Surprises are rarely a good thing when it comes to owning and operating single-family rental homes, especially if the surprise comes in the form of an unexpected cost or expense. Nobody would want that. New real estate investors in Rexburg might face a number of unwelcome surprises. So, in order for rental property investors to be prepared, it would do them well to look into a few of the most common hidden expenses.
Every single-family rental owner needs a good quality landlord liability insurance policy. But that doesn’t mean that the policy must be the most expensive one you can find. Insurance policy rates can vary widely, as can the quality and reputation of the company that offers it. This makes it important to shop around before choosing your landlord insurance policy and to check your rate annually for changes. So, to make sure you don’t end up paying far more than you need for your landlord insurance, make sure to carefully compare rates and insurance carriers.
Yet another surprise may present itself in the form of a property’s utility bills. An energy-efficient property is one that has relatively low energy costs. Eventually, new investors will uncover something about investment properties: they come with high energy price tags. The reasons for this vary, but there are a variety of ways that property owners can make their rental property more energy efficient. Checking the house for air leaks, aging appliances, and other energy “vampires” can help you get a better idea of where the issues may lie. Replacing weather-stripping, single-pane windows, lightbulbs, and other leaky spots can go a long way toward lower energy costs. With a few simple fixes and some annual maintenance, you can significantly reduce your rental home’s energy bills.
Erosion Prevention and Repair
New owners of a rental property will eventually understand that each new season can bring surprises of its own. Warm spring weather sometimes reveals erosion issues that were not visible during colder months. In cases like these, the cost of erosion prevention and repair may come as an unwelcome surprise. As soil is eroded from a home’s foundation, water can pool and result in damage. A home that has proper drainage and has been thoroughly checked for signs of soil erosion is one that is protected against any unknown prevention and repair costs.
Even the best single-family property owners may face unexpected legal fees at a certain point. Working with tenants is rarely easy, and disagreements can and do happen. Though budgeting for a future lawsuit is good, and even better approach is to make sure that steps are taken to prevent a lawsuit in the first place. Performing regular maintenance on the property and responding promptly to repair requests is a good start towards responsible ownership. Not only that, but ensuring your property is compliant with safety standards, has basic safety equipment, and has been checked for hidden problems like mold, lead paint, or asbestos is procedures that secure not only the property but keep the owner out of the courtroom. One of the many excellent means of avoiding tenant lawsuits and keeping legal fees at bay is to follow your lease agreement and to encourage your tenant to do the same.
Inadvertent Appliance Damage
One last possible cost that might surprise a new rental property owner is how quickly the appliances seem to wear out. The cost of replacing major appliances every few years can have any investor feeling sticker shock. The trouble isn’t necessarily that tenants are abusing the appliances, but rather that they may be accidentally damaging them because they don’t know how to operate the machines. Educating your tenants on proper appliance use and care is key to keep your rental home’s appliances running longer and better. You can significantly extend the life of your property’s appliances by informing your tenants to use the appliances correctly and to perform a few basic maintenance tasks.
Now that you know some of the unpredictable expenditures that come with owning single-family rental properties, you can be better prepared to reduce or avoid them. When pursuing an investment in real estate, it’s best to understand that it is impossible to avoid encountering a number of undesirable concerns. But, by being proactive with tenant education, property maintenance, and cost comparisons, you can better prevent a good number of those possible concerns.
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