Lots of people like the idea of applying for a specialist landlord mortgage and trying their luck in the property game. Of course, the issue is that lots of folks rush into the endeavor without understanding the day to day realities of the job. While it might sound like you earn a profit without having to do anything, the reality of the situation could not be further from the truth. Landlords have to work hard these days, and they have to deal with lots of expenses too. With that in mind, this post will highlight some of the costs new landlords tend to overlook.
The cost of repairs and maintenance
As a landlord; you have an obligation to provide properties to tenants that meet certain standards. For instance, it is illegal for you to rent a home out and leave someone without water or electricity. For that reason; you often have to spend a lot of money when it comes to repairs and maintenance. You never know when something will go wrong and you have to put your hand in your pocket. You also have to think about getting the house cleaned in between tenancies. End of tenancy cleaning might not cost a fortune, but you might have to spend a pretty penny if you have lots of properties.
The cost of advertising the property
Finding tenants for your houses is not as straightforward as it might sound in most instances. Unless you want to deal with lots of paperwork every day and feel like you’re running a business from home, it makes sense to ask a real estate agent to deal with that process. They will also manage your rent payments and ensure tenants stick to their contracts. You have to pay the estate agent commission or a small fee each year for their assistance. However, that leaves you free to focus on growing your empire. Just bear in mind that you lose money every day a home is empty.
The cost of insurance
Landlords are legally obliged to take out specialist insurance policies that tend to cost a lot of money. The idea is that the insurance company will help to pay for repairs, etc. if a house gets damaged. However, it is still sensible to keep cash in your accounts for emergencies because you sometimes have to spend the money and then claim it back from the insurance provider. There are places online where you can compare quotes from lots of different firms. So, make sure you do that in the effort to get the best prices.
Starting out as a landlord can seem like a worrying time. You’re not sure how much money you’re going to make and whether or not you’re going to end up having to sell the properties. However, as with anything else in this world; you just need to conduct as much research as possible, put the right measures in place, and take a leap of faith. Be sure to take a look at some of the other posts on this blog before you click away because you might learn a thing or two!