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3 Expenses as a Landlord or Investor
We speak from personal experience when we tell you that being a property investor or landlord is AWESOME. And while this type of real estate ownership comes with lots of amazing perks, it’s not without its occasional drawback. One of these is in the form of unanticipated expenses, which can wreak havoc on your bottom line. In order to eliminate at least some of the surprise factor, though, we’re going to let you in on 3 of the expenses that you are more or less guaranteed to encounter as an investor/landlord.
1. Repairs, both minor and major. Houses break down; it’s what they do. And your rental house is no exception. You are going to encounter everything from regular maintenance to minor and major repairs, and you need to be ready for them. The average furnace will set you back a few thousand dollars, and so will a new roof or exterior paint. While some of these won’t be a surprise – you’ll know they’re coming due to clues like peeling paint – others will completely throw you off and put a huge cramp in your plans for positive cash flow.
2. Horrible tenants. This probably won’t come as any great surprise to you, but not all tenants are going to pay on time and treat your home as if it were their own. In fact, there are some that are downright awful who will end up causing you a great deal of stress and costing you major bucks, whether it’s in the form of missed payments or damage to your unit. Pro tip for avoiding these tenants: get a background/employment check, or better yet, work with a reliable property management group that makes it their business to match you with only high quality tenants.
3. Taxes, insurance, and other fun fees. These aren’t necessarily unexpected costs; in fact, they shouldn’t be a surprise at all. Regardless, they’re worth mentioning because you’re going to have to pay them every year, whether you have a tenant or not. As an investment property owner, you’re responsible for property taxes each year, insurance on the home, and any other fees, such as homes association dues. You’ll also be responsible for things like yard maintenance, utilities, and other regular costs associated with the property.
These are just 3 of the expenses you’ll come across as a property investor, and while they’re certainly not any fun to deal with, it’s part of the package. To help mitigate some of the discomfort, it’s best to plan for them. Save a little extra each month and stash the cash in an emergency fund so you have something to fall back on when one of the above occurs. And remember, when it comes to real estate investment, the rewards usually end up outweighing the risk. With a little bit of planning and forethought for the future, you can set yourself up to avoid most of the suffering that is associated with these expenses.
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