Whether you’re buying a home, renting out a home, or simply shopping for groceries – there are always unexpected costs.
Owning a Benicia rental property is a great investment because you’ll earn recurring rent every month and some impressive long term ROI as your asset appreciates in value.
But investing is not just about income. There are costs to owning a rental investment, too. If you’re not prepared, those costs can feel like a larger burden than you were expecting as an investor.
Here are a few surprise costs that you must include in your rental property budget.
Budget for Vacancy and Turnover
Even with outstanding retention and strategic marketing, your Benicia rental home will probably not be occupied by tenants 100 percent of the time.
There will be weeks and perhaps even months where you have to make renovations or put some extra effort into the turnover. Or, the market will shift and suddenly be flooded with rental homes like yours, making it more difficult to rent your home quickly.
Vacancy hurts because it’s a total lack of income – even while you’re spending money on the property. These costs are hard to recoup.
Turnover costs are even more expensive. When one tenant moves out, you’ll have to invest in cleaning and preparing the property, and then you’ll have to advertise and market it.
Plan on having a full month of vacancy between tenants. Even if the vacancy isn’t that long, by budgeting for that time period, you will have more flexibility when you’re making updates and upgrades.
Deferred Maintenance in Benicia Rental Homes
In all of our years as Benicia property managers, we have never seen a maintenance problem get cheaper with time.
They actually get more expensive, and it’s easy to be blindsided by the cost of those deferred repairs that seem like no big deal.
Most property owners plan for preventative maintenance and routine maintenance. You might even have a budget set aside for those emergency repairs that seem to come out of nowhere.
But, it’s hard to budget for deferred maintenance and unreported repair needs. If a pipe under a sink is left to leak for six months, not only will you face an enormous plumbing repair bill, you’ll likely have rot and mold to clean up, too.
So, the lesson here is simple: don’t put off those minor repairs.
Make them right away.
A preventative approach to maintaining your home will reduce the number of emergency repairs that pop up and you’ll protect yourself from deferred repair costs.
Bad Tenants are Expensive
Landlords will be surprised at what a bad tenant can cost.
When you have an unqualified resident in your property, you are risking:
- Property damage
- Late rent
- Unpaid rent
- Lease violations
- Eviction
Bad tenants require you to spend more time and money than you expect on lawyers, court fees, evictions, maintenance, cleaning, and renovations. There will also be a lot of frustration.
Protect yourself with solid screening and a good tenant relationship.
Legal Liability is Expensive
A first-time offense for a fair housing mistake that turns into an investigated claim is $16,000.
That’s not a fine you want to pay.
Losing a security deposit case in small claims court can cost you three times the amount of the original security deposit plus your tenant’s legal fees.
As you can see, legal mistakes are expensive.
California has some very strict laws in place that protect tenants when you rent a property to them. By violating a law even unintentionally, you could find yourself in a lot of legal trouble and a lot of debt. Some of the most important laws you need to know include:
- Fair housing laws
- Security deposit laws
- Eviction laws, particularly just cause eviction laws
- Rent control laws
- Habitability laws
- Right to entry laws
- Retaliation laws
The list could continue. If you do not have the time or the resources to stay up to date on all the federal, state, and local laws that govern your rental property and your role as a landlord, it’s important to work with a Benicia property manager. Otherwise, you’re putting yourself and your finances at risk.
DIY Property Management Costs
Managing your own rental property seems easy enough, right? You get it ready for the market, you do a little online advertising, and then you pick a tenant. Collect rent, fix the toilet when it breaks, and everything is just fine.
Maybe it will go that smoothly, but maybe it won’t.
A lot of the property owners we work with come to us after trying to manage their own properties and then realizing how easy it is to lose money. Professional property management saves you money on DIY costs by:
- Limiting what you lose on vacancy
- Pricing your property profitably and competitively according to the market
- Providing a list of preferred vendors and contractors who can keep maintenance costs down by offering us their deepest discounts and most competitive rates
- Improving tenant retention
- Avoiding deferred maintenance
- Protecting you against legal liability and tenant claims
Property managers are valuable resources because we provide expertise, technology, and a completely hands-on approach to managing your property. You don’t have to worry about tracking your income and expenses. We’re doing it for you. There’s no need to chase down late rent – we collect it on time.
A lot of the unexpected costs landlords run into are created because they’re trying to do everything themselves. You’ll have a more relaxing – and a more profitable – investment experience if you allow professional property managers to help.
If you really want to limit the number of unexpected costs you encounter as a rental property owner, consider professional Benicia property management. You’ll find that you’re able to earn more on your rental properties and spend less. This is what we do: we help you keep your costs down.
Contact our team at Krystle Properties.
