Rental Property Management Made Easy

Having your own rental property management plan is key to residential rental property investing.

Its 8:30 at night, your tenant calls and says water is leaking very badly under the sink. Its 8:30 at night, your tenant calls and says the toilets clogged. Its 8:30 at night, your tenant calls and says a window just got smashed. Its 8:30 at night, your tenant calls and says the roofs leaking. Its 8:30 at night, your tenant calls and says the heats not working. Its 8:30 at night, your tenant calls and says the bedroom doorknob fell off.

How about a gutter gets disconnected. No big deal, when it rains make sure your not standing underneath it. Winter comes, where water hits the ground, it starts to collect and then it freezes. Whoops, someone slips there and you get sued. Big problem. It pays to have a rental property management plan.

How about that exterior porch wood that needs painting. No big deal. Next year. Next year comes and goes and you saved 700 bucks not doing it. Three years later you spend $2000 having wood replaced because its to rotted. Big problem. It pays to have a property management plan.

You get the idea, whether something breaks or routine maintenance – things need to get fixed and maintained. A good rental property management plan helps ensure easy and profitable multifamily property investing.

There are three main factors for a good rental property management plan. Knowing who is responsible for managing the properties maintenance, who is going to fix things and when will things get fixed are the three main factors. Having a game plan for these three things is vital for maintaining your rentals. Theses three factors should be addressed and included in the lease. This ensures the tenant knows ahead of time what to expect when things need repairing or maintenance.

Lets start with who will be responsible for managing your rental property. Seventeen years experience of owning rentals has taught me that know one else will be better than the property owner for being responsible for managing the maintenance of your rental units. So the most cost effective rental property management plan has the owner doing the managing.

Before you say, oh god, what a nightmare managing rental property is, let me say I have learned and you can too, how to make property management simple and profitable.

In fact, for those who understand and implement a solid rental management plan correctly and continue investing wisely in cash flowing residential multifamily properties will find that their hourly pay time for managing their rental properties is extremely lucrative.

Needless to say, I personally strongly advise against hiring a management company for residential rental property.

Lets address who is actually going to be fixing broken items or doing the required maintenance?

You, the owner, your payroll help, a hired handyman, who is going to actually be doing the physical work for fixing and maintaining your rental units. Why is it important to have this be part of your rental property management plan?

Well, what you don’t want is having every time something needs to be repaired become a stressful costly headache.

By knowing who is going to be doing the repairs ahead of time, through your rental maintenance plan, you eliminate two potential problems.

One, when a problem does occur, your somewhat prepared by having had developed a list of contacts ahead of time. Secondly, being prepared like this, tremendously reduces stress and makes managing your rental property easy.

Hopefully you see the importance of knowing ahead of time who is responsible for and who is actually going to be doing the maintenance work.

Later, I’ll tell you the third important key for a cost effective, easy to implement rental property management plan.

A few additional things to consider regarding rental property management. If your just starting out and you buy a multifamily house, and your a hands on type person you may want to do as much of the maintenance and repairs as possible.

If you go on to keep investing in multifamily houses you’ll find actually doing the physical maintaining of your income properties to burdensome.

Understand that managing rental properties and doing the physical work are two different things.

If you decide to hire a maintenance man or handyman to do the maintenance, ask around local hardware stores for referrals or ask people in a Home depot or Lowes. They’re not supposed to refer people but I have been pleasantly surprised how many people moonlight or know someone fair priced and reliable.

Look in a local paper for a handy man you can enlist to do the maintenance. Call a few people placing adds, not big print adds, rather the small adds and tell them what kind of help your looking for. Listen to them give their spiel, ask questions and ask if they can offer you anyone who they worked for in past as a recommendation. If they check out tell them you’ll be giving them a call when you need them.

Personally, I do not recommend hiring an outside company to do your rental property management.

Another great place to get names of reliable people to do your repairs and maintenance is through your local REIA group. The more names and numbers for cost effective, reliable maintenance men, the better. Put their names, numbers and what they do into your cell phone or keep them in a special book. I’m sure I’m not the first or last person to put a name and number in a book and later not remember who they are or what they do!

Who might you want to have on your rental property maintenance list before you even need them? A few general handymen, a furnace repair man unless you want to get repair contracts from the gas company if your property heats by gas, an exterminator ( I actually have contracts for quarterly prevention with exterminator on all my units), an appliance repair man if you supply appliances, a plumber, a drain cleaning company and someone to shovel or plow your dwellings.

If you went on to own a lot of multifamily units, you may want to considering hiring someone on full time for doing the physical maintenance work. Personally I prefer having a large network of contacts I can call on for maintenance and repair work over having employees.

If you follow these rental property management guidelines, managing your cash flow units is simply a very profitable job of receiving and making phone calls.

Earlier I mention there was one more important factor to address regarding how to manage your rentals.y.

When will things be repaired? Put in the lease or addendum how long you have to make arrangements to have things fixed, twenty four, forty eight, seventy two hours? Put it in the lease so tenant knows how you maintain your property. It may seem silly, but I’ve found by having the tenants being aware of how you manage and maintain your rentals the less misunderstandings you’ll have.

Remember, your in charge. Its your property and having a solid rental property plan and informing your tenants how you maintain your rental property will make owning investment property all the better.

Tax On Rental Properties – What Is Tax Deductible?

