Wednesday, 18 September 2019
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This Old House - Do-it-Yourself

Being a Landlord: A Breakdown on Rental Property Expenses

Written by Posted On Wednesday, 11 September 2019 09:27

Thinking of investing in a rental property? Being a landlord has its perks, of course, but there are a couple of rental property expenses to keep in mind.

There are over 48.5 million rental units in the United States, and the vast majority of these are owned by individual investors.

Are you one of these investors? If yes, thumbs up! Being a landlord is a dream for most Americans and it’s a proven way to build wealth.

However, owning rental properties has its fair share of challenges. For instance, you have to keep up with repair and maintenance costs, and there are tax obligations you have to observe.

Here’s a detailed breakdown of rental property expenses.


Property/Unit Insurance

A fire, water, burglars, or even a bad tenant can all cause substantial damage to your property. And when this happens, you will have to dig deeper into your pockets to repair the property and bring it to a habitable state.

Fortunately, property insurance exists so that you don’t have to bear the brunt of property damage costs.

Yes, you’ll pay out regular premiums to your property insurer, but this expense is nothing compared to the peace of mind you’ll get knowing someone else will cater for repair costs.


Property Marketing/Advertising

The number of households living in rented properties has reached a 50-year high. But this doesn’t necessarily mean tenants will be jostling for your rental units.

This is why you need to spend money on marketing or advertising campaigns. Depending on your strategy, you might need to hire a real estate marketing agency, especially if you own multiple rental units.

Without proper marketing, your units might stay vacant for several months before finding tenants. This is lost revenue.


Property Taxes

As a landlord, you earn rental income. Consequently, you have a responsibility to pay federal taxes on this income.

In addition to this, you might also be required to pay state taxes on the same income. We say “might” because income tax laws vary from state to state. Some states have no income tax at all. has an informative article on what you need to know about states that have no income tax.

The good thing about federal tax on rental income is you can deduct your other rental property expenses, such as insurance and repairs.


Security, Cleaning, and Other Utility Services

To provide a safe and secure environment for your tenants, it’s inevitable that you’ll hire security and cleaning service providers. You might also provide free Wi-Fi to your tenants.

Add these costs to your rental property expenses.


Your Time as a Rental Property Expense

Being a landlord is a full-time job.

You have to be on-site from time to time to ensure service providers are doing a good job. You also have to stand ready to address tenant complaints. When a new month rolls around, it’s your job to follow up on rent payments.

If you’ve opted to self-manage your rental properties, you’ll spend a lot of time doing these tasks. This is time you could be spending on more important things, such as looking for other investment opportunities.

There’s an ideal alternative if you don’t fancy spending your time this way. Outsource management tasks to a property management firm--at a fee, of course!


Rental Property Expenses: Pay Up!

Owning rental property has attractive perks, sure, but be prepared to spend money and time on it, too. These are some of the rental property expenses you’ll have to take care of. They can be a pain in your wallet, but you have no choice.

Need more real estate tips and insights? Keep reading our blog!

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