Real estate is a long-term investment with steady capital appreciation. A rental income is a valuable tool in maximising the investment potential and ensuring that the property can pay for itself. However, this calculation often ignores the full cost of being a landlord which can range from property tax to regular home painting.  A home rental management company can help minimising these costs while maximising the rental income.

Factoring in these costs is important in calculating your liabilities as a homeowner. It also gives you a realistic picture of your true rental income.

Cost of being a landlord

Some fixed costs come with owning any property, such as property tax. In addition, you may be paying regular EMIs on your home loan. Even with inherited property, you cannot avoid some recurring expenses. Here are some of the key expenses that every landlord must consider:

Taxation 

Every homeowner has to pay the property tax irrespective of its rental status. But this may differ from state to state. For instance, property tax is based on market value in Mumbai, while in Delhi, it’s based on the built-up area. In addition, you may also have to pay tax on rental income. Do check deductions based on home loan interests and expenses incurred in the repair or maintenance of the property. 

Home loan EMIs

If you’ve bought the house on loan, you are probably still paying off the loan. In most cases, the EMI will exceed the rental income. This is a recurring expense and can be a considerable burden. 

Non-occupancy charges

Where the home or apartment is lying vacant, the landlord is liable for paying non-occupancy charges. This fee is charged in lieu of maintenance charges. Failure to pay non-occupancy charges can result in the society declaring the homeowner as a defaulter. They can also refuse to issue a no-dues certificate when the owner decides to rent or sell the property. You can read more about non-occupancy charges in this article.     

Regular maintenance and upkeep

Every house needs regular maintenance whether it is occupied or not. Depending on the terms of the rental agreement, some repairs and maintenance are the responsibility of the tenant. However, major repairs are usually under the purview of the landlord. This includes structural repairs like leaking roofs. 

Maintenance costs are often a major source of acrimony between landlords and tenants. A rental agreement is vital in avoiding such disputes. Read here to learn more about rental agreements and how a home rental management company can help in negotiating the best term for you. 

Insurance charges

Given the high cost of real estate, it’s a good idea to get property or landlord insurance. The insurance protects you from damage, theft, liabilities, and loss of income. While this is an added expense, you should see it as a necessary precaution. 

Utility payments

The tenant is typically responsible for paying the cost of utilities like electricity and broadband. However, the custom may change depending on the micro market and the rental agreement. For instance, utilities like the water bill may or may not be part of the rental. 

Loss from home vacancies

Your flat will fall vacant from time to time. You will be responsible for expenses like utilities, maintenance costs, and non-occupancy charges during such periods. You may also have to consider paying a property manager for its upkeep. A new tenant will require additional spending in ensuring that the house is ready for habitation. This will include painting, deep cleaning, and other repair costs. Finally, you must also factor in the loss of income during the vacant stage. 

Tenant search costs

This includes costs associated with searching for tenants, like brokerage. You may have to pay a specialist to conduct a background search for your peace of mind. In addition, you will incur advertising or listing costs if you are planning to directly market your home. Finally, you must factor in the time spent looking for and finalising a new tenant. This will also include the time spent conducting site visits, particularly if it affects your non-rental income.

Renegotiation costs

Continuing with a tenant helps in avoiding the tenant search costs which can be considerable. You also completely avoid any loss of income from non-occupancy. Renegotiation is also important in hiking the rent to keep up with the market rates and maximise rental income. But it usually comes at a cost. The tenant may ask for additional services such as home painting, deep cleaning, or other repairs.

Want to maximise your rental income? Read about how a home rental management company can help in  Our Seven Smart Tricks for Getting the Best Rent for your Home.

As a home rental management company, ApnaComplex Rentals offers a highly cost-effective alternative with hassle-free listing. The end-to-end rental management services include support with site visits and rental negotiations. It also includes KYC and background checks. With a record of high rental yields, ApnaComplex further helps in offsetting the costs of being a landlord. Read more about