Rental property is either commercial or residential property from which the actual owner receives payment (rent) from the users (tenants) for occupation or use of the property in question.

To venture in rental property, the investor should consider these renting property tips. The tips will guide the future investors on the best way to benefit from rental property investment.

Rental income is the earnings received by the rental property owner from their tenants for the use of the property.

Rental income taxes are the deductions provided by the real estate so as to reduce the income tax. These provisions benefit the investors because they pay reduced taxes.

Real estate investors should consider all the renting property tips to ensure arriving at the most beneficial decision for them.

1. The first tip is to know all the available options. To invest in rental property the investor must identify the kind of property that will fall within the intended strategy. These strategies include being a landlord and the resale of properties. When the options are clear, the best decisions are made to ensure maximum benefits.

2. The second tip requires first time investors to partner with those experienced in the field of rental property. The partnership can be from an already established real estate agent to provide best advice and also locate the most potential areas. This partnership provides a win-win situation where both the investor and real estate agent benefit.

3. The third rental tip is the right location. Any property that is intended for renting should be in high potential areas, such areas with high population and a high rent rate. The areas should also have low crime rate so as to attract potential clients. The investors should stay away from rural areas and less populated areas. They should also consider the sizes of the rental property because the bigger properties attract more clients. The area itself should have public transportation and other social amenities.

4. The fourth tip is that any investor should have enough capital. They should have a potential financial plan with enough assets so as to have to not obtain a loan. The investor should be able to pay mortgage financing using the money obtained from the rental properties.

5. The fifth tip is that the investor should have a supporting cast on their team. This is to ensure that all repairs in the rental property and other maintenance jobs are done at the right time. The investor should also have an attorney to take care of the rental agreements.

The rental property tax rules are the guidelines to ensure those in the real estate sector pay the required taxes. The rules include that rental income should be taxed when received not when they are due. This means even the advanced payments are taxed.

Security deposits are not taxable if the intention is to return the money to the tenant.

Repairs and improvements are also taxable because they increase the quality of the property.

Interest on mortgages are deductible during their payments. These include improvements and credit card interest if used for the rentals.

Tenant paid expenses are taxable because they are considered income from tenants.

Trade for services if a tenant pays by use of offering a service as rent it should be taxed because it has a market value.

Tax on rental incomes are any taxes on income received as rent. There are different taxes on rental income to cater for each and every investor and ensure the set guidelines are followed.

But above anything else, you must adhere to this rule, as it is the most important…..”every investor should keep good records for reference purposes”.

Following these rules, you will find owning rental properties easier and more profitable than just putting money in a savings account. Don’t wait, start thinking of owning a piece of real estate today!

Rules For Buying Rental Properties

According to experienced landlords, the difference between a rental property being a profitable investment and being a disaster is how much work an investor is willing to do. Anyone buying rental properties must choose properties that generate a positive cash flow, and this involves more than the rent covering the mortgage payment. It is a mistake for someone buying rental properties to think they can deal with negative cash flow by waiting a while for the property to go up in value and then “flipping” the property for profit. Just ask the people who bought property in 2007 and tried to flip it in 2008 or 2009. The three big mistakes people buying rental properties make are underestimating expenses, expecting to put no money down and get instant riches, and not screening prospective tenants.

Big Mistake Number 1 is underestimating the expense. To be safe you should estimate that on a monthly basis, 40 to 60% (depending on whether you hire someone to manage the property) of the rental income will be spent on things like insurance, taxes, vacancies, and damages. Why such a high percentage? A major repair such as a roof or new furnace can really set you back. One way to figure out how much you should pay for a rental property is to find out what rents go for near your property, and divide that by 0.01. That would mean that for a house that rents for $1,000, you should spend no more than $100,000 on the purchase of the property.

Big Mistake Number 2 is believing those infomercials about “no money down and instant riches.” Those people on the commercials who live on a yacht within months of buying rental properties for no money down have nothing to do with the real world. Owning and operating rental property is more of a business than it is an investment that you sit back and watch grow. If you plan to manage the property yourself, be prepared for your phone to ring at any time, and be prepared to take care of the burst pipe or broken window that your tenants report. If you hire someone to manage the property for you, expect this to cost around 10% of the gross monthly rent.

Big Mistake Number 3 is failing to screen new tenants. If you’re in a hurry to rent a place out, or if you feel sorry for someone, prepare to pay big for it. Credit checks can be done for as little as $10 to $20. Verifying references may seem like a pain, but you should do it anyway. Contacting previous landlords to ask about their rent payment history, cleanliness, and damage to rental units is time well spent. Even if you hire someone to manage the property for you, take the time to learn the landlord-tenant laws where you live. You can bet that the “professional bad tenants” know the law forwards and backwards. Just remember that legal forms may cost a few dollars and getting them signed will take some time, but the time and money spent on an eviction is far more expensive and time consuming.

Buying rental properties can be a good or bad investment just like anything else. There are a number of rules of thumb for calculating expenses and cash flow. You also need to know how to analyze rents in the area you have in mind beyond just what the rents are at a given address. You will need to learn how to consider capital investments and determine whether a big repair on a property you are considering buying is a dealbreaker or not. Buying rental properties can be a satisfying way to make a side income or even a primary income as long as you go into it with your eyes open and don’t believe the infomercial hype about no money down and instant wealth.