We hope this isn't new news for you! Here are a couple of fast-facts for investors:
- Collecting the rent isn't free money
- The purchase price of a property isn't the only expense you'll incur with a new investment property
Rental properties in Ashburn have ongoing expenses, and investors need to budget wisely to maintain consistent cash flow—but what are those expenses? If you thought that a monthly rental check was pure profit, it's time for help from the best Ashburn property management company to budget for costs that you can't afford to overlook.
What do investors need to account for in their annual operating budgets? Make sure you include these four line items.
1. A Rise In Condo or HOA Fees
Is your Ashburn rental property subject to condo community association or HOA fees? It's not uncommon for those fees to increase over time.
Most associations provide valuable services and perks for the community. Purchasing a rental property in an HOA (Homeowner Association) neighborhood means investors are responsible for the fees required for homeownership in the community.
While the monthly rent amount can pass HOA costs on to your renters, it's still important to budget for potential increases. If you've owned a property for a while without a fee increase, it could be time for the HOA to raise it. Make sure you budget for a potential increase when planning your operating expenses.
2. Special Assessment Taxes
Ashburn homeowners and rental property owners can be subject to special assessment taxes when the city (or HOA) conducts infrastructure projects. These projects can include roadway maintenance, adding new community features like a public park, or supporting additional city services as the local population grows.
An existing special assessment tax won't go away until a project is fully-funded. If you buy a property in an area subject to one of these taxes, make sure it's part of your budgeted expenses (in addition to property taxes and the HOA fees we already mentioned).
However, a rental property without a special assessment fee might not stay that way forever. A local Ashburn property management company stays up-to-date on city projects and infrastructure plans. They can keep you informed about potential assessments and incorporate these fees into your investment property budget.
3. Unexpected Repairs
Your maintenance budget should include routine (or seasonal) care and enough cash flow to handle anticipated repairs. If you know your property needs a new roof this year, make sure it's part of your maintenance budget to manage your cash flow for this critical update.
What about repairs you can't predict? Even with a professional, year-round maintenance plan, unexpected things will go wrong in your investment properties. Large or small, emergency repairs need a prompt response to prevent additional damage (and unhappy renters). Not having enough cash on hand to deal with an unexpected repair can be an expensive mistake.
Smart investors plan for the unexpected! The operating budget for your Ashburn rental properties must include a line item for maintenance emergencies. A professional helps investors estimate potential costs for unforeseen repairs. We also deliver fast, quality fixes in emergencies without overpaying for emergency contractor services.
What Can You Expect (From the Unexpected)?
You probably know when to plan for a new roof—unless a storm comes through or a tree falls and puts a hole in the roof of your rental property. Your renters haven't reported any issues with the toilets or faucets, but suddenly they call in the middle of the night because a pipe burst and flooded the home.
Even with routine property inspections, problems can lurk in places where you won't find them until they break. Investors can't plan the timing of an emergency, but the best Ashburn property management team can make sure you're prepared with the funds and contractors to respond well when something goes wrong.
4. Real Estate Tax and Escrow Increases
You hope your monthly investment property mortgage never increases as long as you own the home, but that's rarely the case. With fluctuations in property values and real estate taxes, your mortgage payments and escrow can increase from year to year.
A property manager can incorporate market research to help investors estimate potential tax increases and plan for them in the budget. With foresight, they'll also help you prepare for an appropriate rental rate increase to match your budget and compensate for tax or escrow increases.
Build a Better Budget With a Property Manager!
A professional Ashburn property management company has the experience to help investors budget for every rental property need. Don't let yourself get caught off guard without the cash flow to absorb HOA fee increases or other common potential expenses with real estate investing.
The RentSimple team is here to help! Let our experience keep you prepared for anything that comes your way. Contact us to learn more about how we can help you build a better budget.