Business Tips for Landlords or Property Managers

It’s official: the sharing economy is booming. Companies like Airbnb, Homeaway, and VRBO have made it easier than ever to capitalize your properties when you’re not occupying them. This can net a tidy profit, but what if you want to take the next step and make your living renting out your properties? Becoming a landlord or property manager is a fantastic way to generate income while also being your own boss, but navigating the business itself may be daunting for some.

How Deeply Should You Invest?

It really depends. It is always wise to think of renting out your property as a long term investment. It takes money to get started, but it also takes money (and time) to get out. If you own multiple properties, there will always be a lag in releasing your assets as it will take time to sell the property. That being said, investing in new properties to rent out will net you a sizeable sum of money every month that should be enough to cover any outstanding mortgage on the property.

Whether you choose to invest your money into traditional housing, an apartment complex, or even a mobile home park, there are substantial tax breaks to reap. The current tax code allows residential landlords to deduct interest paid on a mortgage, and depreciation is also covered as you are allowed to deduct the purchase price of the rental property from your taxes for an incredible twenty-seven and a half years.

Repairs made that fall under landlord responsibility are also deductible, as is travel costs related to landlord responsibilities. Even a home office can be deducted, provided it meets certain requirements. It is important to note that the IRS pays close attention to all of these deductions, so keeping accurate records is essential.

Be Prepared for the Disadvantages

Though being a landlord or property manager is a good source of long-term, ongoing income, it doesn’t mean that you won’t have to work hard or deal with the occasional emergency. All of the things that stress you out as a homeowner — frozen pipes bursting, backed up sewage systems, leaking roofs — all apply to your new business as well. Cultivating a list of repairmen, plumbers, and contractors that you trust is essential, unless you plan on being on call to make those repairs yourself.

Renters have varying rights depending on the state that they live in. It is vital that you as a new landlord familiarize yourself with the intricacies of the laws surrounding renting in your state before you start up your new business. Be sure you know what your rights are as well when it comes to deposits, late rent payments, and if you have the grounds to issue an eviction notice if your tenants become untenable.

There will be a significant time investment if you plan on being a successful residential landlord. From the possibility of repairs to legal issues, you will also be dealing with sorting through applications, and planning walkthroughs of your tenants living space to ensure that they are not violating the lease agreement.

Be an Ethical Entrepreneur

There is a marked difference between a landlord and a slumlord, and it is important for your success that you are seen as an ethical businessperson. This doesn’t mean that you have to look the other way when tenants are unable to pay, or issue multiple warnings if your tenants are in violation of the lease agreement.

The lease exists as a contract to protect both you and those who rent from you. A tenant who breaks their lease can lose their deposit and face eviction, but if a landlord breaks that same lease agreement they can face legal ramifications and bad press. To avoid being painted as a villain, be sure that you address all issues that arise for your renter that fall under your responsibility. Having happy tenants means that they are more likely to renew their lease, often at a higher rate. If tenants are displeased with you and word gets out, you could find yourself with a vacant property for months on end.

If you hold yourself responsible and take charge when issues arise, you will find that being a landlord or property manager is quite rewarding. Though the job can be demanding of your time, attention, and in many cases your wallet, in the long run it will end up being a very profitable and fulfilling venture.