In the industry of single-family rentals, surprises are rarely a good thing. This is even truer if that surprise comes as an unexpected cost or expense. Unwelcome surprises are what may await the new real estate investor in Lakeview. But, having knowledge of the most common hidden expenses will allow rental property investors to be more prepared for when these unwelcome surprises come.
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 offering it. This makes it important to shop around before choosing your landlord insurance policy and to check your rate annually for changes. You should be careful comparing rates and insurance carriers, otherwise, you may end up paying far more than you need for your landlord insurance.
One thing to consider is that a property’s utility bill may also come as a surprise. An energy-efficient property is one that has relatively low energy costs. Something that new investors are going to find out is that a high energy price tag comes with a new investment property. The reasons for this vary, but there are a variety of ways that property owners can make their rental property more energy efficient. Getting the house checked– specifically 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
Throughout the first year of rental property ownership, owners will realize how each new season can bring surprises of its own. Warm spring weather sometimes reveals erosion issues that were not visible during colder months. In these cases, 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 sooner or later. 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 starting point. Ensuring your property is compliant with safety standards, offering basic safety equipment, and checking for hidden problems like mold, lead paint, or asbestos — these are simple but effective steps towards enjoying a life free from the courtroom. Following your lease agreement, and encouraging your tenant to do the same, is one effective approach to avoid tenant lawsuits and keep legal fees at bay.
Inadvertent Appliance Damage
Lastly, one more expenditure that may catch a new rental property owner off guard is how quickly 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 the abuse of the appliances by the tenants, but the damage accidentally caused to them by the tenants’ failure to safely run them. 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.
Owning a single-family rental property inevitably comes with unforeseen expenses. Now that you know this, you can be better prepared to reduce or avoid them entirely. Though rewarding, investing in property also comes with its own set of challenges. However, by being proactive with tenant education, property maintenance, and cost comparisons, you can better prevent several unwelcome surprises.
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