Having an investment property can help you financially in the short and long term. However, novice investors are sometimes taken aback by the amount of money needed to keep a rental property in good condition, as these costs are not one-time. You can get help from your HOA management.
Expenses are far more manageable if you have a plan and a budget in place.
- Establish a Budget for Rental Property Maintenance
The age of your property and its current state will determine how much money you will need to spend on maintenance. Knowing how long each component of your building will last is essential when planning a maintenance budget. The age of the appliances, HVAC system, roof, and an estimate of when they will need to be replaced are all important factors to consider.
The most effective approach is to hire a professional once a year to perform maintenance and servicing. Inspecting your heating and cooling system once a year by a professional will tell you whether it is working properly and give you a good sense of when it might be time to replace it.
- Establish a Fund for Maintenance Reserves
Reserve around 10% of monthly rental money for repairs and upkeep. This will ensure that you have the resources available whenever you need them. You will not need that entire sum very often, but it will be nice to have it on hand in case of an emergency. Having a maintenance reserve means you will not have to come up with a unique way to pay for a costly repair.
- Record every expense and income.
Documentation is the gold standard for keeping tabs on money spent. Your property management will send monthly financial statements and will cover all income and expenses for the month and the year. Keep detailed records of any money spent and labor put into your property. At tax time, you will want to have access to all of this paperwork.
- Costs Related to Renting Out an Additional Unit
When it comes to rental property, the costs of maintenance are not necessarily the largest expense. Expenses like these include vacancies and lost tenants. It will be quite expensive to initiate an eviction proceeding. The legal fees associated with resolving a disagreement over a security deposit may easily triple the amount at stake. Property management services can help keep these problems at bay. A skilled manager will reduce your vacancies, arrange a fantastic renter, and guarantee your expenses are maintained as low as possible.