Rental properties may seem like a fantastic way to make a steady income, but it doesn’t come without risks.
Renters often neglect the house they are living in because “it really isn’t theirs anyway.” Now this is certainly not all renters! But unfortunately, it tends to be a good deal of them.
If your renters have been neglecting your property, you may lose some of the income that you have acquired in trying to fix all the things that have been broken or damaged by the tenants. Some repairs are much more costly than others.
Floors, cabinets, large appliances, and ceilings are the most commonly damaged in a rental home. Unfortunately those are also some of the most expensive to fix. At this point you will need to do an assessment.
Here is a quick worksheet to help you figure out where you are at:
Section 1 What exactly is broken in your rental home?
|What is broken or damaged beyond repair?||How much will a replacement cost?|
|What is broken or damaged that can be fixed?||How much will a repair cost?|
Take the amount in table one and add it to table 2. Subtract the deposit that you will be keeping for damages.
Section 2: Updating Your Rental Home!
No matter what your rental house is subject to normal wear and tear of everyday living. You will need to factor in the costs of fresh paint, new furnishing items, and other updates.
|Update||Cost of update|
Add this total to the total from section 1.
Section 3 Unavoidable costs of a rental home.
|What property taxes will you have to pay for the first quarter of the year?|
|What is the monthly HOA fee?||–|
|Mortgage payment still on the house? How much per month?||–|
|What will the new tenets monthly rent be? (if you have tenets lined up)||+|
|Lawn Keeping Fees||–|
|Utilities bills you are responsible for paying (Estimate one months payment)||–|
Take total from this table and multiply it by 4. This will give you a quarterly earnings projection of your rental property, provided it is rented during the entire quarter.
Section 4 Crunch the numbers, can you afford your rental?
Take the total of section 1+2 and subtract it from section 3.
If your number is positive, start the repairs! The first quarter of the year might be hard but you do win out.
If your number is negative it may not be worth further investment. The questions at this point you need to be asking yourself are:
Is the cost of fixing, repairing, and replacing broken or damaged items outweighed by the respective of getting new renters?
Or are you not going to break even for months and months?
Can you afford to continue investing in this property?
If the answer is no, that’s ok! Better to off load a property while you are ahead. There are several ways you can go about turning your hard asset to liquid cash. The easiest and fastest way is with Kentucky Sell Now!
Kentucky Sell Now is here to help you get the most out of your fixer upper. If you can’t afford to continue investing in a property that just simply isn’t working out, there is a solution. Contact Kentucky Sell Now today!