Investing in a Lakewood rental property comes with a lot of financial benefits. You can expect consistent rental income, and your home’s value will appreciate over time. There are tax breaks to enjoy as well. However, you’ll also face some expenses, and it’s important to budget for every dollar before you buy a rental property.
Budget for Investment Acquisition Costs
You’ll have to decide how you’re paying for your investment property. Unless you’re paying cash, there will likely be a mortgage, which means you’ll need to budget for one-time line items like closing costs, broker fees, and expenses such as inspection and appraisal fees. Don’t forget the ongoing costs like mortgage interest, property taxes, homeowners insurance, and any other recurring expenses like association fees.
Expect Leasing and Marketing Costs
Once you’ve closed on the deal, you’ll have to spend some additional money before you can start collecting rental income. Begin by making the property rent-ready. Depending on its age and condition, you may have to do some repairs or updates before you list it for rent. You don’t want to buy a property that requires a complete renovation; this will only delay your cash flow, and you’ll face additional price tags for labor and materials. A few upgrades, cosmetic fixes, and a complete cleaning will probably be necessary before you can start inviting tenants to see it.
There’s also the cost of marketing and advertising your home. Most advertising is done online, and some of the sites you’ll want to use will have a fee. You may want to hire a professional photographer to take great marketing photos, or you’ll need to pay a leasing fee to a Lakewood property management company so you can be sure the home is rented quickly, for the most money, and to the best tenant.
Prepare for Rental Property Maintenance Costs
There are going to be routine and emergency maintenance issues at your investment property. Some of them will be minor; a $50 garbage disposal fix, and some of them will be major; a $5,000 roof replacement. Whether it’s for lawn maintenance, HVAC maintenance, or just preventative pest control, you’ll have to set aside a maintenance reserve to ensure you can cover the expenses that pop up.
Maintaining your home is important to preserving its condition. Deferred and unreported maintenance issues will only get more expensive.
Lakewood Property Management Fees
Smart investors understand the importance of surrounding themselves with experts. You probably didn’t broker your own mortgage and you likely didn’t perform your own appraisal. You need help from professional insurance agents, lawyers, mortgage professionals, and property managers. All of these services are extremely valuable and they will ultimately help you earn more and spend less on your investment. However, they cost money, so be prepared for the fees. Lawyers do not work for free. Lakewood property managers charge a monthly fee. Make sure you factor these things in when you’re budgeting for your rental property.
When you need some support creating a budget and understanding the costs associated with your investment property, please contact us at Assured Management. We can provide you with professional Lakewood property management as well as tools and resources that lead you to a better and more profitable investment experience.