Investing in rental properties can provide you with significant financial returns. In order to accomplish this, though, it’s crucial to make sure you don’t make common mistakes that could end up costing you.
These are three ways to lose cash on a rental property:
Renting to unreliable tenants. This mistake can cost you a considerable amount of money, especially if you have tenants who suddenly stop paying rent or take off without notifying you. You could even end up losing out on up to five months of rent due to the eviction process. Bad tenants can also cost you by not taking care of the property and leaving you with several repairs to do after they move out.
Having a poor price-to-rent ratio. When buying a property, you need to make sure that you’ll be able to get enough rent from it to cover the cost of expenses. Otherwise, you’ll have a price-to-rent ratio that will make you lose cash on a rental property month after month. Choose your rental properties carefully, based on the cost of expenses and real estate prices in the area.
Buying an older home. Routine maintenance and having minor repairs taken care of as soon as possible can cost you a bundle. Unfortunately, you can’t skimp on these tasks, since they could result in even bigger problems that are much more costly to fix. Your best bet is to purchase a newer property, since it will be less likely to have problems than an older property.
Protect your investment! Work with one of our highly professional Property Management Staff! Ring the office for an appointment 03 5470 5811 and ask for Cecilia or Brooke.