Three Tips For First-Time Landlords
Individuals decide to become landlords for a variety of reasons, such as the desire to diversify their investments or wait out a bad property market. Regardless of the reasoning behind your decision to become a landlord, there are a few simple tips you can follow to make the transition from property owner to landlord as seamless as possible.
1. Hire a Property Management Company
As a first-time landlord, you may feel like you can save money by handling all of the errands and tasks yourself. However, a good property management company is invaluable and can even keep more money in your pocket in the long term.
Property management companies handle a variety of tasks, such as marketing the unit, screening tenants, collecting rent and applicable deposits, handling maintenance issues, and evicting tenants. They have experience in the rental industry and know how to screen and interact with tenants.
Landlords who will not live near their rental unit, who have little time, or who are not comfortable with frequent tenant interaction can especially benefit from the services of a property management company.
2. Be Leery of Renting to Family Members
Aunt Becky needs a place to live, and you need a tenant for your property; renting your unit to Aunt Becky sounds like the answer to both of your problems. However, a rental relationship gone awry can sever your familial relationships permanently. Your family members may feel like they deserve a little leeway when it comes to paying rent on time. You may not be comfortable evicting someone you have known and loved for decades over a couple thousand dollars
It is best to look elsewhere for tenants. If you do decide to rent to family, never rely on a verbal rental agreement. Make sure you to have your family member sign the same paperwork as any other tenant.
3. Keep Immaculate Records
As a landlord, it is important to know that you have several deductions that you can take on your taxes. To maximize your deductions and lower your tax liability, it is essential that you save all paperwork associated with your expenses. Bank statements, receipts, and invoices should all be kept. Property-related expenses, such as loan interest, insurance, legal services, travel, depreciation, and repairs, are all tax deductible. Understanding all of your expenses also helps you gauge the true profitability of your rental unit.
Also, it may be helpful to meet with a tax professional. Tax professionals can tell you exactly what deductions you are entitled to take.
The foray into the world of real estate can be daunting. Become a successful landlord by sticking to these important guidelines.