Hidden Rental Expenses That Might Cause Problems

enter-the-catacombs-PDIf you are like most investors in real estate, you want to make money.  Unfortunately, Murphy has a way to continually take away your profits at the earliest moment.  Even though you have accounted for all of the known events, and even all of the unseen events, the ‘other’ events happen.  These hidden rental expenses are real, and they add up.

Some expenses are a part of running a business, and really have no bearing on the rental property you are purchasing.  But you would not have the expense if you did not have the rental.  So it impacts your cash flow and profitability.  Some expenses are very small, but they indeed add up.

Some expenses are obvious, but who would ever think to include that in the cash flow analysis of a rental property.

Were you aware that driving to and from the rental will cost you something?  Of course, did you account for it in your analysis?  It could add up to be several hundred dollars a year.

Were you aware that sending letter(s) to a tenant would cost you something?  Did you account for it?  It may only be a couple of dollars, but it adds up.

You may want to get a business business liability policy.  How does that affect the cash flow of the rental?

Tenant gifts?  Even $50 adds up fast.  Bad tenants?  Those are the worst.  Evictions?  Bed Bugs?  rental licenses?  Rental inspections?  Tax preparers?  Incorporating?  Time and effort?  YIKES!!

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What expenses in your own life have popped up, some that may have been expected but were unplanned?  Or even totally unexpected?


5 Replies to “Hidden Rental Expenses That Might Cause Problems”

  1. I’m having some problem with the tenants right now. They gave me 3-day notice to break the contract early. In my previous letter, I told them it wouldn’t be an issue if they want out. but 3-days, come on! 😛

    So they have their Dad sent me letter, threaten to call the city inspector for unsanitary condition. City inspector, if they come, they might find small things to make me change. Or they can find some big things which could throw me off. It could be a blessing or it could be rough. 😛 Blessing because everything will be to “code”, “rough” I have to spend the extra time to deal with unnecessary issue.

    I’ve been calling the pest service to take care of this every 2 months or so. I have a year contract with them. Anyhow, I might just gave in and give them a free ride.

    What’s your thoughts? How have you deal with this kind of situation?

    1. You have a deposit, but you said they could break their lease. I would say there is not much you can do. If they would call an inspector, they would also take you to court for holding a deposit after you said moving was OK.

      I have a lease termination fee built in my leases. They owe rent until it is re-rented.

  2. They could break the lease if they work with me. They failed to read that part. Anyhow, I’m able to get a replacement . Working to get a second replacement. I thought about adding a breaking clause, but I decided against it. Now, I’m adding back the clause. Thanks.

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