of costs that you may not expect.
Understand Legal Fees
Owning a rental property does not only involve finding a tenant and receiving monthly rent payments. There are legal aspects associated with operating a rental business. As a landlord, you should understand the law related to owning a rental home. It’s critical to stay in compliance with the law to avoid any problems later on.
But if you are not well-versed with the law or creating a lease, it’s easy to get into trouble, especially if you have to deal with legal issues like evictions. That is why most landlords prefer to partner with a legal counsel to ensure that all the legal procedures related to operating a rental home are complied with.
While this is generally a good idea, there is also a downside, you’ll have to pay hefty legal fees. This is especially true if you hired the wrong legal partner. You may not realize how expensive legal services are until you receive your invoices from the law firm.
To avoid paying for unnecessary services, it’s important to discuss what services you need with your legal counsel. Also, make sure to work with a law firm that is an expert in real estate, so you are getting the right solutions to your requirements. Know the fees and other charges based on the services provided.
Make sure to find out if the fees are fixed or on a per-service basis. This can help you decide which one suits your needs best.
Mitigate Maintenance Costs
Maintaining the upkeep of your rental property is necessary to attract renters and keep them for the long term. Moreover, it is also your legal duty to provide clean and habitable place for your tenants. If you fail to maintain and repair your property as needed, you may end up facing legal issues for not complying with the health and safety standards in your local area.
Maintenance can become costly if you fail to address issues early on. Most seasoned landlords know how important routine inspections are to their business. If you perform regular inspections, it’s easy for you to identify issues early on while they are not yet too costly to fix.
A leaky faucet is generally easy and inexpensive to fix if you spot the issue right away. But if you wait too long, it might turn into a bigger problem like a burst pipe, which can be very costly to repair. It can also create a dispute between you and your tenant.
In addition, when it comes to maintaining the condition of your rental home, it’s best to hire an expert who is knowledgeable about the potential problems that can happen. This way, you can trust that the resolution they provide will last long.
On the other hand, working with someone who does not have the right knowledge and equipment to identify and address the problems can cost you more money in the long run and make your property a liability.
Avoid Long Vacancies
You still need to pay for the expenses associated with owning a rental property even if you don’t have revenue to cover the costs. When this happens, a vacant rental home is no longer an asset, but a liability.
To prevent vacancies, make sure to keep your tenants happy and provide them with high–quality services so they won’t have to find another place to live in. But tenants leaving is inevitable, so you also have to prepare for months that your rental home might sit vacant after the tenant moves out.
It’s best to have an emergency fund to cover the costs of owning a rental unit while it’s not yet occupied. You also need to have a proper marketing strategy in place. This allows you to list your rental unit in the market right away and have it rented again soon after the previous tenant moves out.
Let To Good Tenants
As a landlord, you should be careful of who you accept as a tenant because some tenants can only cause headaches and stress. It’s best to screen your tenant properly to ensure that you only accept those who are highly qualified.
Bad tenants can cause damage to your rental unit and its furnishings which can be too expensive to repair. Plus, they are also prone to missing a rent payment, which can greatly affect your profitability. You might also need to spend more on eviction processes should problems arise.
To avoid this, make sure to perform background checks and verify the applicant’s employment history, financial resources, credit, criminal record, and past tenancies. This can help you ensure that you’re only hiring those who can pay their rent on time, will communicate clearly and won't cause problems in the future.
Landlords need to be aware of all possible expenses related to operating a rental business. By knowing the costs of owning a rental home, you can easily prepare for all possibilities.
To help save on unnecessary costs, it’s best to work with a reliable property manager who can do all the necessary tasks for you, including giving legal advice, performing repairs, marketing the property, screening tenants, processing evictions, and more.