If you are thinking about investing in property, make sure that you have thought of everything. There are many things that could end up being a massive drain on your finances. That’s not to say that investing in property is something that you should not do, if you can afford it, you definitely should. You just need to make sure that you know what you are getting in to and all the financial risks that come along with it. This is going to be particularly relevant if you are buying property to rent it out. Here are some of the financial troubles that you could face when you invest in property.
Failing To Keep On Top Of Mortgage Repayments
Paying your mortgage should be number one on your to do list every month. If you fall behind on these repayments, you might find yourself going deeper and deeper into a hole that you will find it very difficult to get out of. If you can’t pay your mortgage one month for any reason, you need to try and find a way to get the money together. Owing a friend or family member money is going to be a lot safer than owing it to a mortgage company. At least if you owe it to someone you know and love, you can’t lose your property. However, do not make the mistake of doing this every time you need to make a mortgage repayment. Debt of any kind is not a solution, it will just become another problem.
One thing that you will hear people complain about above everything else is going to be property tax. It is going to be important that you pay the right amount of property tax when the bill comes in. To do this, you might want to consider hiring an accountant so that they can help you keep track of all your finances and make sure that there is enough available to you to pay your property tax. If you don’t pay this, you will find that the State will start accumulating interest on the tax. Eventually, you will be hit with monetary penalties and all of this will add up to a massive amount that you are going to owe the government. In the worst case, if you continue to not pay your property tax, you could lose your property altogether and we are sure that this is not something you want to happen.
Sued By A Tenant
If you have decided to rent out one or more of your properties, you may at some point end up facing a lawsuit from a tenant. If you own a condo complex, you might have multiple tenants at a time and this on its own can be a handful. If this is the situation that you are in, you need to think about investing in condominium complex insurance to make sure that you and your property is covered. This type of insurance is specialized for condominium complexes and the policy will protect common areas such as hallways, stairs, community rooms and so on. You need to make sure that you are protected from lawsuits or else you may end up in the situation where you are being sued by a tenant and it is costing you thousands.
If you are being sued by a tenant, make sure that you have hired a lawyer. While this may cost you a fair sum of money, the lawyer will be there to protect your best interests and negotiate with the other party. As well as this, if the case does end up going to court, a lawyer is going to be crucial to your defence. Turning up by yourself without legal counsel could break your case rather quickly. With a lawyer on your side, you will find that you are far more likely to have an outcome that is more agreeable to you.
Expensive Emergency Repairs
One thing that you have to make sure you do is keep up the maintenance on your properties. It may be the case that a property may need some expensive and urgent repairs. This is going to cost you a lot of money and we don’t want to sugar coat this and make it seem like it won’t. Emergency repairs can be expensive depending on what the problem actually is and how serious it turns out to be. It tends to be the case that the more serious the problem, the more extensive work is going to need to be done. Unfortunately, there is no way to avoid problems like this. Even if you keep all of your properties up to the highest standard, there is no guarantee that a pipe won’t burst and the entire place could end up in a state.
Theft And Vandalism
One thing that you can never guarantee safety from is theft and/or vandalism. You are not going to be able to control what other people do to your property whether they are renting it from you, or if they are just a passerby. You should make sure that you have insurance in place that will protect you if someone breaks into your home and steals something. However, this could still cost you a lot of money, especially if you don’t have insurance. It is easier to get compensation if there is a tenant who has vandalised your property because you know who has done it and their details. However, if it has been committed by someone who does not rent your property, this is going to be a lot harder. You will have to pay to have the property cleaned up and it may never be possible to find out who vandalised your property. If this is the case, you will be out of pocket with noone to help.
We hope that by reading this article, you are more aware of the financial troubles that you may be facing when you invest in property.