As an investor, we all know there are expenses that come with owning a rental home. If you’re a new investor, you should think about owning an investment property the same way you think about owning a car. You’re going to get a flat tire at some point. You may not have expected it, but it’s bound to happen.
It’s the same with your Tampa rental property. There are always going to be expenses. With people living in your property, you have to be prepared to pay for the wear and tear and the maintenance that comes with a tenancy. Residents will be flushing toilets and turning on appliances.
Some things will break more frequently and cost you more money, depending on who is living in your home and where your home is located.
Because of its climate and geography, Tampa has some unique expenses that are more common for investors here than in other parts of the country. We’re talking about those things today so you’ll be prepared as a property owner.
Cost of Acquiring a Tampa Investment Property
The first big expense that many investors forget to factor into their budgets is the cost of actually purchasing an investment property. You have to pay for the financing, the property taxes, and the mortgage. In Florida, property taxes are a bit higher than they are in other states. The value of a home and its corresponding taxes are re-assessed any time the property is sold. In Florida, we don’t have a state income tax, so the state’s revenue largely depends on property taxes and the transient taxes that are collected from hotels and short-term rental properties.
Insurance is another cost of doing business in Tampa. We are always at a risk for hurricanes, so the insurance costs for your rental property may be a bit higher than they are in other parts of the country. Californians have earthquake insurance and in Texas, investors have to worry about high winds and hail. Hurricanes are the major threat in Florida, and with hurricanes come water. Even a strong tropical storm can cause flooding, so flood insurance is a legal requirement in most neighborhoods on a financed home.
These are fixed expenses for the most part. They’re generally outside of your control as an investor because you have to pay them. However, you can usually budget and estimate what you’ll spend every year on things like property taxes and insurance.
Eviction Expenses in Tampa
Eviction expenses can also creep up on an investor when they have a resident in place who isn’t performing or paying the rent. Everyone who owns rental property is worried about the cost of evicting a tenant. It’s a big expense, especially when you consider how many expenses are actually rolled into an eviction. You’ll have to pay court fees and attorney fees all while rent isn’t coming in at all.
The best way to avoid this expense is to do your due diligence. When you’re screening residents, do everything you can to avoid the future eviction risk.
You never want to have these eviction expenses because they’re awful and they’re also somewhat preventable. A lot of investors also forget to factor in the mental expense of an eviction. Even if you’re working with a Tampa property management company who is making the eviction has stress-free and low-cost as possible, evicting a tenant is stressful and emotional.
During an eviction, you’re also worried about the expense of residents trashing the property. Worst case scenarios will be running through your head. You have to detach. It’s easier said than done, but trust the process and remember that you’re running a business and this is part of the business. Mitigate this potential risk by screening well and putting the right person in your property. Do your background checks and talk to former landlords.
When a Tampa investment property isn’t producing any kind of cash flow, it goes from being an asset to a liability. On your P&L statement, you could start getting uncomfortable. At Mynd, we always work with our owners to avoid the potential expense of eviction.
Paying for Preventative Maintenance in Tampa
Preventative maintenance is an expense, but it also keeps future expenses down at your rental property.
Do things proactively so you aren’t waiting for big and expensive repairs to happen. Flush your water heater and make sure it’s working. Air conditioning check-ups are really required at least once a year in Tampa. We run the air conditioning nine or 10 months out of the year in Tampa, so keeping that system in good shape is critical. You’ll pay between $50 and $85 for an air conditioning inspection and service, but you’ll avoid the potential $6,000 replacement cost.
Work with your residents to ensure they’re changing the air filters regularly. Leave extra ones for them so they remember to change them. Preventative maintenance may feel expensive, but it keeps your investment property working and ensures it’s taken care of. This saves you a lot of money and extends the life of your appliances and your property.
If you’d like to hear more about how to manage the expenses associated with your Tampa rental property, please contact us at Mynd Property Management. We’d be happy to work with you on maintaining your investment.
We also have other opportunities to connect with us and learn more about investing in Tampa. You can also visit our Facebook group of investors, which is called Master Mynd. It’s a real estate investors’ club, where you can exchange ideas with other owners. Check out our weekly podcast as well, called The Myndful Investor. We invite leaders in real estate and property management to talk about their success and, more importantly, their failures. There’s a lot to learn from this relatable content.