Unexpected Costs of Owning a Sacramento Rental Property & How to Budget for Them

Owning a Sacramento rental property can be a great investment. You have the potential to earn some positive cash flow, and when you hold onto the property for several years, you’re also earning a healthy ROI while the asset appreciates and your tenants help you pay down the cost of the mortgage. 

There are costs associated with every investment, however, and you need to be prepared for them. Make sure these unexpected things are included in your budget so you’re not surprised at the expenses that are associated with your rental property. 

Budget for Vacancy and Turnover Costs 

Many investors run their numbers and project their financials without considering that their rental properties won’t be occupied 100 percent of the time. You may need to spend a few weeks or even a few months finding a tenant. When one tenant moves out, you’ll have to invest in cleaning and preparation, and then you’ll have to advertise and market the rental property. 

Vacancy costs are especially expensive because it’s money that you can’t really recoup. The longer you don’t have a tenant in place, the more your investment costs you. You’re not receiving rental income, and at the same time you’re also required to pay for the utilities and the upkeep. 

Minimize these costs with a strategic marketing program. You want to get a well-qualified tenant in place as soon as possible. Once you have a great resident, focus on tenant retention so you don’t have to face a vacancy every year.

Deferred Maintenance and Emergencies 

Deferred and unreported repairs will cost you a lot more than you could possibly budget for.

So, don’t put off those minor repairs. Make them right away. Take a preventative approach to maintaining your home; otherwise, those emergencies will become more frequent and more expensive. There will always be maintenance costs, so make sure you have a reserve fund or a savings account set aside for potential repair bills. 

Be responsive when those maintenance requests come in from your tenants. You want to preserve the condition of your home and avoid complex and costly repairs. You also want to keep your tenants happy. Responsive maintenance saves money.

Bad Tenants Come with High Costs

Hopefully, you’ve never had a bad tenant experience and you never will. They can be expensive. A bad tenant will pay rent late or not at all. A bad tenant will cause property damage and will violate the terms of your lease. You’ll spend more time and money than you want to on evictions, maintenance, and renovations. There may be legal fees, extra cleaning charges, and who knows what else. 

Unless you want to spend a lot of money on bad tenants, be sure your screening process is on point. You need to be thorough and consistent so you aren’t losing money on terrible tenants. 

These are just a few of the things that investors and landlords rarely anticipate when they begin to rent out a home. We know your bottom line is important, and we’d like you to know that working with a professional Sacramento property manager is one of the best ways to keep your income up and your expenses down. 

For more information, please contact us at Sacramento Delta Property Management. We specialize in helping owners minimize their costs and have a successful investment experience with their Sacramento rental properties.