Having a nest egg is a practical idea no matter your age, career choice or future plans – even if you don’t have a particular goal in mind, you never know when you’ll need that stash you kept for a rainy day. Some may think that landlords don’t need to set aside money or keep a close watch on their budget because the money seems to come on its own every month but this can’t be further from the truth.
There is so much more to being a landlord, at least one who is dedicated and/or has a portfolio of properties than just collecting rent or otherwise everybody would be doing it. So, let’s see some of the reasons landlords need to save.
No tenants, no rent
This doesn’t sound like a pleasant notion but it’s better to be prepared for all scenarios – your current tenants for some reason might have to move out suddenly and that you can’t find new reliable ones for some time. This means that you might miss a month or a couple of months of rent, and your budget has to be ready for that.
The thing is, it’s far better to wait until you find trustworthy tenants than to let just anyone into the rental and have them destroy the furniture, appliances, etc. with their reckless behavior. If you don’t screen the people you are renting your property to, your rental might also earn a bad reputation so that in the end no responsible person would want to live there and you’ll have to lower your standards both in terms of tenants and the rent.
An additional source of income
If you haven’t saved up enough and some unexpected expense arises or you simply want to invest more in the rental, it’s essential you have a backup option. This back-up will not only give you peace of mind but also a potential opportunity to up the price of the rent.
For instance, a small makeover can make all the difference when it comes to the price of the rent so taking out a personal loan is a prudent solution if you want to renovate the place. A modest investment can provide you with a long-term cash flow increase so you shouldn’t hesitate to take advantage of a favorable loan.
The property’s interior
To attract respectable people who will pay the bills and rent on time and be mindful of your belongings, you have to offer them something in return. They would want a place that is comfortable and practical, for the furniture not to be old and dirty and you have to admit, those demands don’t sound irrational.
So, your budget might need to cover a new mattress, a cozy sofa, a coffee table, a lamp or two. Also, you should consider the appliances because although you might be OK battling with a moody washing machine that switches itself off, your tenants might be less enthusiastic. They will thank you if you substitute all the traditional light bulbs with the LED ones because the electricity bill will be lower.
The exterior also matters
Although the comfort and functionality of the interior matter greatly, the exterior is not to be disregarded. The first obvious reason is esthetics because your potential tenants will take the first impression into account and if the rental looks neglected, they might not like the interior no matter how it looks.
Besides a fresh coat of paint, it would be also wise to think about replacing the doors and windows if they are weathered. No one wants to waste money on electricity bills because the rental isn’t insulated properly. If you are renting a house, you can also pay the driveway a bit of attention by planting grass or a rose bush – something that will make the place feel warm and more welcoming.
Rentals security as a relevant topic
Last but not the least, the topic that is crucial for both the landlords and the tenants – security. Both parties want for the items in the rental to be secure and remain undamaged and of course, for the tenants themselves to be safe. Adding a video camera, alarms or motion sensor lights are all valid ideas worth researching since they would discourage most thieves.
When it comes to fire, flood, earthquake or some other unexpected hazard, most people regret not taking out an insurance policy on time. This is an additional expense, that much is true but in case something like that happens, your financial losses will be much smaller. Some policies also cover the monthly rent in case some hazard renders the rental inhabitable for a certain period.
Having a rentable property neither makes you a landlord nor will it make you earn money. As a landlord, it is your duty to tend to the condition the rental is in so those who are not ready for this will quickly give up simply because they won’t be able to charge a decent price or find trustworthy tenants. This is why preparing your budget for different expenses is crucial for a harmonious and lucrative relationship between a landlord and a tenant.