The finances are a big part of being a landlord, and unfortunately, it’s not quite as simple as rent, minus mortgage, minus tax equals rental income. There are plenty of other costs associated with being a landlord that you must understand in order to prepare your finances appropriately. Failing to account and take notice of these costs could potentially put you at risk of unforeseen costs later down the line. To avoid any nasty surprises, it’s always a good idea to take a focused approach to your landlord business and factor in every possible cost accordingly.
There are a few costs that every landlord will encounter somewhere down the line. These compulsory costs are:
There’s no one-size-fits-all when it comes to being a landlord, and many costs are circumstantial. Here are some examples that you may come across:
As with anything in life, things can go wrong and you can run into unforeseen expenses. It’s really important that you have some money set aside to fall back on if this happens. For instance, as a landlord, you are responsible for the maintenance and repairs within your buy-to-let property. Over the years, it’s difficult to avoid these costs. It’s a good idea to take out extended warranties, insurance policies and rely on a landlord emergency repair service. These things could limit the overall cost you could end up being faced with in the event of unexpected repairs, but they do all cost a few extra pennies. Factor these into your financial plans.
You may also decide to redecorate every few years and/or after every few tenancies in order to keep things looking fresh and attractive for future tenants. This might involve replacing the carpets and repainting the walls. Legal costs are also important to keep in mind. No landlord expects to run into legal costs, but it can happen to anyone. For instance, you may find yourself in a position where you need to evict a tenant. Serving notice, taking a tenant to court or being taken to court by a tenant will all likely incur a cost. This can make a difficult situation all the more unpleasant if you are unprepared. If you do your research and understand the costs of becoming a landlord, it will be a worthwhile business venture. It takes time and effort to get right, and preparation is key. And remember - landlord insurance can be a great way to safeguard against things not going quite to plan. Contact us today to get the most comprehensive cover for you.