Costs That Landlords Don’t Notice They’re Accruing

Investing in a rental property can be an extremely lucrative venture. It’ll allow you to earn a steady passive income while also growing your long-term wealth.

However, it’s crucial that you understand what managing a rental property entails. Landlords not only have to dedicate time but also money to keep their properties profitable.

There are many costs associated with managing a rental property, including property taxes, insurance premiums, and property upkeep.

These expenses can quickly accrue to your budget. If you don’t plan correctly, you could end up with a negative cash flow at the end of the month.

Luckily, the experts at Rent Easy are here to help you! Keep reading to discover the top costs that landlords don’t notice they're accruing and, more importantly, how to minimize them.

Rental Property Marketing

Finding tenants is not as easy as one would assume. Hundreds of rental properties are listed for rent every single day. So, if you want to attract long-term tenants, you must make your rental stand out.

A good rental listing is a great start but it’s not always enough. 

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Rental listings only attract prospective tenants who are actively looking for a new place to live. But, with so many competitors, your listing will have a hard time standing out.

That’s why most landlords opt to invest in advertising, including social media ads, signage, and promotional materials. Some even work with marketing agencies to give their properties maximum visibility.

Of course, all these costs can quickly accrue, especially if you can’t fill your vacancies quickly. 

Maintenance Repairs

Keeping your rental property in good condition is a year-round task. Most maintenance tasks, such as painting, plumbing, electrical work, and landscaping have to be done regularly.

This along with occasional property inspections and cleaning fees can quickly accrue. Emergency repairs can be very expensive. But this is one of the times when you don’t want to cut corners.

More often than not, DIY repairs tend to become even bigger problems, meaning that you may end up having to call a professional and spending even more money.

Property Taxes

Rental earnings are generally taxable because they are considered a source of income. These taxes can amount to 10 to 37 percent of your earnings, depending on your income tax bracket.

Also, property taxes can vary depending on the location and value of your property. Failing to account for taxes throughout the year can leave you with a negative cash flow when tax season comes.  

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Utilities and Services

While it’s not required by law, many landlords include the cost of utilities in the price of rent. Covering utility bills might not seem like a substantial loss, but it can accrue plenty in the long run. 

Depending on the location of your rental, you might be required to pay for services such as landscaping, trash removal, and even cleaning of common areas.

It’s important that you are familiar with your local landlord-tenant laws and, if needed, include these costs into your budget to ensure a good return on your investment.

Vacancies and Tenant Turnover 

An empty rental typically means a loss of income. Plus, vacant rental properties require more maintenance and are more vulnerable to risks such as squatters, property damage, and break-ins. All of this can quickly eat up your savings. 

Moreover, each time a tenant moves out, you’ll have to spend money on property inspections, deep cleaning, and repairs.

These expenses, along with rental property marketing and tenant screening, can become substantial if you have high turnover rates or if your rental experiences extended vacancies.

Property Management Fees

Hiring a property management company will make your life easier as a landlord.

These professionals will manage all the day-to-day operations of your rental, from screening tenants to collecting rent payments, while you simply get the earnings.

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Property management fees typically range from anywhere between 8 to 12 percent of your monthly rental earnings.

Some companies might even have additional charges for services such as screening tenants, marketing your property, or writing a solid lease agreement. So, you must consider these fees when you're doing your budget.

Insurance Premiums

Investing in landlord insurance is a must when renting out your home. Not only can it help you cover the costs of property damage caused by tenants, but it also keeps you protected from liabilities.

Unfortunately, most insurance premiums tend to increase over time, especially if you own more than one property.

You must regularly review your insurance policies to ensure they adequately protect your investments and also stick to your budget.

Legal Expenses

Owning a rental property involves understanding and complying with many laws and regulations.

For instance, landlords need to act per the Fair Housing Act when choosing among a wide pool of tenants. Failing to do so can lead to costly fines.

That’s why most landlords opt to work with a lawyer to ensure their property complies with local laws or to write a good lease agreement. 

Having problematic renters can also cost you a lot of money in the long run. Legal expenses, including attorney fees and court costs, can add up quickly. Plus, this doesn’t include the losses associated with missed rent payments, holdover tenancies, or even evictions. 

Bottom Line

Owning and managing a rental property comes with many hidden costs that can accumulate over time. This includes property maintenance costs, property management fees, property taxes, and even legal expenses.

By acknowledging and planning for these often-overlooked expenses, you can better protect your investment and maximize its profitability. 

Do you need help managing your Virginia rental? Contact Rent Easy today! We’ll handle the day-to-day operations of your rental while also ensuring you get the best return on your investment.

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Thank goodness, a quick Google search led me to RentEasy. Their one-stop-shop property management services provided just what I needed as a new rental property owner. For tenants, they offer multiple rent payment options to suit everyone’s needs. The online portal allows me self-service access to data and reports in a matter of minutes. I love that everything is user-friendly and easy as 1-2-3. Alex has been a great business partner. I appreciate that he responds promptly to every inquiry. His expertise has helped to navigate what some may see as difficult circumstances. He has a kind and welcoming demeanor and makes you feel comfortable while taking care of your property business. I’m looking to working with RentEasy on future projects.

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