Surprises are rarely a positive thing in the world of single-family rentals. This is particularly true when the surprises are brought on by unforeseen fees or charges. For the novice real estate investor in Ellsworth, those unpleasant surprises are practically guaranteed. Learning about some of the costs will better prepare rental property investors for sudden and surprising expenses.
Landlord Insurance
A reliable landlord liability insurance policy is essential for every single-family rental owner. This isn’t to say that you have to get the most expensive coverage you can find. The cost of insurance policy rates can vary greatly, as can the quality and standing of the provider. This emphasizes the importance of comparison shopping before selecting a landlord insurance policy and monitoring your premium annually for changes. unless you thoroughly examine rates and insurance carriers, you may pay far more than necessary for landlord insurance.
Energy Costs
The utility costs of a property may present a second unpleasant surprise. Energy costs are often low for energy-efficient buildings. However, prospective investors may find that their new investment home has a hefty energy bill. Although there are numerous causes for this, property owners can take several steps to improve the energy efficiency of their rental property. You can learn more about the potential causes of the problems by having the house assessed for energy “vampires” like old equipment and air leaks. The cost of energy can be significantly reduced by replacing leaky components such as weatherstripping, single-pane windows, lightbulbs, and other items. With a few easy improvements and yearly upkeep, you can drastically lower your rental home’s energy costs.
Inadvertent Appliance Damage
Another expenditure that may surprise a real estate investor or Ellsworth property manager is the rapid depreciation of equipment. Any investor may feel trapped due to the cost of replacing large equipment every few years. The issue is more likely that tenants do not understand how to use and care for the appliances properly owing to a lack of information rather than they are misusing the items. Providing your tenants with information about proper appliance use and maintenance is one of the greatest ways to keep the appliances in your rental home operating longer and more effectively. You may dramatically increase the life of the appliances on your property by encouraging appropriate appliance use and having them carry out some simple maintenance procedures.
Pest Control
Inexperienced investors can decide to ask their tenants to do a good job of keeping bugs to a minimum by cleaning and maintaining the property frequently. Renters might still encounter pest issues, including termites, ants, rodents, and more, even in the cleanest properties. You may need to offer pest control services from time to time, as needed by local law, to keep your property habitable. Not only should you be prepared with a local pest control company that has been thoroughly vetted, but you should also budget for such services in advance. Otherwise, you risk having negative monthly cash flows due to emergency termite or other treatments.
Erosion Prevention and Repair
Every new season during the first year of rental property ownership might come with its own surprises. Sometimes erosion problems are revealed in the spring when it is warm outside. In these situations, the cost of erosion prevention and maintenance may deter an investor and alarm the tenants. Water might collect where the soil has worn away from a house’s foundation and cause harm. The easiest method to minimize unanticipated preventive and repair expenditures is to ensure that your rental property has adequate drainage and has been thoroughly inspected for symptoms of soil erosion.
Tenant Lawsuits
The best single-family property owners occasionally have to pay unanticipated legal costs. Tenant management can be challenging, and arguments do occur. Although budgeting for future litigation may be sensible, preventing a lawsuit in the first place is an even better strategy. One of the best places to start is to conduct routine maintenance on the property and respond quickly to repair requests. In addition, ensuring that your property conforms with safety requirements, providing basic safety equipment, and inspecting for hidden risks such as mold, lead paint, and asbestos are all measures to prevent court procedures. Another great approach to avoid tenant lawsuits and minimize legal costs is to adhere to your lease agreement and encourage your tenant to do the same.
In Conclusion
Now that you understand some of the unforeseen expenses that go with owning single-family rental properties, you can be better prepared to avoid or reduce them. Having forethought with property maintenance, tenant education, and cost comparisons, you can be better equipped to prevent some of the unfortunate surprises of real estate investing.
Real Property Management Acadia is a seasoned veteran when it comes to property management, which makes us the best resource for new and inexperienced property investors. Contact us today to see what we can do for you and your property!
Originally published on January 17, 2020.
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