Surprises are rarely a positive thing in the single-family rental industry. This is especially true when unexpected charges or expenses are unanticipated. For the novice real estate investor in Rexburg, those unpleasant surprises are practically guaranteed. Rental property investors would be better prepared if one or more surprises arise by learning about some of the most typical hidden charges.
Landlord Insurance
A good quality landlord liability insurance policy is a must for every single-family rental owner. The insurance need not be the most expensive one you can locate, however. Insurance policy rates can widely vary, and so can the quality and reputation of the insurance provider. Because of this, it’s important to compare options before selecting a landlord insurance policy and to review your pricing each year for any adjustments. You could pay significantly more for your landlord insurance if you don’t thoroughly examine rates and insurance carriers.
Energy Costs
The property’s utility costs could present a second unpleasant surprise. Energy costs are often low for energy-efficient buildings. However, prospective investors can find that the cost of maintaining their new investment property is exorbitant. There are numerous ways in which property owners can increase the energy efficiency of their rental property, regardless of the cause. Having your home inspected for air leaks, outdated appliances, and other energy “vampires” can help you identify potential problem areas. Lowering energy expenditures can be achieved in large part by replacing weatherstripping, single-pane windows, lightbulbs, and other leaky areas. Simple improvements and yearly maintenance can drastically lower the energy costs of your rental property.
Inadvertent Appliance Damage
How rapidly appliances tend to wear out is another unplanned expense that could startle a real estate investor or Rexburg property manager. Any investor may feel trapped due to the cost of replacing large equipment every few years. The issue is not necessarily that tenants are mistreating the appliances, but rather that they lack knowledge on their correct use and maintenance. Educating your tenants on the correct usage and maintenance of appliances is one of the greatest methods to keep the equipment in your rental home working longer and more efficiently. 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
First-time investors in rental properties may plan to have their tenants perform regular cleaning and upkeep to minimize bug infestations. Renters may still experience insect issues in even the cleanest properties, including termites, ants, rodents, and more. You may occasionally need to offer pest control services to maintain your property’s habitability, as required by local law. Not only should you be prepared with a trusted local pest control service provider, but it’s crucial to plan ahead financially for such services. Otherwise, emergency termites or other treatments can result in negative monthly cash flows.
Erosion Prevention and Repair
During the first year of rental property ownership, each new season might bring its own unique surprises. Sometimes erosion problems are revealed in the spring when it is warm outside. Such circumstances could cause an investor to lose money and tenants to become concerned about erosion prevention and repair costs. Water may collect and cause harm as the soil is lost from a home’s foundation. The easiest method to prevent any unforeseen preventative and repair costs is to make sure that your rental property has good drainage and has been thoroughly inspected for symptoms of soil erosion.
Tenant Lawsuits
Even the most careful single-family property owners periodically encounter unforeseen legal costs. Conflicts can and do arise when working with tenants, which can be challenging. While setting aside money for a potential lawsuit may be wise, it is always preferable to take all reasonable steps to avoid one altogether. One of the finest places to start is by carrying out routine upkeep on the property and quickly attending to repair requests. In addition, keeping yourself out of court also entails making sure your facility complies with safety regulations, offering basic safety gear, and inspecting it for hidden hazards like mold, lead paint, or asbestos. 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
You may be better equipped to reduce or avoid unexpected expenses that go with owning single-family rental properties, now that you know about them. A good deal of unexpected outcomes which come with real estate investing can be prevented if you are active toward tenant education, property upkeep, and cost comparisons.
Real Property Management Southeast Idaho is a veteran expert when it comes to property management, making us the greatest 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.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
