How to Cover Your Financial Obligations as a Landlord

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Being a landlord is complex during the most benign times. Especially during pandemics, there are additional stressors that are pressing upon you. How can you cover your own financial obligations as a landlord?

Save for Times of Need

It seems simplistic, but when money is coming in on your property, do not be tempted to use all of it as income gain. Some of that money needs to be saved so that you can use it for emergencies, repairs, and other complications. If you have a tenant move out, or who needs to be evicted, it’s essential to have this buffer in those instances as well. Paying an emergency plumber on Sunday morning at four AM is easier when you’ve prepared ahead and don’t need to pay out of your own pocket.

Speak to a Lender About a Loan

Your costs are more than the cost of the mortgage of your property. Your expenses as a landlord include advertising, property maintenance, upgrades or remodels, quality cleanings between renters, and other complications. While you do not want to have more debt than is necessary, there are times in which it is needed to have an additional loan from the bank. Being able to refinance if possible is also a great option, to lower your personal costs as much as possible while gaining equity.

Landlord Insurance

Your homeowner’s insurance will not cover renter-related issues. This means you need a specific landlord’s insurance policy. This covers not only things like damage to your property by tenants who might not take as good of care of things as you would like (or, worse, are vindictive about their leaving your rental), but also liability protection if someone is injured on your property, or loss of income if your tenant stops paying for an extended period of time. Your insurance company can find what policy will suit you specifically. This is a financial obligation for a landlord, but it’s also security to your finances as well.

What Does Landlord Insurance Cover?

Property Damage—This is covered in the event that the real estate or furnishings suffer from a natural disaster, fire, electric/gas malfunction, earthquake, vandalism, or irresponsible tenants. If possible, try to get a policy that offers replacement costs instead of the actual cash value or a predetermined lump sum of cash.
Lost Rental Income/Rental Default Insurance —Should something cause your property to be totally uninhabitable (severe mold, termites, a rat infestation, or a sinkhole), this feature provides temporary rental reimbursement to cover the rent money you’d otherwise receive if tenants could be occupying the property.
Liability Protection—This is coverage for the medical or legal costs that might ensue if the tenant or a visitor suffers injury due to a property maintenance issue.

Additional Coverage

There are several common riders that can come with landlord insurance policies. They’re not as vital as the key provisions mentioned above, but they could come in handy and save you some money in the long run.

Guaranteed Income Insurance—This covers the landlord if a tenant comes up short on the rent for one month (or doesn’t pay at all).
Flood Insurance—As many landlord insurance policies don’t include flood damage related to natural disasters or municipal plumbing, this coverage is worth adding if the property is in a flood-prone zone.
Emergency Coverage—In the event, a tenant calls you out to fix something such as a leaking dishwasher or was accidentally locked out of the house, this feature can help cover some or all of the costs you incurred to travel to the property and resolve the issue.
Additional Construction Expenses—This will cover expenses incurred by having to bring a building up to code after it has been damaged.

If being a landlord is your business, you’ve got to run your business in the smartest way possible. This includes saving a buffer for emergencies, and, if necessary, getting loans to further your business needs. It always includes insuring your business so that you are protected in case of emergencies. The best landlords are the ones who can take care of problems because they’ve done their business in advance!

If you need money to get your business started, apply for funding from us today!