Hidden overheads every landlord needs to consider | As a landlord, there are always some unexpected expenses lurking around the corner. Whether it’s insurance costs or maintenance costs, you need to make sure you have enough in your bank account to take care of the everyday expenses of running a rental property. This article outlines some of the biggest hidden overheads every landlord needs to consider.
As a landlord, you need to insure your property against many things, including major damage and theft. You also need to consider insuring yourself in the event that a tenant sues you because they have been injured in your home.
If you ever sell your property, there will be some small fees that need to be paid, such as agent and lawyer fees. However, it’s also important to factor in the costs of repairs and redecoration. If you fail to consider these costs when you first purchase a property, they can come as a nasty shock once the house has been sold.
In most parts of the country, you will need to pay a yearly property tax for your rental property. In some cases, this does also include water and garbage collection. If you fail to comply with paying these taxes, you could find yourself under heavy fines or potentially face jail time, depending on your local laws.
If you ever want to go into a rental agreement with your property, it will be necessary to hire a realtor. Even if you are advertising the property yourself, you will still need to pay realtor fees of 10% on all new leases or renewals.
It’s important to do your research before committing to a realtor. Google something along the lines of “property management companies near me” to get the best results. You should also ask your friends and family if they have any suggestions on who you should speak to.
As a landlord, it’s important to factor in some money each month towards the upkeep of the property you’re renting out. For example, if you purchase a property with wooden flooring, you will need to get sanding or refinishing done at some point. Not only will this cost you extra money, but it also means that your home won’t be in rentable condition while this work is being carried out.
There will always be times where you need to make some major and minor repairs. This is especially the case if you own an older property, as things like plumbing and electrics can wear out relatively quickly. You will need extra money set aside for any of these unforeseen expenses.
If you consider these costs, there won’t be any nasty surprises when it’s time to find your next tenant or sell the property. It’s also a good idea to think about putting away some extra money from each rent payment as a special “repair and renovation” fund. That way, if something major does happen, you will have the cash on hand to fix it.
These are just a few of the hidden overheads every landlord needs to consider when they purchase a rental property. By following these simple steps, you can ensure your rental property is always profitable.