If you’ve invested in an income property, you know the importance of saving money. As a landlord, it’s your job to make sure that apartments are filled, tenants are happy, and you’re bringing in a little extra at the end of the day.
This is a lot harder than it sounds, even for rental properties that make a good profit from their investments. Whether you’re dealing with a lucrative property or you’re struggling to make ends meet, these money management tips will help set you up for success.
- Start with a Great Property
Ultimately, all the money management in the world won’t help if you purchased a money pit. Some properties are old or underwent poor construction, which makes them much more likely to have problems. Try to avoid purchasing a rental property that has clear signs of extra maintenance required. Those signs might include:
- Roof problems
- Outdated plumbing and wiring
- Cracks in the basement, walls, ceiling, or exposed foundation (indicators of foundation problems)
- Cracked, warped, or molding siding
- Clear signs of water damage
These signs all indicate that you’ll be spending a lot on maintenance in the coming years. This may not be an issue if you purchased the property at an extremely affordable price and you’re prepared to handle the cost, but it makes a lot of difference when you’re dealing with newer properties that are in better shape.
- Invest in the Maintenance Process
“As a landlord, it is easy to overlook minor issues,” say Erin Eberlin, a contributor for The Balance. “Performing regular maintenance on your property can help you catch a small problem before it turns into a large expense.” Some important maintenance investments might include:
- Inspections for water damage and leaky pipes
- Monthly pest inspections and exterminations
- Examination of home efficiency (sealants around windows and doors, insulation checks, etc.)
- Testing of carbon monoxide and fire detectors
- Changing air filters
- Regular yard work
- Flushed water heater
These maintenance investments, and others like them, are a great way to show tenants that you’re really invested in the property. They maintain the quality and raise tenant morale – both are grounds for higher rent prices.
- Put Your Legal Affairs in Order
It’s much more expensive to skip over the legalities of a rental property than it is to hire a lawyer in the beginning and make sure everything is in order. If you don’t adhere to federal and local laws, you could find yourself facing a lawsuit, which takes serious cash. Most small income property businesses won’t be able to handle the financial repercussions and may have to shut down.
Remember, there are some laws regarding rental properties on the federal level, but most vary by state. For example, in Texas, the Repair and Deduct Statute is an important law. It states that the tenant may withhold rent payments if the landlord doesn’t take care of an important repair, like a broken HVAC system. As you can imagine, failing to adhere to this law could be very costly for landlords.
- Get Great Insurance
This one might be surprising, given the high cost of landlord insurance. However, it’s a necessary expense that could result in huge savings later on. If there’s a fire, flood, or other incident caused by a natural disaster, you’ll be saved from paying for the majority of the repairs.
It’s very important that you get good insurance, however. This is a little different than regular homeowner’s insurance because it will cover your commercial property and you as a landlord from certain liabilities. To make sure you’re getting the best out of your policy, make sure it has adequate coverage. You can also save money in the application process by looking for new customer discounts and other membership credits.
- Take Advantage of Tax Credits
Tax season is here, and if you aren’t aware of some important tax breaks, you’ll pay far more than is necessary for taxes. There are many deductions you can make, including:
- Depreciation of assets
- Insurance premiums
- Travel expenses
- Office supplies
- Loan interest
Basically, any expense that goes directly to caring for your properties or running the business of a rental property can be deducted from your taxes.
- Be an Excellent Landlord
One of the best ways to ensure profits from your rental property is by being a great landlord. “Good landlords are able to keep long-term, qualified tenants,” says an article from the real estate site Rentalutions. “To get and keep a good tenant, you have to be an awesome landlord! Awesome landlords view their tenants as customers, always follow the law, and are willing to go the extra mile.”
Being a great landlord takes patience, discipline, great communication, compassion, and passion. Basically, when you show tenants that you’re invested in their comfort, they’re happy to pay higher rent prices. The faster you are with maintenance and communication, the more you can charge for rent.
- Screen Tenants Carefully
One of the fastest ways to lose money on a rental is to get a bad tenant. Bad tenants will destroy the property and fail to pay rent, both of which cost you time and money. If you want steady revenues with minimal destructive maintenance requests, screening tenants is a must.
In the past, we’ve written a blog post on the best ways to execute tenant screenings. Some of our tips include:
- Ask the right questions on the rental application.
- Run a credit check.
- Ask for references and actually contact them.
- Meet the tenant in person during a personal interview.
The tenant screening process can be complex, but our tenant screening services make it easy. When you get good tenants in your apartments, you don’t have to worry about the risks of lost revenue in this sector.
Bonus: Hire the Property Managers at Green Residential
For any landlord, hiring property managers is the best way to save money. With Green Residential, you pay a flat fee for our services, which include maintenance, rent collection, tenant screening, eviction notifications, and so much more. You’ll see incredible savings from this investment that pays for the fee and more. When property managers care for your rental community, you have grounds to raise rent prices and increase profits. For more information about how our services can help you, contact us today!