Whether you’ve invested in a rental property or you’re renting out a home that you once lived in yourself, there are certain costs that come with that home, and you’ve probably budgeted for them. You’ll have to keep up with the mortgage and the insurance. You’ll have to pay the property taxes. Routine maintenance issues are going to arise, and you’ll need to be prepared to pay for minor repairs and replacements. There’s the landscaping and the pest control. Marketing costs can be planned and services such as
property management
and professional accounting or bookkeeping.
The unexpected costs are often more expensive than any landlord anticipates. It’s hard to budget for what you don’t see coming. This can sometimes be disruptive to your earnings.
Here are some of the unexpected costs to owning a rental property that often catch owners by surprise.
Vacancy and Turnover Costs
The current rental market in Northern Virginia is hot, and vacancy is less of a concern than it is in slower markets. However, there will be periods where your property is not occupied. Rent won’t be coming in, and you’ll be paying out of pocket for utilities, maintenance,
landscaping, and cleaning. You’ll be spending money and time trying to find a new tenant.
Turnovers are even more expensive, and while owners often understand that there will be some cosmetic issues that need to be addressed between tenants, you’ll often pay more than you realize. This is the most ideal time to make updates and improvements that will increase your rental value and
attract high quality tenants. Plan to spend some money during turnover periods; it’s worth it to upgrade your rental property before you look for a new tenant.
Unpaid Rent is an Unexpected Cost
Your entire rental operation is based on the assumption that rent will be paid when it’s due.
What if it’s not?
When you have tenants who don’t pay rent, you are left with housing-related bills that you’ll have to pay on your own, including your mortgage payment, if you have one. This is disruptive and it’s frustrating, and you’ll spend a lot of time and money trying to collect the rent that has not been paid.
You can attach late fees. You can use the courts to bring your tenants into compliance. But, if the rent isn’t paid, you’re out thousands of dollars each month it does not come in. Eviction is your ultimate tool when it comes to removing a non paying tenant, but it will take time, and you will lose money.
Try to have a reserve in place to cover expenses for a couple of months in case the rent stops coming in and you have to move through the eviction process or convince your tenants to move out.
Emergency Maintenance at Arlington Rental Homes
Have you accounted for the rising prices? Inflation has had a huge impact on the rental market – in ways that benefit and detract from owners. Your rent is likely higher, which means you’re collecting more income every month. But, your expenses are higher, too. So even if you’ve planned for the potential emergency maintenance costs, you need to make sure you’ve planned enough. Everything is more expensive; supplies, materials, and labor. This can be a huge shock when you receive invoices and quotes. Prepare to pay more.
These are just a few of the immediate expenses we think of when we’re talking about the hidden or surprise costs associated with
renting out property. If you’re looking for ways to keep these costs down, consider working with a property management partner. We’d be happy to help. Contact our team at Arlington Realty Property Management.
