An income property can be an excellent financial asset. The property itself has value, of course, and may appreciate with time (assuming a healthy real estate market and a little bit of luck). And, in the meantime, you’ll be making money off of rent. What’s not to love?
Risk, of course: risk is what most landlords don’t love about their income properties. Real estate is a good investment, but owning property means you’re exposed to the risks that come with real estate. What if a fire burns down your property? What if a bad tenant trashes the place or stops paying rent?
Fortunately, there’s a lot that you can do to manage the expenses associated with owning a rental property. To rest easy at night, you’ll want to get out ahead of costly issues, get covered for big risks, and save some cash on typical tasks.
Maintenance is key.
Getting out ahead of costly issues means one thing above all: proper maintenance. That means regular inspections, preventative maintenance, and immediate repairs, even on issues that seem relatively minor. Problems with your property will only get worse over time, especially when you factor in the wear and tear of having a tenant on the property.
Next up: mitigating risk. Maintaining your property serves a purpose here, too, because your proactive maintenance schedule will lower your risk of running into serious issues that require costly repairs. But you can’t prevent every sort of disaster, which is why it’s also important to have insurance. You have probably already seen to this, but familiarize yourself with your landlord insurance policy and prepare to take it over as you take on more responsibilities. Also worth mentioning here is your tenant screening process. Choosing a good tenant is very important, because bad ones can really disrupt your cash flow: a bad tenant could refuse to pay rent, cause damage to the property, or even require eviction (a slow and costly process). Make sure you use a reliable service to perform credit checks and background checks on potential tenants.
Cut costs where you can.
Finally, you can control costs by looking for savings on the things you need. Finding and screening clients is cheaper if you use a service that lets you advertise rental property for free. A long-term maintenance contract with a property maintenance service might be cheaper (particularly in terms of your time) than working with multiple companies and relying on your own schedule to make appointments. Remember to balance things like your time – not every cost-saving measure is a good idea, because you will have your own career that you need to be focusing on, and disrupting that can have costs of its own. Do your best to make wise decisions and save money where possible while still getting the maintenance, background checks, and insurance coverage you need to feel secure. If managed properly, your income property should earn you money without exposing you to undue risk.