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How to Slash Your Rental Property Expenses

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If you’re a landlord, the only thing better than increasing your passive income is cutting your expenses.  In fact, both acts lead to the same goal, and that is increasing monthly cash flow.  So, it’s important to focus on both sides of this equation.  What follows are some tips for slashing your rental property expenses.

Basically, in order to devise your cost-cutting plan, you’ll need to prioritize and attack your largest expenses first.  The “big three” are your mortgage, landlord insurance, and property taxes.  This prioritization is critical because, for example, saving 10% of your mortgage might save you around $100 a month, but saving 10% of your water bill might equate to only $10 a month, which won’t get you to where you need to go.

Therefore, one obvious item to evaluate is your mortgage.  Rates are still at or near historical lows at the time of this writing, so now’s as good a time as any to look into refinancing.  Lock in a lower rate now, and you’ll never need to look at your mortgage again.

Insurance, on the other hand, should be reevaluated every year (both liability coverage as well as the actual building insurance).  Staying with the same insurer year after year is usually not ideal.  You can almost always get a better insurance deal than what you had previously, as long as you’re willing to put the time in to do this.

Property taxes are also interesting to look at.  Most landlords assume that they are totally at the mercy of their local municipality when it comes to property tax.   However, this is a mistake because property values can become outdated or inaccurate over time.  Thus, if you’ve had a property for more than 10 years, check your property valuation against other similar properties that have recently sold in your area.  If you find that your property is over-valued from a tax assessment perspective, you can then follow up with the municipality to get your assessment adjusted.

Again, the bottom line is that for landlords, a penny saved truly is a penny earned.  Whether you increase your rent by $100 a month, or slash your expenses by $100 a month, the net effect is the same…and, it’s good!

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