Not every type of investment property generates income. If you have tenants, you’ll have a steady profit. However, if your property is vacant, you certainly won’t have a source of passive income. In fact, you’ll have extra costs associated with simply owning the property. Therefore, in this article, we will talk about the true cost of holding an empty property.
Depending on how you funded your investment property, you may have to make monthly mortgage payments. Believe it or not, if your property is vacant, you’ll have to pay the mortgage out of your own pocket. This might add up to a significant monthly expense. Unfortunately, there is no straightforward method to avoid these charges.
Some people have a mortgage, and others decide to pay off their property in full. Unfortunately, no matter which of these two situations you are in, you’ll have to pay tax. Why? Simply put, just because you have a property under your ownership. Fortunately, you may review your property data to discover whether you’ve been paying too much tax and then cut back on the unnecessary costs. However, you can’t avoid property tax altogether.
People who can’t find tenants for a long time decide to move there themselves. If you’re one of them, sell your current home and find trustworthy long-distance movers that will get you there quickly and safely. Fortunately, CA is full of reliable moving crews!
What are opportunity costs in a nutshell? They represent any potential lost income. So, when calculating the actual cost of owning an empty property, you must consider the lost revenue from rental income. Therefore, once you’ve calculated all of the other expenditures, you should include the amount of money you’re losing by not collecting rent. As a result, a vacant investment property is a double negative for your monthly revenue.
If your home is in a community with a Homeowners Association, you will be required to pay a membership fee. The monthly payments are typically between $200 and $300. However, this fee varies depending on the size and type of your property. Unfortunately, it doesn’t matter if your property is rented out or simply vacant – you’ll have to pay HOA fees either way.
To sum up
The true cost of holding an empty property is much higher than anyone would expect. Even though nobody’s living there, you will have to pay additional fees, which can break the bank. Therefore, think carefully about leaving your property unoccupied.