These Hidden Costs Can Hurt Your Rental Property Profits
If you already have a rental property or two, you may be happily humming along on the road to greater financial freedom. However, there are some hidden costs that can hurt your rental property profits. These costs may come in a different form than you might think: from the people you work with and the unexpected.
Hidden Cost #1: Your Tenants
Before you allow anyone to lease your rental property, it is vital that you know as much as you can about them. Background checks are a must. Any history of eviction notices should be a huge red flag and tell you the tenant is likely too high of a risk. Verifying the tenant’s income is also important to make sure they can actually afford the rent of your property. One bad set of tenants can destroy your rental property, so make sure you have contracts that include scheduled, as well as surprise inspections built in. You may even want to consider finding renters through a rental service that screens tenants for you.
Hidden Cost #2: The People You Work With
Knowing the people well that you work with can make a huge difference in your rental property profits. It’s important to have professionals on your side who have your best interests in mind, whether this applies to your realtor, property manager, maintenance personnel, your plumber, electrician, or accountant. Make sure these people are skilled, insured, and have references and an excellent reputation before you hire them.
Hidden Cost #3: Unexpected Repairs
When you buy a property be very aware of the life left on the roof, water heater, water softener, furnace, and the appliances. Whether the repair is large or small, being unprepared for it can set you back in your rental property profits in a hurry. Consider building a significant margin into your cash flow to pay for unexpected repairs due to breakdown or even tenant misuse. This margin can also be used to repair things, should a tenant trash your property, however this can be avoided by the aforementioned contracted inspections.
If you are looking to expand your portfolio of rental properties, contact us at Clear Capital Group to explore how we can assist you.