Investing in Colorado Springs rental real estate comes with a lot of benefits and financial rewards. It’s important not to forget about the risks and the cost of doing business, however. You’re going to have to expect maintenance costs when you’re a landlord, even if your rental property is brand new and in excellent shape.
When you have a budget in place, you won’t have to worry about scrambling to pay for unexpected repairs. Maybe your roof is showing more wear than you expected due to a particularly brutal winter. Perhaps you’re hoping to upgrade your appliances during a turnover period to earn more rent and attract better tenants. These things cost money, and if you already have a reserve set aside – you’re in a stronger position.
Budget for Maintenance Emergencies
Unexpected things will happen, and they usually happen at unexpected times.
Be prepared for middle-of-the-night phone calls from tenants who have had a water heater leak or a tree fall through a window. When an emergency occurs, you have to respond immediately, and you’ll need the funds available to pay for repairs right away.
Set aside part of the rent you earn every month to keep for potential emergencies. You won’t have an emergency every single month, so you’ll be able to grow your reserve fund over time. It will be there when disaster does strike and you need to access those funds.
Budget for Preventative Maintenance
One of the best ways to reduce the amount of emergency repairs you have to make is by adopting a solid and consistent preventative maintenance plan. When you take a proactive approach to protecting the condition of your investment, you’ll have fewer surprise expenses and you’ll also extend the life of your property’s most expensive functions and systems.
For example, if you schedule an annual review and inspection of your HVAC system, there’s less of a chance your tenants will suddenly lose heat in the middle of a cold Colorado winter. Have a qualified technician check things out once or twice a year, and you’ll be able to troubleshoot more affordably.
Spending a couple of hundred dollars a year on preventative maintenance is much better than spending thousands on a new furnace.
Budget for Rental Property Upgrades
Making routine upgrades and updates to your property will allow you to increase your rental value, attract highly qualified tenants, and reduce the number of days your property is vacant. If your property is already in good condition, there’s no need to budget for a complete renovation. Instead, put aside some money to pay for cost-effective improvements such as new paint, updated flooring, and better lighting. Small changes like that won’t cost you a lot, but they will have a positive impact on your ROI.
Working with a professional Colorado Springs property management team can be especially helpful when it comes to budgeting and managing things like maintenance and upgrades. You’ll benefit from lower repair rates, an immediate response, and an experienced understanding of what will pay for itself in the local rental market.
If you’d like to talk more about how to budget for these important things, please contact us at Muldoon Associates.