More than 44 percent of landlords manage their own rental properties. Finding tenants and taking care of the property can take a lot of your personal time, and you might not have a lot to show for it.
Are you thinking about investing in rental property, but you’re not sure what it will cost? Here are some of the hidden costs of being a landlord.
Tenant Screening Takes Time
One of the best landlord tips is to take your time when looking for a tenant. Most landlords screen two or more applicants before finding the right person for their rental property. If you’re a DIY landlord, the full impact of a wrong decision lands in your lap, so it’s a good idea to make the right choice.
There’s a cost to running background checks, but it’s not a good idea to skimp on this crucial tenant screening step. When you spend time doing administrative work instead of working at a paying job, that costs you.
Repairs Can Add Up
Property repairs may be minor issues or major repairs like an appliance failure. As the landlord, you are the person the tenant will call. You will need to take time from your busy schedule to fix the problem or arrange to have a repair company provide a quote.
You might need to meet them at the tenant’s home and let them in if the tenant is away at work. Your time is worth something, and there is the added cost of travel to and from the property. Some landlords hesitate to consider a property manager because of the cost.
They are ignoring the actual cost of their time. To see what a property manager can do for you, check out https://certainmanagement.com/the-best-property-management-new-orleans-has-to-offer/. They provide some great property management tips.
Higher Property Taxes and Insurance
When you own your home, some states or municipalities give you a tax break because you are an owner-occupant. That can result in a higher property tax amount than you budgeted for. If your home’s status changes to a rental, this tax break no longer applies.
You won’t be able to use your homeowner’s insurance to cover your rental property. As an investor, the cost of your insurance will be higher. Some estimate that the premiums will cost up to 25 percent more than if you lived on your property.
Tenant Damages Cost Money
When a tenant leaves and you find significant damage, you wonder why you started renting out a property. Absorbing the cost of a major repair can be a financial setback if you’re a small investor. You can use the tenant’s security deposit to pay for some of the repairs, but it might not cover the entire amount.
Enjoy Being a Landlord
There are a lot of good reasons to use a property management service to help you with your rental property. You can reap the rewards of being a landlord without spending all your time taking care of the rental.
Did this article help you understand the ins and outs of rental properties? If so, be sure to use the search feature to find more information.