When you own or operate single-family rental homes, surprises are rarely welcome; it is almost never a good thing. This is even truer if that surprise comes as an unexpected cost or expense. New real estate investors in Lake Hamilton 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. The policy rates of insurance companies can vary widely, as can their quality and reputation. This makes it important to shop around before choosing your landlord insurance policy and to check your rate annually for changes. If you aren’t carefully comparing rates and insurance carriers, you may end up paying far more than you need to 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. However, new investors might find that a new investment property is accompanied by a high energy price tag. 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 discover that each season can bring surprises of its own. Warm spring weather sometimes reveals erosion issues that were not visible in colder months. In such 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. Making sure that your rental home has proper drainage and has been thoroughly checked for signs of soil erosion allows you to avoid any unknown prevention and repair costs.
Even the best single-family property owners may eventually face unexpected legal fees. Working with tenants is rarely easy, and disagreements can and do happen. It is wise to budget for a future lawsuit. Still, it’s wiser to take the necessary steps 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. In order to stay safe and out of the courtroom, a few arrangements need to be made. Such as ensuring your property is compliant with safety standards, providing basic safety equipment, and checking for hidden problems like mold, lead paint, or asbestos. Practice following your lease agreement, and encourage your tenant to do the same to avoid tenant lawsuits and keep legal fees at bay.
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. Lacking the appropriate knowledge of handling appliances can very well lead to accidentally damaging them. That’s where the trouble comes from, not necessarily that the tenants are abusing them. There are many maintenance procedures that can keep your rental home’s appliances running longer and better. One of which is to educate your tenants on proper appliance use and care. Instructing your tenants to use the appliances correctly and to perform a few basic maintenance tasks will significantly extend the life of your property’s appliances.
Now that you know about the potential costs that come with owning single-family rental properties, you can be better prepared to reduce or avoid them. By being proactive with tenant education, property maintenance, and cost comparisons, you can better prevent a number of unwanted expenses that come with real estate investing.
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