While owning rental property can certainly be a lucrative source of income, it’s important to be aware of all the costs that come with it as well. Read on to learn the top 3 hidden costs of owning rental property.
With more people renting than owning homes than ever before in history, having a property that you rent out could be a massively lucrative affair. It could be the first step in becoming a professional landlord. When you’re considering owning rental property, you need to also consider the costs.
Here are the top 3 hidden costs of owning rental property.
1. All The Cleaning And Repainting
Owning a rental property is a great way to earn a passive income but before you set your rental price, you’ve got to consider all the extra costs. Before tenants move in, you need to make sure the space looks pristine. If the former owners left behind chipped or scratched paint, you’ll need to handle that.
If there is a science experiment growing in the fridge, that’s up to you to take care of. Bathrooms that are left a mess, rings around the tub, and sticky floors are all up to the owner to handle before renting.
Check every corner of the unit before you rent it out to anyone. If you leave anything dangerous or questionable behind, you could be violating the tenants’ right to a reasonably clean home.
2. Maintenance Is Your Responsibility
While you might be able to handle the odd light bulb or fuse that needs to be repaired around your house, you might not be a whiz at the big stuff. As the owner of a rental property, you’ll need to find a handful of handy people who you can trust. This is especially important if you don’t live close to the place that you’re renting out.
If an appliance like a refrigerator or a stove stops working, the ball falls into your court. You’ll need to remove and replace any major appliances the apartment came fitted with.
If there are issues with plumbing, the last thing you want is your tenant trying their hand at working on your drains. They could cause serious water damage that could cost more than the price of a plumber coming from the birth of their child on Christmas Eve in a blizzard.
The same can be said for any major maintenance like roofing, electrical, or anything structural. You’ll have to be ready to put on your tool belt or call up a trusted professional.
3. Higher Insurance
People who own units that are up for rent may have to pay higher insurance rates than people who live in the unit they own. You’ll need a special policy that’s meant to cover landlords.
These premiums are often more than the cost of standard homeowners insurance. Make sure that you account for this increased cost when you’re setting the rent for your unit or you could lose money.
Owning Rental Property is Still a Good Bet
Even though owning rental property can seem like a burdening affair, it’s still a safe bet for passive income. You never have to worry about having a roof over your head when you own a second property that pays for itself.
Hiring a property manager can make being a landlord a lot easier. Be sure you check out our guide to help understand how to select and hire a property manager first.