Real estate investing can bring in a great income source, but there are some risks associated with renting a property. Investing in real estate means you are a landlord and as such, you have certain requirements you will need to fulfill. Here are some risks associated with rental properties, and what you can do to combat them.
Quality of Property is Poor
One issue that occurs is when someone buys a rental property that isn’t well-maintained and needs a lot of work. Buying the right property in a good location makes a massive difference in the ability to maintain tenants. Another issue that occurs is when you spend more money on repairs than you will recoup through monthly rental fees. A home inspection is the best way to ensure the property is in good condition before you buy it.
Problems with Vacancy
A rental property does not mean you will always have a tenant paying each month. There will be times when the property is vacant, and that does mean you need to be prepared to advertise for new tenants. The property needs to be cleaned and prepared for the next tenant. A property management company can provide help in situations where you struggle to find and keep renters.
Failure to make the monthly payment on time puts unnecessary stress on landlords. Bad tenants are one of the largest headaches, but how do you know if you have a bad tenant or not? Being desperate to fill the property could cause you to select the wrong tenant. Other issues with bad tenants include:
- Haggling over the rent cost
- Problems with deposit fees
- They are a nuisance to others
- They bring pets into the unit when there is a strict policy against them
- They do not have an income source
The problem many landlords face is the fact that the wrong tenants are very costly. Not only do evictions have to occur, tenants often damage the property when they are upset and being forced to leave.
A landlord has several expenses that need to be paid monthly. If the tenant continues to pay rent late, it is important to ensure that there are funds to cover all these expenses. Some of the expenses that tenants need to understand that are associated with their residence include:
- Mortgage payment
- Upkeep and maintenance
Utility costs and other expenses are often the responsibility of the tenant unless it is noted in the rental agreement. Helping the tenant understand these costs, and the fees that will be applied to their account if they fail to pay rent on time may give them extra motivation to always pay on time.
Keyrenter Property Management in Houston provides service to landlords of duplexes, condos, single family homes, and small multifamily units.