The Common Reasons Landlords Keep Losing Money
The idea of becoming a landlord is always an attractive one. After all, there is so much real estate out there just waiting to be snapped up. Everyone seems to be in perfect agreement that owning a buy-to-let investment almost guarantees profits.
Unfortunately, many landlords keep losing money month after month. While renting out a property has a high success rate, it’s important to note that it can fail. Most of the time, this is because of the following reasons:
An undesirable property
Firstly, money can be lost because the property isn’t desirable enough. For whatever reason, you rushed into buying the home and didn’t do your research. As a result, you have something in a bad location that doesn’t meet the standards most tenants are hoping for. Already, this means you can go months or weeks without finding a tenant. Thus, you miss out on a lot of rent. Eventually, you get tired of this and lower your monthly rental price. Now, you’re making less than you hoped, which might not be enough to keep up with all your outgoings.
Problematic tenants
Tenant issues are the main cause of money loss for landlords. Mainly, this comes through tenants who don’t pay rent on time. It’s incredibly frustrating as you need the money, but you have to keep waiting for it. Sometimes, it never even comes in as they leave the property or claim they can’t afford to pay rent anymore. Thankfully, this can be remedied by learning how to manage your tenants a lot better. Companies like GRG Property Management, Inc exist to help landlords deal with problematic tenants won don’t pay rent. Similarly, you can improve your vetting process to ensure you only consider tenants that can be trusted to keep up with monthly payments!
Improper Insurances
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Expensive services
All landlords will have to spend money on different services for the benefit of the property and tenants. This includes things like plumbings services, boiler checks, and so on. Basically, the usual things that any homeowner has to deal with. Sometimes, you can end up paying far too much for these services. This happens when you’re dealing with the wrong suppliers. They’re charging too much, and you’re not aware of it. Make sure you check and compare different vendors before you settle on the ones to use. It will surprise you how much money you can save by switching to a more affordable supplier for various services.
Legal issues
Finally, many landlords are losing money due to legal fees. Tenants have a lot of control over landlords, which means they can sue you for lots of little things. Something as simple as not fixing a broken water heater can lead to a lawsuit. Even if you win, there are lots of legal fees to pay for. Again, this can easily be remedied by working with a good property management company and being more aware of your responsibilities as a landlord.
It’s good to be aware of what causes landlords to lose money. Too many people are falling victim to these problems, leading to a loss on their investment. By knowing the main causes, you can work on preventing them from causing you any harm.
