Can you afford to be a landlord? This guide outlines five hidden costs of being a landlord that could impact your decision.
5 Hidden Costs of Being a Landlord
Landlords face a number of expenses that can add up quickly. These hidden costs may include:
- Property taxes
- Maintenance and repairs
- Advertising and marketing
- Legal fees
Here’s a closer look at each.
Hidden Cost #1 of Being a Landlord: Property taxes
One of the biggest expenses landlords face is property taxes. The amount you’ll pay in property taxes will vary depending on the location and value of your property, but it’s important to factor this cost into your overall budget. In some cases, you may be able to deduct your property taxes on your income tax return.
Hidden Cost #2 of Being a Landlord: Maintenance and repairs
Another significant cost of being a landlord is the cost of maintaining and repairing your rental property. Landlords are responsible for keeping their properties in good condition, which can require regular upkeep and occasional major repairs. Setting aside money each month for maintenance and repairs is a good way to budget for these expenses.
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Hidden Cost #3 of Being a Landlord: Insurance
Another important cost to consider is insurance. As a landlord, you’ll need to insure your property against damage, theft, and other risks. You may also want to purchase liability insurance in case someone is injured on your property. The cost of insurance will vary depending on the type and value of your property.
Hidden Cost #4 of Being a Landlord: Advertising and marketing
If you want to rent out your property, you’ll need to invest in advertising and marketing. The cost of advertising will vary depending on the method you choose, but it’s important to factor this expense into your budget. You may also need to pay for professional photos or videos of your property, as well as for any repairs or staging that needs to be done before listing it for rent.
Hidden Cost #5 of Being a Landlord: Legal fees
Finally, landlords should budget for legal fees. You may need to hire an attorney to help you with the leasing process, or if you have any legal issues with your tenants. It’s also a good idea to have a lawyer review your lease agreement before you sign it.
While the cost of legal fees can vary depending on the services you need, it’s important to factor this expense into your overall budget.
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