What Are the Major Costs of Rental Ownership & How to Prepare – Phoenix Investor Advice
Most rental property owners think their major cost will be repairing damage to the property, however the biggest cost to your bottom line is vacancy. The most important thing you can do is to get your property rented to a quality tenant as soon as possible. It’s the best course of action for your bottom line.
Vacancy Can Cost More Than Repairs
We once had an owner who placed her property under our management and she didn’t want it rented out until she did her own repairs. It took her four months to do those repairs. The property rented for about $1,400 per month. She saved maybe $3,000 in labor costs by doing her own repairs. However, there were four months of vacancy plus another month to get the property rented. That means she spent $5,600 on the vacancy, which is $2,600 over what she saved in labor costs.
True Maintenance Costs Calculated
Maintenance costs are certainly something landlords need to prepare for, but they are often not as high as you might think. I added up all the repair costs over a year on the 400 properties we manage. I subtracted from that any costs that were paid for by our tenants, either through their monthly rent or through deductions from their security deposits. I discovered that the average cost per property for all of the maintenance for a year was only $312. So you can see that the major cost is what you spend on vacancy, not what you spend on repairs.
The most important thing you can do is find a quality tenant and get your property rented as soon as possible. This will offset all other costs associated with rental property ownership.
If you need help with your rental property, please contact us at McMath Realty & Property Management, and we’d be happy to tell you more.