Sick of Renting? Sell Your Property for A Fast and Pain-Free Profit
The concept of renting sounds fantastic: after all, who wouldn’t want to make a passive profit while retaining ownership of a valuable piece of property? Unfortunately, as is oftentimes the case, the application just isn’t as neat as the theory. Far too many landlords have learned the hard way that rental income is not by any means passive – and, in many cases, it may not even equal a profit. In this article, we will discuss a few of the most common expenses associated with renting out a property, which are often the main impediment to a real and sustainable profit margin. And, to conclude, we will discuss the alternatives that frustrated landlords have at their disposal.
The Hidden Costs of Renting out a Property
Here are a few of the most common factors that can turn a superficially lucrative property into a money sink:
- Mortgage costs. Not all landlords have full ownership over the property that they are renting out. In fact, a large percentage are still stuck making mortgage payments of their own. This means that, even during the best of times, they are paying a hefty percentage of their earnings straight to the mortgage lender who finances their project. This also means that, during slow times, landlords can easily lose money on their property. Moreover, mortgage ensures usually adds to this expense.
- Property taxes. Whether you have paid off your mortgage or not, all property owners have one expense in common: their debt to Uncle Sam. Property taxes vary from place to place, but you should expect to pay roughly 2% of the value of your property to the government every year.
- Landlord Insurance. Costing roughly 30% more than homeowners’ insurance, landlord’s insurance is not an expense to be taken lightly.
- Repairs, Replacements, and General Maintenance. These expenses fall on you, the landlord, even if your tenants are mostly responsible for the wear and tear. (Excluding only a few of the most flagrant abuses by renters.) This adds both a cost and a certain level of unpredictability that can be difficult to manage.
- Advertising. Attracting new tenants is an important part of the business equation for landlords – and, just like any business out there, you should plan to spend a portion of your proceeds on advertising and marketing costs.
- Tenant checks. Both for your own bottom line, and for the sake of complying with laws and regulations, it’s probably going to be necessary to background check new tenants. Unless you own an accredited background checking agency of your own, this is going to constitute an additional cost to your business.
- Employees. At a certain point, you may need to hire employees of your own in order to help manage certain components of your business – be it tenant relations or simple accounting. Either way, this will be a significant expense.
- Opportunity Costs. Whether you have employees or not, running your business is going to be a significant time commitment – which limits both your professional and personal opportunities. This cost, though easy to overlook, should not be underestimated.
Looking to get out? If you’ve invested your time and money into becoming a landlord only to discover that the profession isn’t profitable and/or enjoyable for you, then you may be feeling trapped. Selling a property can be quite challenging, especially if you don’t have the funds to invest in a renovation. Fortunately, cash-only buyers are an excellent option for people in your situation. To learn more, visit Blue Marble Properties online today.