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Unforeseen Costs That Can Surprise an Investor

Frustrated Investor Looking at PaperworkIn the realm of single-family rentals, pleasant surprises are unusual. This is especially valid in cases where the surprises are brought on by unforeseen fees or expenses. It’s nearly a given for a new real estate investor in North Logan to encounter those unpleasant surprises. Rental property investors may be better prepared when one or more surprises arise by becoming aware of some of the most prevalent hidden costs.

Landlord Insurance

Every single-family rental owner should have a good landlord liability insurance policy. This does not necessitate purchasing the most expensive coverage out there. Along with the caliber and standing of the coverage firm, insurance policy rates can differ greatly. Due to this, it is crucial to compare options before selecting a landlord insurance policy and to check your price each year for adjustments. unless you thoroughly examine rates and insurance carriers, you may pay far more than necessary for landlord insurance.

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. Even though there are numerous causes for this, property owners can take several 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. Replacement of weatherstripping, single-pane windows, lightbulbs, and other energy-wasting components can significantly reduce energy expenses. Simple repairs and periodic maintenance can drastically lower the energy costs of a rental property.

Inadvertent Appliance Damage

How quickly appliances seem to degrade may come as another unexpected expense to a real estate investor or North Logan property manager. Any investor can feel stuck due to the expense of updating big equipment every few years. The trouble is not necessarily that tenants are mistreating the appliances, but rather that they have no understanding of their correct use and care. One of the most effective strategies to keep the appliances in your rental house functioning longer and more efficiently is to educate your tenants on appropriate appliance use and upkeep. By helping tenants to correctly use appliances correctly and maintain them, you can increase the longevity of your unit’s appliances.

Pest Control

First-time investors may intend for their tenants to keep unpleasant pests to a minimum through routine cleaning and maintenance. Even in the cleanest residences, renters may encounter pests such as termites, ants, and rats, among others. Local law may oblige you to provide pest control services to maintain the habitability of your property. 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 risk having negative monthly cash flows due to emergency termites or other treatments.

Erosion Prevention and Repair

Each new season can come with its own surprises during the first year of rental property ownership. Sometimes erosion problems that were not apparent during the winter months become apparent in the warm spring temperatures. In such circumstances, the cost of erosion prevention and maintenance may deter an investor and alarm the tenants. Water can accumulate and cause harm as soil erodes from a home’s foundation. 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 most exemplary single-family property owners sometimes must pay unforeseeable legal costs. Tenant work can be challenging, and disputes can and do arise. Although budgeting for future litigation may be sensible, preventing a lawsuit in the first place is an even better strategy. One of the greatest places to start is by doing regular maintenance on the property and swiftly attending 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.

When it comes to property management, Real Property Management Cache Valley is an expert which makes us the wisest 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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