Steve Rozenberg is the VP of Investor Education with Mynd Property Management, and he asked Jessy Porter, the Portfolio Manager of Atlanta Operations with Mynd to talk about some of the common issues and challenges that face Atlanta real estate investors and landlords.
Today, we’re talking about expenses and addressing the things that Atlanta investors will need to pay for if they’re not careful with the way their rental properties are managed.
Atlanta Rental Property Expenses: Vendors
A rental property expense that you can expect as an investor is professional repair work. If you choose a vendor who isn’t licensed or insured, you’ll have to pay a lot of extra money to fix the problem. Some property owners think they’re saving money by working with cheap vendors. But, choosing the wrong vendor will cost more money than the price of an established professional with good references.
Cheaper is not always cheaper.
Working with an Atlanta property management company can save you money on vendors and contractors. You don’t have to think about vendor selection at all, and most property managers have a long list of experienced people that they work with every day. You won’t have to worry about looking for a reliable plumber or an HVAC technician who is going to prioritize your property in the heat of the summer. You need professional vendors who do a great job at a good price.
Everyone has that one guy who can do any job for cheap. That’s great if you need someone to cut a small lawn. You don’t need to overpay for a landscaping company in that situation. But, don’t look for the cheapest vendor. You’ll end up getting someone less qualified, and you’ll have to send someone else back in to do the same work. It costs more than you can imagine to rebound from a mistake like that.
Atlanta Rental Property Expenses: Vacancy
Another major expense is vacancy. Every investor expects a little bit of vacancy time. You’ll have to factor in the days that your property isn’t rented. While vacancy is normal between tenants or when you first purchase a property or have to do some work on it, you don’t want that vacancy cost to be higher than you budgeted.
When you have an Atlanta rental property that is ready for the market and should be occupied but it’s not, we consider that a loss. The vacancy is a loss of income and an expense. Vacancy loss is the money you are not making because no one is paying rent. That can be one of the most expensive loses on a P&L for an investor. Even if you’re doing all the right things, not having a resident in place will be a loss.
Think about the things that can help you avoid vacancy loss. Hang onto your great residents so you don’t have a high turnover. Make sure the home is priced competitively for your market. Pay attention to marketing and the showing process. Work with an Atlanta property management company to make sure everything is being done to keep rent coming in and vacancy rates low.
Atlanta Rental Property Expenses: Maintenance
Every rental property is also going to have maintenance and repair costs associated with it. There will always be maintenance costs, even if your home is new and in excellent condition.
By not addressing maintenance issues, you’re only going to spend more money. Sometimes, investors hesitate to spend money on preventative items. It might be difficult to pay for minor issues. However, those things keep your rental property in good condition, and if you don’t pay attention to the small maintenance items, one of two things will happen:
Your resident won’t care about the property because it seems like you don’t care about the property. So, they’ll treat it poorly. A resident that doesn’t care about whether you fix things and respond to maintenance is a resident who isn’t going to keep the place clean or help you maintain it. When that resident leaves, you’ll likely spend a lot of money turning the unit in order to get a new person in place.
You might have an excellent resident in place, and you’ll want that person to stay put and continue renewing their lease. But, if you don’t make the necessary repairs, you’re opening the door to a turnover. Turnovers lead to vacancy.
If you don’t maintain the property and do the repairs, you’re losing more money than you think you’re saving. Quality residents want to live in a nice home that’s well-maintained.
We are always surprised when an investor doesn’t want to pay $50 to pay for a leaking pipe. Later, that leaking pipe can turn into thousands of dollars that have to be spent remediating a mold problem. Neglect costs money. Preventative maintenance saves money.
You’re going to need to spend some money on maintenance, vendors, and vacancy. But, you don’t have to make those rental expenses worse. You can avoid paying more than you have to by working with great vendors and contractors, responding to the maintenance needs of your residents and your property, and keeping you vacancy rates low.
If you’d like to talk more about Atlanta real estate and how to save money on your rental properties, please contact us at Mynd Property Management. We’d be happy to tell you more about how we work with owners and investors to earn more and spend less on their properties.
We also have other opportunities to connect with us and learn more about investing in Atlanta. 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.