Surprises are rarely a good thing in the single-family rentals industry, especially if the surprise is an unexpected cost or expense. Nobody welcomes that at all. There might be a few unwelcome surprises for the new real estate investor in Papillion. But, having knowledge of the most common hidden expenses will allow rental property investors to be more prepared for when these unwelcome surprises come.
Every single-family rental owner needs a good quality landlord liability insurance policy. But that doesn’t mean that the policy must be the most expensive one you can find. Insurance policy rates can vary widely, as can the quality and reputation of the company that offers it. This makes it important to shop around before choosing your landlord insurance policy and to check your rate annually for changes. So, to make sure you won’t have to pay far more than you need for your landlord insurance, make sure you are carefully comparing rates and insurance carriers.
Secondly, a property’s utility bills may also come as a shock. An energy-efficient property is one that has relatively low energy costs. Something that new investors are going to find out is that a high energy price tag comes with a new investment property. Although the reasons for this vary, multiple options can be explored by the property owners as to the way they can make their rental property more energy efficient. To get a better idea of where the issues may lie, you can have the house checked for air leaks, aging appliances, and other energy “vampires”. Replacing weather-stripping, single-pane windows, lightbulbs, and other leaky spots can go a long way toward lower energy costs. With a few simple fixes and some annual maintenance, you can significantly reduce your rental home’s energy bills.
Erosion Prevention and Repair
In the initial stages of owning a rental property, each season can bring surprises of its own. Warm spring weather sometimes reveals erosion issues that were not visible during colder months. In these cases, the cost of erosion prevention and repair may come as an unwelcome surprise. As soil is eroded from a home’s foundation, water can pool and result in damage. Making certain that your rental home has proper drainage and has been thoroughly checked for signs of soil erosion is a good way to steer clear of any unknown prevention and repair costs.
Even the best single-family property owners may face unexpected legal fees at any given time. Working with tenants is rarely easy, and disagreements can and do happen. Preparing a budget for a future lawsuit seems sensible; however, it’s wise to plan a course of action that will prevent a lawsuit in the first place. One way to avoid possible lawsuits is by performing regular maintenance on the property and responding promptly to repair requests. Similarly, ensuring your property is compliant with safety standards, includes basic safety equipment, and has been checked for hidden problems like mold, lead paint, or asbestos are methods that offer legal protection to keep oneself out of the courtroom. Following your lease agreement, and encouraging your tenant to do the same, is one method to avoid tenant lawsuits and keep legal fees at bay.
Inadvertent Appliance Damage
Finally, an unexpected cost that the rental property owner might face is how quickly appliances seem to wear out. The cost of replacing major appliances every few years can have any investor feeling sticker shock. Abusing the appliances isn’t necessarily where the trouble comes from; it’s that the tenants are accidentally damaging them by handling them without being properly equipped to do so. A good way to keep your rental home’s appliances running longer and better is to educate your tenants on proper appliance use and care. The life of your appliances can be extended significantly, and it starts by telling your tenants to use the appliances correctly and to perform a few basic maintenance tasks.
Now that you know several unanticipated expenses that come with owning single-family rental properties, you can be better prepared to reduce or avoid them. Proactivity in tenant education, property maintenance, and cost comparisons, can lead to better prevention of multiple issues that are ever-present in the world of real estate investments.
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