Out-of-Pocket Expenses When Renting Out a House

If your house won't sell at an acceptable price, putting it on the rental market at a fair rate can be an alternative to selling below your asking price or possibly losing the home to foreclosure. Being a landlord has both challenges and benefits. There are many out-of-pocket expenses to keep the home up. On the other hand, if you price your rental right to cover the mortgage and expenses, you may have positive cash flow every month.

Property Taxes and Insurance

    When your home is tenant-occupied, you must properly insure and pay for the policy. If the home was formerly your primary residence, you must notify your agent, as an owner-occupied insurance policy will not give you the proper coverage. Instead, ask your agent to remove the coverage for your personal belongings and cover the structure itself. Your property taxes are another necessary expense. Taxes are levied by your local tax assessor and payable each tax year. These must be paid by the landlord and can be high, depending upon the city.

Maintenance or Handyman

    Homes need repair. Unless you're handy with tools and repairs and have the time, you'll have to hire out for the work. A good handyman is indispensable. Your tenants may need a plumber, appliance repair, paint, or squeaks and leaks fixed. Unless otherwise arranged with the tenant in advance, it is customary for the landlord to pay the handyman directly.

Advertising Costs and Publicity

    A good ad will go a long way to filling your rental home quickly. Ads may be placed online or in a newspaper or other media for best exposure. There are both free and for-pay websites dedicated to matching renters to rentals. Depending on where you place the ad, you may pay for the ad out-of-pocket. You may also hire a photographer or creative professional to create a virtual online tour for the home.

Utilities and Yard Maintenance

    If you provide some utilities for the tenant, such as trash and sewer service, you will pay for these services yourself. If your yard needs maintenance, you may also incur out-of-pocket expenses for the gardener.

Administrative Fees

    Disputes between landlord and tenant are common. Landlords must draw up legal rental agreements and should place money aside for advice if the need arises. If a landlord must evict a tenant, the landlord will need legal assistance to property handle the matter. A landlord has to pay filing fees, pay the movers, and add in rent lost for up to three months or longer during the eviction process.



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