Budgeting is something you did when you invested in an Arcadia rental property. You knew approximately what you’d earn in rent and what you’d spend on things like vacancy, marketing, and maintenance.
The budgeting doesn’t stop once you’ve begun leasing your home. Now that you have tenants in place, you’re still in need of some good numbers to take care of emergency maintenance issues and all the upgrades and updates that keep your home attractive to potential renters and competitive in the Arcadia rental market.
Here’s why it’s so important to create that budget, and how you can do it.
Budgeting Helps You Forecast Income and Return on Investment
Emergencies are always unexpected. You never know when a tenant will call to report a leaking water heater or a tree that’s crashed through a window. If you’re prepared financially, there’s a lot less stress during the repair process.
You need to know what you’re likely to earn in rent on a monthly, quarterly, and annual basis. You even want to have some idea of what you’ll earn on a rental property over the lifecycle of that investment. When you have a maintenance budget in place for emergency repairs, preventative work, and the upgrades and renovations you’ll ultimately need, you can factor those costs into your long-term earning and spending goals.
This is good business. It’s organized preparation, and it leads you towards better decision-making, whether you’re putting in new floors or contracting with painters.
Emergencies are Expensive
Maybe you have an overall maintenance budget in place. There may even be a reserve you’ve set up to handle the periodic repair requests that come in from tenants.
You need a separate budget for your emergencies, however. Put aside up to 10 percent of your monthly rental income specifically for those emergencies that you don’t see coming. This will be a huge relief when there’s a breakdown in the HVAC system or a problem with your plumbing. You will be well-positioned to provide a more responsive, more efficient plan for making the repair.
Emergencies always cost more than routine and preventative repairs. This is why it’s so important to have a separate budget in place. You don’t want to jeopardize the things that you’re hoping to do with the general maintenance budget.
Upgrades and Updates are Investments
When your Arcadia rental home is in good condition and you’re staying ahead of general repairs and maintenance, you don’t need a lot of expensive renovations. But, during tenant turnovers, you might notice that the floors need some work or the appliances could stand to be replaced.
A budget for these improvements will help you provide a competitive and attractive rental property. That means earning higher rental values and attracting better tenants.
Budget for the improvements that keep your home modern and welcoming to tenants. This isn’t so much a cost; it’s an investment. It’s an investment you can afford to make.
We can help you with your budgeting and your maintenance. For more information on this topic and for answers to any questions about Arcadia property management, please contact us at ZenPro Property Management.