Rental Property Income and Expenses Explained by an Orlando Property Manager

Orlando long-term rental properties have the ability to produce a substantial income. Whether it’s a single-family home or a multifamily duplex, all types of Orlando rental properties remain in high demand.

While owning a tenant-occupied rental property produces a steady income, there are many factors to consider when evaluating the financial aspects of the property. Tracking both the income and expenses play a pivotal role in determining a rental property owner’s financial gains and long-term wealth. As an Orlando property owner, I can’t stress enough the importance of tracking your income and expenses. Let’s break it down!

Types of Rental Income

Monthly Rental Payments

The primary benefit of owning a rental property is the substantial income. The main income source generated by a rental property is the monthly rent payments, typically collected on the first of each month. The value of your Orlando property’s rental income varies depending on a slew of factors. These include:

Location

Square footage
Property condition
Bedrooms and bathrooms
Amenities
Appliances

In addition to the physical and geographical aspects of your rental property, the monthly rental rate also relies heavily on the current state of the rental market. While Orlando is one of the most popular tourist destinations and a thriving city, there are constant rental market fluctuations. Market fluctuations are typical for any major city that experiences frequent population increases, new construction, and a dynamic economy.

According to Zillow, Orlando’s current market summary is as follows:

Median rent: $2,075
Month-over-month change: -$21
Year-over-year change: +$5
Available rentals: 2,760

When listing your Orlando rental property, it is essential to familiarize yourself with these factors because pricing your rental property competitively is the key to renting it quickly. Competitive pricing means pricing your property similarly to other successful rentals in the area. If your property is a significant outlier, the chances of filling your vacancy are lower.

With so many factors to consider, I know that setting the rental rate in a fluctuating market like Orlando can be difficult. As an Orlando property management company, we offer a FREE rental price analysis at The Listing Real Estate Management. This is an in-depth analysis that gives you the most accurate and competitive rental price to get your property rented efficiently. CLICK HERE to get your free rental analysis today!

Additional Income Sources

Depending on the rental property, location, and pet policy, some rental property owners may earn additional income. These additional income streams can include pet rent or parking fees.

Pet rent is a common tactic used to ensure coverage of any damage from pets. If a tenant has a pet, you can charge them a monthly fee to go towards necessary cleaning or repairs at the end of the lease. Property managers and owners typically charge between $25–$100 per pet.

In some cases, property owners charge tenants a monthly parking fee. A parking fee is typically collected at large multifamily complexes and is rarely implemented for a single-family or duplex rental.

Common Rental Property Expenses

An essential step in gaining long-term wealth as a rental property owner is keeping track of your expenses. Rental properties can come with significant expenses, some with a due date like a mortgage or a loan that must be paid on time. Your true profits do not come until your monthly expenses are paid off — failing to pay your expenses can put your rental property success in jeopardy.

There are two categories of expenses that come with a rental property: financing expenses and operating expenses.

Financing Expenses

Financing expenses are typically major expenses with a set due date. The main financing expenses are mortgage, loan, and interest payments. These payment amounts vary on a case to case basis, however, one factor remains consistent: the importance of paying them.

Failing to pay mortgage and loan payments puts your property and financial status at risk. It is essential to budget your rental income to allocate towards these essential expenses.

Operating Expenses

Another category of rental property expenses is operating expenses. These expenses go towards keeping your rental property up and running and in good condition. These expenses include:

Maintenance and Repairs:

Whether your property is newly constructed or 100 years old, all properties will need maintenance and repairs at one point or another. Some repair problems will be more severe than others, however, it is essential to perform routine maintenance, preventative maintenance, and repairs when necessary.

Maintenance is an important factor in keeping your rental property operating smoothly and ensuring your tenants are satisfied. Think of it this way—maintenance means maintaining your property to a high standard. Routine maintenance for a rental property can be as simple as checking the outlets to make sure they work or replacing a shower-head with low pressure.

In addition to simple maintenance, you may face a situation where your rental property needs a more serious repair. While major repairs are an inconvenience and can be a major expense, addressing major issues will allow your property to operate efficiently and continue generating a monthly income. More serious repairs may include repairing or replacing appliances, roof repairs, replacing damaged floors, or storm repair.

Maintenance Reserve Account

To prepare for potential maintenance and repairs, I recommend setting aside a maintenance reserve account. A maintenance reserve account is a bank account with funds dedicated solely to paying maintenance and repair expenses. This account ensures all relevant expenses can be paid for immediately and without having to scramble for money at the last minute.

As an Orlando property manager, I recommend setting aside 1-3% of your rental property value for maintenance. For example, if your property is worth $400,000, you should set aside between $4,000-$12,000.

Utility Fees

If and when your rental property is vacant, the property owner will have to pay for the utility fees. These fees include electricity, gas, water, and trash collection.

Landlord Insurance Fees

Most property owners choose to get landlord insurance, which I highly recommend. Landlord insurance offers property protection to cover losses and damage that may occur when renting your property out. In addition, there is landlord liability protection which can cover the cost of medical bills if someone is injured on your property.

The average cost of landlord insurance is $2,450 annually. This cost will vary depending on coverage and insurance companies.

Orlando Rental Property HOA Fees

Homeowners associations are common in Orlando — there is a high chance your rental property is located within one. If this is the case, you may be subject to HOA fees. Florida HOA fees typically range from $100-$500 per month but vary depending on factors such as property type, location, and community amenities.

Even when your rental property is occupied by a tenant, the property owner is responsible for submitting monthly HOA payments. The HOA fee amount can be deducted from your monthly rental income.

Orlando Property Taxes

Florida rental property owners must pay taxes on any home they own, whether it is a condo, single-family home, or multifamily complex. The average tax bill in Orange County is $2,621, however, property tax prices vary depending on the location, size of the property, and property type.

Calculating Net Rental Income

With all of the expenses associated with a rental property, it is essential to allocate funds towards any monthly and one time payments. While every property owner wishes they could keep 100% of the rental income, paying your expenses is what allows a rental property to succeed with smooth operations and satisfied tenants.

To calculate your profits, or net rental income, use this formula:

Gross income – total expenses =net income

Your gross income is the amount of money you earn before taxes and other expenses are deducted from your paycheck. Once you factor in tax deductions and expenses, you are left with your net income.

How to Maximize Income and Minimize Expenses

One of the most beneficial ways to maximize your income and minimize your expenses is to hire a professional Orlando property manager. At The Listing Real Estate Management, we have years of experience working with rental property owners throughout the Orlando and Tampa Bay areas.

Owning and managing Orlando rental properties takes time and dedication, and handling the financial aspects on your own may not be for everyone. The knowledge and organization it takes to manage an Orlando rental property should not be underestimated; doing so could lead to stress, inefficiency, and costly mistakes.

With the help of an Orlando property manager, the stress of managing rental property finances is lifted, and success is significantly increased. Not only will your stress be gone, but the insight of a property manager will help minimize expenses and maximize income.

At The Listing Real Estate Management, our property managers offer the best service through a personal, proactive, and dynamic approach to residential management. Our services include marketing and leasing, tenant screening, rent collection, maintenance and repairs, and rental property accounting, allowing our clients to take a step back from the day to day responsibilities of managing a rental property.

Our team’s experience and unique skill sets maximize our clients’ ROI. We execute on the little things, and our attention to detail directly affects your bottom line. Our clients appreciate the accessibility and communication our team delivers — two key aspects for success.

To experience the difference in working with a professional Florida property manager, contact us today at The Listing Real Estate Management, your Orlando boutique property managers!