If you’re thinking about investing in rental property, you’re probably doing your due diligence to make sure it’s right for you. Likely, one step in that due diligence is figuring out what expenses you’ll pay. Smart! To help you, we’ve created this list of 4 costs associated with rental property in Fort Myers…
When it comes to investing in rental properties, it’s easy to think of the cash flowing income. But remember that your profit doesn’t come from the gross rent but what’s left over after your expenses. For that reason, here are 4 costs associated with rental property in Fort Myers that you should be aware of…
4 Costs Associated With Rental Property In Fort Myers
#1. Taxes And Fees
Property taxes are an important factor to consider when budgeting for an investment property. This tax isn’t just a single, flat rate. It can encompass several components depending on your location. There’s the base property tax which goes towards the general running of the local government. On top of that, there might be additional school taxes that fund the local school district. Municipal taxes could also be levied for specific purposes like sanitation or infrastructure projects. Waste and recycling collection may be covered by a separate tax as well. Then there are HOA fees, which are homeowner’s association dues that can go towards maintaining common areas, amenities, or enforcing community rules. These fees vary depending on the HOA and the services they provide. Finally, if you earn rental income from the property, you’ll also need to factor in income taxes on that income. While the exact amount you’ll pay in total property taxes will depend on specifics like the property value and location, being aware of these different components will help you get a clearer picture of the ongoing costs associated with owning an investment property.
#2. Insurance
Renting out your property can be a great way to generate income, but it’s important to remember that your rental property is an investment. Just like any valuable asset, you’ll want to take steps to protect it financially. That’s where rental property insurance, also known as landlord insurance, comes in. This type of insurance goes beyond the coverage provided by standard homeowners insurance. It’s specifically designed to address the unique risks associated with renting out your property to tenants.
Rental property insurance offers a two-pronged approach to protection. First, it covers the physical structure of your property itself in case of damage caused by fire, theft, vandalism, or other covered events. This ensures that you won’t be left on the hook for expensive repairs or replacements if the unexpected happens. Second, it provides liability insurance. This protects you financially if someone, such as your tenant or a visitor, gets injured on your property and sues you for negligence. With proper insurance coverage, you can have peace of mind knowing that your investment is safeguarded. Don’t forget to encourage your tenants to get renters insurance as well. This will protect their belongings in case of damage or theft.
#3. Upkeep
Another cost, which may be harder to estimate ahead of time, is upkeep costs. This includes things like the costs to maintain and repair the furnace, hot water tank, roof, and the plumbing and electrical systems in the house. Upkeep costs would be incurred whether you live in the house or your rent it out, and they’re important to ensure that your rental property is a nice place to live.
#4. Time
This last cost might surprise you but it’s the cost of owning a rental and dealing with tenants. You’ll need to spend some time finding a tenant, doing a background check, making sure they pay their rent on time, and occasionally checking on the property. And, since “time is money”, there is a cost implication to you. It can be minimized, though, with an investment into a good property and a property management team.
Summary
Before you let this list scare you away, remember: every investment has costs… whether it’s the transaction fees or management fees charged by your stockbroker or mutual fund manager, or whether it’s these 4 costs associated with rental property in Fort Myers. What’s important for you to decide is whether the benefits far outweigh the costs. And when it comes to rental property, we believe they do.