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Unforeseen Costs That Can Surprise an Investor

Frustrated Investor Looking at PaperworkIn the present world of single-family rentals, surprises are rarely a good thing. This is particularly accurate whenever those surprises happen through unexpected costs or expenses. For the new real estate investor in Allentown, there could be some of these unwelcome surprises. But by knowing several of the most common hidden expenses, rental property investors may be more prepared in the event that one or more do crop up.

Landlord Insurance

Every single-family rental owner needs a good quality landlord liability insurance policy. Though that doesn’t mean that the policy must be the most expensive one you can get. Insurance policy rates can vary widely, as can the quality and reputation of the company endowing it. For this reason, it is important to shop around before choosing your landlord insurance policy and to check your rate annually for changes. If you are not carefully comparing rates and insurance carriers, you may end up paying far more than you need to for your landlord insurance.

Energy Costs

A second unwanted surprise will appear by way of your property’s utility bills. An energy-efficient property is one that has relatively low energy costs. But it is important that new investors should know that their current investment property really comes along with a high energy price tag. Although the reasons for this vary, there are countless ways that property owners can do to make their rental property more energy efficient. Always having the house checked for air leaks, aging appliances, and other energy “vampires” can help you get a better idea of where the issues may lie. Replacing weather-stripping, single-pane windows, lightbulbs, and other leaky spots can go a long way forward toward lower energy costs. With just a few simple fixes and some annual maintenance, you can significantly reduce your rental home’s energy bills.

Erosion Prevention and Repair

Throughout the first year of possessing a rental property, each new season can bring surprises of its own. Warm spring weather sometimes reveals erosion issues that were not visible in colder months. In this case, the cost of erosion prevention and repair may come as an unwelcome surprise. As soil is eroded from a home’s foundation, water can pool and result in damage. Making certain that your rental home has proper drainage and has been thoroughly checked for signs of soil erosion is the ideal method to keep away some unknown prevention and repair costs.

Tenant Lawsuits

Even the best single-family property owners may face unexpected legal fees at one point. Working with tenants is rarely easy, and disagreements can and do happen. Conceding that budgeting for a future lawsuit is wise, an even a more suitable idea is to work on what you can to prevent a lawsuit in the first place. Performing regular maintenance on the property and responding promptly to repair requests is among one of the ideal ways to begin. Besides, ensuring your property is compliant with safety standards, endows basic safety equipment, and has been checked for hidden problems like mold, lead paint, or asbestos are all processes to keep yourself out of the courtroom. Following your lease agreement, and encouraging your tenant to do the same, is one other suitable measure to avoid tenant lawsuits and keep legal fees at bay.

Inadvertent Appliance Damage

Finally, a last unexpected expense that might surprise a newbie rental property owner is how quickly appliances seem to wear out. The cost of replacing major appliances every few years can have any investor feeling sticker shock. The trouble isn’t necessarily that tenants are abusing the appliances, but rather that they may be accidentally damaging them due to insufficient information. Included among the appropriate strategies to keep your rental home’s appliances running longer and better is to educate your tenants on proper appliance use and care. By encouraging them to use the appliances correctly and perform a few basic maintenance tasks, you can significantly extend the life of your property’s appliances.

In Conclusion

Now that you know some of the more unpredicted expenditures that go with owning single-family rental properties, you can be better prepared to reduce or avoid them. By being proactive with tenant education, property maintenance, and cost comparisons, you can better prevent several of the more unwanted surprises of real estate investing.

At Real Property Management Lehigh Valley, we can help guide Allentown investors through these unforeseen costs. Call 484-544-3351 or contact us online today!

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