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But success is not guaranteed.
Here are six mistakes you should avoid to ensure you dont wind uplosing money.
It cost them over $200,000 in fire damage, he said.
Failing to Budget for Ongoing Maintenance
Rental properties are not set it and forget it.
Unfortunately, too many novice rental property owners ignore this fact.
In my experience, proactive maintenance can save you significant money in the long run.
He recommended budgeting 1%-2% of the propertys value annually for maintenance.
Well, unfortunately, people are people some better than others.
Without a formal lease, landlords may face challenges in enforcing rules or evicting tenants.
Thats a big, potentially costly, mistake.
After all, mortgage payments, insurance premiums and utilities dont take a break just because your tenants do.
He said to plan on at least a 10% vacancy rate and budget accordingly.
Not Recognizing the Missed Opportunity Costs
Managing a rental property takes time.
If you put in 30 hours a week, it takes away from other income opportunities.
you might be earning money during those 30 hours, said Lichtenstein.
In addition, there is thepotential family, friends and fitness timeyou give up.
So do your research and see to it you know the time commitment you are signing up for.
Set the rent too high and you risk costly vacancies.
Too low and you fail to maximize your profit or, worse, fail to cover your costs.
I always recommend usingreal-time rental market datato optimize your pricing strategy, Wei said.
Wei has seen this strategy result in annual return boosts of up to 12%.
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