Understanding Your Money Flow
Owning a rental property can be a wise investment, especially in North Carolina. With Raleigh and the greater Triangle Area averaging a rental rate increase of 11.2% since last year, the statistics show that the money is there and prime for the picking. However, while the trend has shown an increase in people choosing to rent, it’s always wise to understand the financial responsibility of owning investment properties.
When everything goes well in the rental property market, there is a constant source of income for landlords. A positive, monthly cash flow to maintain the property and (hopefully) place additional gains into your personal bank account. However, there are often “hidden” costs associated with owning rental property.
Taxes and Fees Insurance
Although tax rules can change from year to year, there is the cost of property taxes when owning a rental property. These taxes tend to be higher when the individual who owns a home does not reside in the property. (i.e- landlords). This tax increase might not be considered until it’s time to file with the state and federal governments, but it can not be overlooked.
Insurance is also an additional fee to factor in when renting a property. Most insurance premiums can be as high as 25% more for landlords, and it is something to consider when setting a rental price. Note that these fees are also associated with a vacant property.
Having a tenant in your property doesn’t mean the maintenance stops! As the landlord, you will be the sole individual responsible for the 24/7 repairs. Most seasoned landlords set aside additional funds to cover the constant maintenance needs and often have a qualified contractor on hand that they can trust with the work.
No landlord wants to deal with a nightmare tenant, let alone the financial strain that comes from breaking the terms of a lease agreement. However, it is bound to happen at some point. While it is essential to know the laws that govern the eviction of a tenant — there are also fees associated with the process. Filing for an eviction detainer or dispossessory can cost up to $250 and is a lengthy legal process.
A happy tenant is a constant tenant, but that doesn’t mean they won’t have to move at some point. When you find yourself with a vacant unit, there are fees associated with getting a qualified tenant into the property. A multidimensional advertisement plan is needed to find an applicant that meets the needs of your property. Online marketing, word of mouth and more traditional avenues such as newspapers and flyers are all ways to market your property. Unfortunately, these advertising options cost money and take up a ton of time.
Property Management Fees
If you’re not the kind of person who wants to deal with the prospects of a vacant rental property or the accounting/financial obligations, it may be worth your time to contact a property management service. A full management service will market the property, find tenants, provide 24/7 maintenance, help with accounting/tax services and deal with any court appearances in the event of an eviction.
At Oak City Properties, we have been helping those in the Raleigh area purchase and sell homes for years! Whether you are a family trying to sell your home or a landlord wanting to downsize your rental portfolio, our full-service property management company is here to help.
If you are interested in learning more about our services or want to speak to our listing agents, give us a call at (919)-232-9222 or check out our website: www.oakcityproperties.com
Want to read more?
Take a look at the following blogs about property management services:
- 7 Benefits of Using a Property Management Service
- Do You Need A Property Management Company?
- How a Property Management Company Can Help with a Vacant Rental
Take a look at the following blogs about the Raleigh Housing Market
- It’s a Great Time to Own a Rental Property in Raleigh
- How to Sell a Home In Raleigh
- Raleigh Housing Market: A Smart Investment
- 5 Things to Look for in a Rental Property
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