Property management can be challenging if you don’t fully understand what it takes to keep track of expenses from the start. If you embark on purchasing your rental properties and fail to account for property management costs, you will pay for it later.
Whether you plan for it or not, big expenditures happen that require some property management know-how. Prepare for expensive ‘rainy days’ by setting aside a portion of the monthly rent in a separate account.
Be sure to budget for roof maintenance because this is often ignored until it starts leaking. If you wait that long it could cost you much more to repair. It may not be just a leak, but something worse. Regular maintenance, ideally every two to three years, lets you patch small problems before they turn expensive.
One of the most common property management expenses is upgrades and maintenance. You can’t avoid this because things do break and get outdated. A good paint job can make a major difference. And appliances need replacing sometimes, which can be costly if not budgeted.
Other smaller but important maintenance to keep track of include pest control and lawn maintenance. After all, keeping your rental home appealing to renters is the goal. Even if you’re an ‘accidental landlord’ you still must keep your rental property in good shape.
Property management investors should set aside emergency funds to have on hand to handle those unexpected issues. If something breaks, it’s your job to repair it and your tenants have every right to expect it.
Your emergency fund could also come in handy in the case of income taxes. If your rental business becomes too profitable, you will have a higher tax bill at year end.
Consider the cost of your rental property being vacant. If you don’t budget for this it can be costly. Depending upon how long it takes you to find a new tenant, remember you still must pay ongoing expenses.
All too often investors forget the value of their own time. It’s true that you can save money by handling things on your own, but you must factor in the time and effort to do this against the revenue it generates. If you choose to take on the job of landlord or as it turns out sometimes, be an accidental landlord, remember to pay yourself.
As your investments grow, you will probably need to hire a professional property manager. That’s the time that you’ll want to contact Cousin James Management. We’ve been in property management for over 25 years, both residential and commercial. Growing your investment portfolio gets a lot easier if you let the pros step in and manage the side of property management that takes too much of your time and energy. Contact us today. We’re here to help.