You’ve acquired a rental property, and you’re about to become a landlord for the first time. Congratulations are in order; a rental property can be a great source of income and a wonderful investment! There’s a lot to remember when you’re a new landlord, so here are a few important tips to help you get the most out of your rental property.
It’s Not Fast Money
Rental income can be substantial, but there are a lot of costs to keep in mind. First, you have to find tenants for your place; this can take time, and during periods in which you have fewer tenants, you’ll still need to pay any upkeep, repair and maintenance costs associated with the property. This means it’s a good idea to have a reserve of money to help you out during periods where your cash flow is a bit low; it also means a lot of your rental income may go to upkeep, so don’t expect to become rich overnight.
Document, Document, Document
Landlording is a business that happens in many steps; you might experience complaints from tenants, bills from repair companies, new potential clients and sudden vacancies all in the same week! This means it’s extremely important to document all of your activities. Your bookkeeping needs to be impeccable, and an accountant can seriously improve the quality of your business. You should take pictures every time there’s a change in vacancy in your building, to ensure that no property is damaged and that you have evidence if it is. Make sure all contracts, whether with tenants or maintenance staff, are in writing, so you can always reference back to the original documents if there’s legal action.
Owning a rental property can mean legal action, tax incentives, maintenance and repair work, groundskeeping, and interacting with tenants. Supposing you are a lawyer, accountant, handyman and property manager with plenty of time in your day, you’ll be able to juggle all of these elements yourself! Otherwise, you’d be best served using professional services. Lawyers will know about housing laws, as well as the laws that govern the relationship between landlords and tenants. Accountants will be able to help you divine which purchases will be tax-deductible, which are considered capital costs, and how to get the most out of your money. Professionals will be needed to repair and replace systems in your property, so get to know plumbers, electricians, HVAC technicians, and other essential repair staff.
Choosing the right property managers is a great idea for new landlords. A good property manager will be able to assist you in creating a budget, and will handle advertising your property, screening tenants, maintenance and repair, inspection, and tenant interactions; they’ll collect rent, overdue payments, and handle evictions. Good property managers will only collect when rent is being paid because they know cash flow goes down with vacancies and will tailor their fees based on your budget and needs. Put your investment in good hands, and hire a property manager!