In the realm of single-family rentals, pleasant surprises are unusual. This is particularly true when the surprises are brought on by unforeseen fees or charges. For the novice real estate investor in Manhattan, those unpleasant surprises are practically guaranteed. Rental property investors might be better prepared when one or more surprises arise by learning about some of the most prevalent hidden expenses.
Landlord Insurance
Every single-family rental owner should have a good landlord liability insurance policy. This does not imply that you must purchase the most expensive coverage you can. Insurance policy rates can differ substantially, as 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 can end up spending far more on landlord insurance than necessary if you don’t thoroughly evaluate rates and insurance carriers.
Energy Costs
The utility costs of a property may present a second unpleasant surprise. The cost of energy is generally minimal for an energy-efficient building. However, prospective investors may find that their new investment home has a hefty energy bill. Despite the fact that there are numerous causes for this, property owners can take some steps to improve the energy efficiency of their rental property. Having the home examined for air leaks, older appliances, and other energy “vampires” will help you pinpoint potential problem areas. 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
How rapidly appliances tend to wear out is another unplanned expense that could startle a real estate investor or Manhattan property manager. The cost of updating major equipment every few years can frustrate any investor. 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 appropriate appliance use and maintenance is one of the best methods to keep the appliances in your rental home operating longer and better. 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
Beginner investors could decide to ask their tenants to keep unpleasant pests to a minimum by doing routine cleaning and upkeep. Renters may still experience issues with pests, including termites, ants, rodents, and more, even in the cleanest dwellings. You may need to offer pest control services from time to time, as needed by local law, to keep your property habitable. You should not only have a trusted local pest control service provider on hand, but you should also plan ahead financially for such services. If not, you can have negative monthly cash flows from emergency termites 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 expense of erosion control 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. Ensure that your rental property has adequate drainage and has been thoroughly inspected for symptoms of soil erosion to avoid unanticipated costs for prevention and repairs.
Tenant Lawsuits
Even the best owners of single-family homes may occasionally incur unanticipated legal bills. Conflicts can and do arise when working with tenants, which can be challenging. It may be wise to set aside money in case a lawsuit arises in the future, but it would be wiser to take all reasonable steps to avoid one in the first place. One of the best ways to start is by performing routine property maintenance and promptly responding 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. Honoring your rental agreement and encouraging your tenant to do the same, is another good way to avoid getting sued and paying huge legal fees.
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. Some of the more unwelcome surprises of real estate investing can be averted if you are active with property upkeep, tenant education, and cost comparisons.
Real Property Management Bozeman 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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