With the current state of affairs in 2020, I am sure it has crossed your mind that now is a better time than ever to get into the real estate investment market. And you are right. We want to provide you with helpful tips about the market that you are getting into. While in the rental property purchasing phase, your priorities are location, location, location. But after acquiring a property and renting it out, your focus is all about planning, planning, planning. We at Real Property Management Coeur d’Alene, have been through the ringer and have seen where planning left long lasting income for investors and where the lack of planning was their demise. We recommend the following plans:
Plan on maintenance costs. It should be apart of your annual budget or what you put aside from your property profits. It is recommended that you take 10% for those unexpected repairs.
Plan on things breaking. Appliances, faucets, water heaters, heating and air conditioning units—these things don’t last forever. So you need a little more than faith in your appliances for them to work, weather they need to be repaired or replaced, plan that these incidents will occur.
Plan on tenant turnover no matter what. Often owners who bring a tenant in expect that they will always live there, this is just not the case in rentals. However, if you keep tenants happy, they typically will stay put for a while, but even the happiest tenants won’t stay forever, it’s the nature of how rentals work. Job changes, schooling, outgrowing the home, or even purchasing a home of their own—life events happen.
Finally, rinse, wash and repeat; plan on repeating the process. When a tenant moves out you start the process over again of preparing the property for the incoming tenant. Costs will vary, but could include new paint, new carpet, bringing the home up to code if necessary, and also making any improvements needed because of general ware and tear. Your tenant’s deposit will take care of their mistakes but you are responsible for up-keeping the general ware and tear of the property.
For Real Property Management Coeur d’Alene this process has become almost a daily routine and we understand the regularity of upkeep, tenant turnovers, and general repairs and maintenance, and for someone whose routine is vastly different we understand these are difficult adjustments. We educate our clients to expect the unexpected and plan on spending the equivalent of approximately 2 months worth of rent per year on maintenance costs. By planning for the costs of repairs, when problems do arise, the costs will not be so overwhelming. Also when you partner with Real Property Management Coeur D’Alene you are connected with our wealth of resources for professional housekeeper, carpet cleaner, landscapers, sprinkler maintenance, repairmen, and contractors.
As the old saying goes, “If you fail to plan, you plan to fail.” We want you to succeed because your success is ours. You can ensure success by planning maintenance costs and by being proactive about issues when they arise. Planning sets you on the path of successful real estate investing.