10 Hidden Costs of Owning a Rental Property in Texas Every Landlord Should Know in 2026

Owning a rental property can be a great way to build long term wealth. But many first time landlords are surprised by how many expenses come with managing a rental home.

Most owners plan for the mortgage and basic maintenance. What they often miss are the hidden costs that affect cash flow and long term returns.

If you own or are thinking about buying a rental property in Texas, here are ten important costs you should understand before getting started.

1. Property Taxes on Investment Properties

Rental properties in Texas do not qualify for the homestead exemption. That means they are usually taxed at a higher rate than owner occupied homes.

After you purchase a rental, the county may reassess the property at its new market value. This can significantly increase your tax bill.

While Texas property owners can protest their tax value each year, many landlords forget to do this and end up overpaying.

2. Landlord Insurance and Liability Coverage

Standard homeowners insurance does not cover rental properties.

Landlords need special rental or dwelling policies that protect against tenant related risks.

These policies often include:

• Property coverage
• Liability protection
• Loss of rental income coverage

Many owners also carry umbrella insurance for added protection. These policies cost more than basic homeowner plans but are essential for managing risk.

3. Turnover and Vacancy Costs

Every time a tenant moves out, your property may sit empty.

During vacancy, you still pay:

• Mortgage
• Taxes
• Insurance
• Utilities
• HOA fees

Even one month of vacancy can reduce your yearly profit. High turnover increases long term expenses and lowers returns.

4. Leasing and Marketing Expenses

Finding quality tenants takes time and money.

Common leasing costs include:

• Professional photos
• Online listings
• Screening services
• Advertising
• Leasing commissions

Poor marketing can lead to longer vacancies and weaker applicants, which creates more problems later.

5. Make Ready and Repairs Between Tenants

After a tenant moves out, most properties need work before they can be rented again.

This often includes:

• Painting
• Carpet cleaning or replacement
• Deep cleaning
• Minor repairs
• Yard work

These “make ready” costs happen between every lease and should be built into your budget.

6. Maintenance and Emergency Repairs

Rental properties require ongoing maintenance.

Common issues include:

• HVAC repairs
• Plumbing leaks
• Appliance replacement
• Electrical problems
• Roof and drainage issues

Emergency repairs often happen after hours and cost more. Without a reserve fund, these expenses can quickly become stressful.

7. HOA Fees and Rental Restrictions

Many Texas rental homes are located in HOA communities.

HOAs may charge:

• Monthly dues
• Transfer fees
• Violation fines
• Special assessments

Some HOAs also limit rentals or require approval. Violations can result in penalties that affect your bottom line.

8. Property Management Fees

Some owners try to manage on their own to save money. Others choose professional management.

Property management fees usually cover:

• Tenant screening
• Rent collection
• Maintenance coordination
• Legal compliance
• Owner reporting

While management is an expense, it often saves money by reducing vacancies, preventing costly mistakes, and protecting your investment.

9. Legal, Compliance, and Eviction Costs

Texas landlord tenant laws must be followed carefully.

Common legal costs include:

• Lease preparation
• Notice delivery
• Attorney fees
• Court filing fees
• Eviction services

One problem tenant can cost thousands of dollars if handled incorrectly. Professional guidance helps reduce legal risk.

10. Capital Improvements and Long Term Reserves

Over time, every property needs major upgrades.

These include:

• Roof replacement
• HVAC systems
• Exterior paint
• Plumbing upgrades
• Foundation repairs

These are not monthly expenses, but they are unavoidable. Smart landlords set aside money each month to prepare for future improvements.

Final Thought: Why Professional Management Protects Your Investment

Owning a rental property in Texas can be rewarding, but it requires careful planning and strong systems.

The most successful landlords are not the ones who try to do everything alone. They are the ones who build a team to protect their investment.

Professional property management helps you:

• Reduce vacancies
• Control maintenance costs
• Stay legally compliant
• Protect tenant quality
• Improve long term returns

At Bluebonnet Property Management, we help owners manage expenses, avoid costly mistakes, and maximize rental performance.

If you own a rental in San Antonio or are thinking about becoming a landlord, our team is here to help you succeed.