Owning rental property is an excellent investment, but with great profits and investment growth, comes the potential for significant expenses. Unfortunately, property owners can be unaware of the costs involved and become overwhelmed as bills stack up.
To learn more about protecting your rental property profits, read about the tips and pitfalls that successful owners use to avoid losing more money than they make.
Consider Fees, Property Tax, and Insurance
Property tax accumulates whether a rental property is occupied or vacant. While owners factor tax costs into the monthly rental rate, they pay out of pocket without tenants to cover the expense. We recommend that you review your property tax assessments for any opportunity to appeal.
Property insurance is another necessary expense to protect the owner’s investment. However, rental property insurance costs more than typical homeowners’ insurance, and getting the right policy is crucial. If the policy costs more than the owner estimated in the rent, it takes another chunk out of their profits. To learn more about what you should consider when it comes to placing insurance on rental investment properties, visit: Emerald Management & Realty Ltd.’s Blog Category – Insurance.
Legal services and matters are part of rental property management. Those expenses can quickly add up should a tenant’s legal matters escalate.
Other miscellaneous expenses include credit check fees and potentially (depending on the type of rental property) condominium corporation fees and contributions.
The Reality of Maintenance Issues
The happier the tenant, the longer they stay, and the smoother it goes when issues arise, resulting in more profits for the owner. Maintenance is a very real pain point for tenants!
Indoor and outdoor maintenance includes:
- Electrical, plumbing & heating
- Windows and doors
- Roof, siding, and trim repair
- Pest control and prevention
- Yard landscaping
- Sidewalk repair & cleaning
- Flooring, cabinets, counters & fixtures
- Wall, door, and trim paint
Maintenance is a reality and without regular upkeep, a minor issue can quickly escalate into a big one with the large price tag to go with it. Preventative maintenance also assists to grow your real estate investment by preserving and protecting your equity.
Owners should update and renovate the property before occupancy, ensuring that any issues that arise afterward are minor. Not only is it more affordable to repair, but it is less hassle for the owner and the tenant in the long run.
Hiring Incompetent Contractors or Service Providers
No one wants to pay more than necessary, and it is tempting to take the lowest bid or pay the lowest fees in an attempt to protect profits.
However, this backfires when the lowest price comes with inadequate services, hassles, and mistakes that end up costing more in the end.
By doing the homework of checking reviews and qualifications, owners and property managers create a network of reliable and trustworthy professionals they can turn to time and again.
Here is a list of professionals a property owner needs:
- Real Estate Agent
- Licensed Property Management Company
- Property Maintenance Company
- Real Estate Attorney
- Professional Accountant
It also saves time and money if you find a licensed property management company that offers several services.
The Cost of Vacancy
Vacancy can end up costing property owners more than they make. In addition, unreliable tenants who damage property or are late paying rent are expensive and lead to evictions.
An extended vacancy in a rental property is a costly issue that every owner wants to avoid. So, they consider researching market rental rates, and when applicable, offering promotions or rental incentives such as one month free to attract potential renters.
These promotions may solve vacancies, but they can attract less-than-ideal tenants and create more problems in the long run. You can also ask for feedback from prospective tenants. Maybe the issue isn’t rent but the condition of your rental investment property: is it clean? Are repairs necessary? Maybe a freshen up with some paint or new flooring will help you compete against other properties in your area for rent.
Eliminate Unnecessary Costs With Professional Property Management Services
With a professional and licensed property management company, owners can hand off the hassle of maintenance, rent collection, credit checks, viewings, and revolving tenants.
Emerald Management & Realty Ltd. offers Calgary and area property owners multiple services to keep profits high and task-load low to help you achieve peace of find. Handling all forms of residential and commercial property rentals, Emerald Management & Realty Ltd. brings almost 50 years of expertise to service rental property owners.
CONTACT Emerald Management & Realty Ltd. by calling 403-237-8600 or CLICK HERE.