The Do’s and Don’ts of Owning a Rental Property
Are you looking to buy a rental property?
If you’re new to the business, you need to know more than just what property to invest in. You need to know the do’s and dont’s of owning a rental property.
Don’t make mistakes when you can learn from the mistakes of others instead. Here are some of our tips for knowing the dos and dont’s of owning a rental property.
The Do’s of Owning a Rental Property
Owning a rental property is a great way to provide a much needed service to your community while also making a profit. Here are some dos every owner should be aware of:
Securing Your Assets with a Robust Insurance Plan
Owning a rental property is a significant investment that can provide a great income stream for many years to come. As such, it is paramount for landlords to ensure that their assets are adequately protected with solid insurance coverage.
In sum, landlords should conduct research, comparison shop, and obtain the most sensible insurance coverage per their specific needs in order to secure their assets.
Maximizing Your Returns with Tax Planning Strategies
Utilizing suitable deductions, deferrals, and credits may help you increase and retain your capital, as well as benefit from any income tax savings.
Consider structuring the ownership of your rental property to effectively use the cost-recovery system and other strategies such as passive loss limitations and self-rental rules.
The Dont’s of Owning a Rental Property
When it comes to renting out a property, there are certain “don’ts” which must be adhered to. Here are some of examples:
Unexpected Maintenance Costs
While these costs may initially seem unpredictable and overwhelming, it is best to create a savings account specifically for maintenance and repairs within the property, as this will help to alleviate costs when necessary.
Furthermore, to really get ahead of potential maintenance costs, try to be proactive in updating and replacing reasonably large items as soon as possible. This can include items such as HVAC systems, roofs, and appliances. Ignoring unexepcted maintenance costs can put owners unknowingly out of pocket, so the best policy is to always to be prepared.
Vacancy Risk and Tenant Turnover
Don’ts include setting rent prices too high, trying to collect too much deposit, neglecting the importance of the terms set in the tenancy agreement, not screening tenants properly, and not establishing clear communication with the tenant.
Furthermore, unclear communication also can make it difficult to explain expectations, duties, and rules to a tenant. Lastly, asking for a large deposit can turn away quality tenants and create tension between land lord and tenant.
If you need more details with property management, you may always consult with a professional.
Learn More About Owning a Rental Property
Owning a rental property can be a great way to make passive income. However it is important to understand the dos and donts that come along with it.
With the right resources, you can become a successful rental property owner and reap the rewards. It’s best to consult an expert to learn more about owning a rental property.
Did you find this article informative? Check out the rest of our blog for more!