In order to plan ahead and plan smart, landlords will often budget out their expenses for the year. But if you’re a beginner landlord or are new to the world of budgeting, knowing what those expenses are and keeping track of them can be difficult. That’s why this article will review some of the most common rental property expenses landlords should know about.
Repairs and Utilities
It can be very difficult to budget out future repairs that your rental might need as it’s nearly impossible to foresee when things will break down. Ideally, it’s best to save one percent of the property’s value per year to have extra money on hand for repairs. In addition, you may also want to pay for things like Wi-Fi or certain utilities as a perk for the tenant. Be sure to do the math on how much this will cost per year, and remember that you will have to continue to pay these bills when the property is vacant.
Permits and Licensing
One of the most difficult parts of being a landlord is having to be aware of all the local, state, and federal laws. In some areas, you have to have a license to be a landlord or manage rental properties. These licenses and permits not only cost money to obtain but may also require you to take classes to keep your permits. To cover all your bases, you may want to consult a lawyer, which is an additional fee to take into account.
Tenant Screening
Tenant screening apps often cost money to use and may even require a membership fee. If you don’t use an application, you’ll have to run background checks through credit bureaus and conduct criminal background checks separately, all of which cost separate fees for each run-through. And remember that it’s best practice to never check one tenant and not another, as this could cost you a discrimination lawsuit.
While there are many more, these are the most common rental property expenses landlords should know about. If you’re a landlord struggling with all you have to juggle, Excalibur Homes has property lease management services to make your experience as a landlord as easy as possible.
