We’ve never met a real estate investor who enjoys surprises when it comes to their rental property.
It’s difficult to expect the unexpected, and it’s even less fun to budget for the worst case scenario. However, the more prepared you are for what could go wrong, the less chaotic things will seem when something does surprise you.
Renting out a Phoenix property comes with a number of expected costs. The unexpected costs, however, are often the most difficult to manage. We have some ideas on how to stay one step ahead of those surprises.
Holding and Vacancy Costs with Phoenix Rental Properties
You know you’re going to have a mortgage payment to meet every month. Some of the costs that are easy to forget will also have to be budgeted for, however, including utilities. While tenants will pay the cost of keeping the lights on and the water flowing once they’re in place, you’ll need to get those things turned on, and it will often require a deposit. Plan on spending $300 or $400 per utility company.
There will also be costs to cover during the vacancy period. Maybe you have budgeted the cost of losing your rental income during turnover periods, but have you included things like landscaping, pest control, and security? These expenses are going to be incurred by you without the benefit of any rental income to offset them when the property is vacant.
Unexpected and Emergency Repair Costs
You won’t know that your main water line has ruptured until your tenant calls to report that water is everywhere. You’ll have to fix it right away, and you can plan on spending at least $1,000 for an emergency involving plumbing and water damage. If the home is not habitable, you’ll also need to pay for your tenants to stay elsewhere until the repairs are complete.
Air conditioning units get a lot of work in Phoenix. If the cooling system breaks down during a hot summer, it’s a habitability issue that will need to be taken care of immediately. Preventative maintenance can help. If you’re having your system inspected and serviced annually, you can reduce the likelihood of an emergency.
How to Plan for Phoenix Rental Property Costs
Two things can help you avoid the unexpected: Phoenix property management and preventative maintenance. There are so many variables when it comes to budgeting and planning; it helps to have experience and excellent maintenance relationships in place. A good property manager will track your systems and their performance. We can alert you to things that might be an issue before they complete breakdown.
Understanding the life expectancy of small things like paint and large things like your roof is also important. If you know your air conditioning unit is going to last 15 to 20 years, anything past the 15 year market could mean that you have to replace the entire system. With any system or appliance, you know you’re getting lucky if 10 years have come and gone and you haven’t needed to repair or replace it yet. You don’t want to rely on luck, however. We recommend that you keep a maintenance reserve or a good balance available on a credit card to handle the emergencies as necessary.
Providing a safe, habitable home that tenants are eager to rent is more complicated than it seems. You have to keep the property well-maintained and you have to be prepared for those unexpected costs.
If you need help budgeting, planning, or managing your Phoenix rental property, please contact us at Zen Rent. We would be happy to work with you.