Barsh & Cohen P.C. | Why has your income property failed to produce a profit?
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Why has your income property failed to produce a profit?

Why has your income property failed to produce a profit?

key lying on a lease documentRental properties can be a great source of supplemental income, but they do not come without their share of challenges. When you buy an investment property, you go into it with high expectations. Unfortunately, not all of them turn out to be profitable. What can you do when an investment property fails to produce the amount of income you were expecting?

There are many factors that can contribute to an income property not returning the expected profit. Perhaps you’ve had to make costly repairs. Attending to repairs promptly is essential in keeping tenants satisfied. However, repairs can be time consuming, not to mention costly.

Start-up capital is another expense that can contribute to unprofitable properties. You may have had to complete a costly remodeling project, deal with contractor delays, and install safety features to comply with your state’s landlord and tenant laws.

Another issue affecting profitability is delinquent rent payments. Even if you’ve properly vetted all your tenants, you are not immune to problems with overdue rent. If you must evict a tenant, this uses time and resources as well as lost income for the time you are unable to rent to someone else when pursuing collection proceedings.

If you are struggling to make a profit with your rental property, you may want to consider getting assistance from a property management company. A property management company can review your expenses and help you determine if you’ve set the correct rental price for your units. The analysis takes into account market conditions, expenses, geographic considerations and other factors to help you improve your return on investment.

If you have legal questions regarding an investment property or landlord/tenant issues, we are here to help! Barsh and Cohen’s team of legal experts has decades of experience representing clients in all areas of real estate. Contact us to schedule a consultation.

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