The learning curve for new landlords can be steep. There’s learning how to deal with tenants, maintenance and legal issues and of course, all the paperwork that goes with renting properties.
But that’s only part of the story. If you are a novice landlord, you will also have to be prepared to cope with other costs that you may not have considered.
Increased insurance and tax costs
Rental properties can be more expensive to insure than regular properties. For example, the premium for a rental home can run as much as 25% more than typical homeowner’s insurance. Rent may help to cover increased costs – so long as it is occupied. There may be times when it is not, such as the period between tenancies.
Unless you live on your rental property, you’ll likely be subject to an increased tax burden. At the same time however, some expenses associated with renting the property may generate tax breaks. Consulting with tax professionals can help clarify the possibilities inherent in your particular situation.
Administrative charges and legal fees
Landlords have to pay for administrative costs related to actually getting new tenants. This can include those associated with interviewing, checking credit histories and also references. Additionally, many cities require that owners register rental homes, make them available for examination and absorb all costs associated with both.
Should a tenant need to be evicted or in the event of some other legal dispute, you’ll need to be prepared to pay for the services of a lawyer. And sometimes the fees can be quite hefty, up to $200 per hour or more.
A landlord often has to spend money on upgrades to rental properties to attract suitable tenants. And even after people do move in, he or she will usually be under some kind of contractual obligation to fix maintenance issues as they arise. A security deposit can usually help offset these expenses – unless the tenant completely trashes the property, which does unfortunately happen.
With so many hidden costs, how can a new landlord get in the game and win it?
The experts at Herman Boswell can help you not only manage your investment properties, but enhance profitability. Our dedicated professionals are among the most trusted names in property management in North Dallas. For the peace of mind and security you deserve, contact us today!