Keep in mind that there can be expected and unexpected costs when renting your home or investment property. A competent professional property manager will advise you on the most common costs and the ones that can sneak up on you. Here are a few to keep in mind.
As you probably know, rent income is taxable. If your income exceeds your expenses, be prepared to pay extra taxes. You may also want to protect yourself and your assets by incorporating. There are extra fees for that as well. If you have a mortgage, the good news is that the interest you pay is tax deductible as always and any improvements or repair you do are a tax deduction as well.
Seasonal maintenance is very important especially in Kansas City and the Midwest. Most tenants mow the yard and trim bushes but it is usually a landlord’s responsibility to have a weed and feed program in place to maintain the lawn. Unless you are knowledgeable about all aspects of home repair and maintenance, it is a very good idea to have your home inspected annually by a professional. Taking care of small maintenance items early will save money on more costly repairs later and prevents small things from becoming big things. Waiting until the tenants move out can be a big mistake. Twice yearly HVAC maintenance is a must. Have your roof, exterior, windows, plumbing and basement checked at least every other year.
What every owner hates: repairs. Some years, it seems like it will never end and others are minimal. No matter if you live in the house or you rent the house, it is a fact of home ownership. The best thing to keep in mind is that this is a long term investment and the benefits usually outweigh the costs. Some renters will nickel and dime you to death, but at least they are keeping you informed on what is needed. It is far worse to go into a house after a year or two and be surprised at all the little things that should have been taken care of and were never reported. Again, a great reason for annual maintenance inspections. Your property manager can advise you on what is necessary for the tenants and what is cosmetic.
When you are ready for renters to move in, you will need to change your homeowners insurance to landlord insurance. This sometimes reduces your insurance costs but may not in every situation. Make sure you have comprehensive liability insurance injuries and property damage. Require your renters to have and maintain renters insurance with liability protection as well.
When your tenants move in and out, you must expect normal wear and tear even with the best tenants. Expect to paint every three to four years especially in high traffic areas. Require your renters to have the carpets professionally cleaned every year and at move out. This will maintain your carpeting longer and keep stains to a minimum. Other items to watch for are drippy faucets, loose handles and hinges, deck steps and rails, Make sure all windows open easily and schedule gutter cleaning in the spring and fall. Require that tenants change furnace filters at least every three months. Leaving them in the house, will make it easier for them to remember and hopefully be more contentious about it. Wood rot is very common in the Kansas City area and is easy to maintain if checked annually. There are great checklists available to keep everything looking good.
Evictions and Early Move Outs
The best way to prevent evictions is to hire a local property manager that is very good at screening. Even the best tenants can lose a job, get sick or have a life altering event that will cause them to move out. Make sure you are prepared for the worst, in case it happens. If you have a property manager, make sure you ask them how they handle and early move out or eviction. One of the biggest mistakes an owner can make is being in contact with their own tenants. It is hard for most owners to remain firm with a tenant in a bad situation. Giving in to a tenant can be a costly mistake. If you give them permission to be late or miss rent, you could be setting yourself up for months of legal costs and lost rent if the situation goes badly. A professional property manager can minimize these costs by knowing the law, remaining firm and giving the tenants and the owner guidance for each situation. Another thing to be aware of; don’t get caught in a month to month lease situation. You will likely end up with a vacant property and no rent coming in. If your tenant wants to move out early, make sure your lease covers this contingency. A good property manager will be on top of the lease ending and will already be looking for a new renter to minimize any loss of rent.
For professional property management advice in the Kansas City area, call National Property Management Group. The cost of management can save you hundreds if not thousands of dollars in mistakes. We have been working with owners and investors for over 12 years and can help with leasing and managing your home, whether you are an experienced landlord or brand new to the rental market.
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