Rental expenses at Tax Return

[Jane A.]

There is an official guidelines that yearly repairs and improvements expenses for a rental property should be below 2% of the purchasing price. For example for 100K Douplex we will spend no more than $2000 during the year. To me it looks pretty much reasonable for only repairs part, any bigger project will cost more than 2K. How do you plan your repairs and improvements ? On t

[Account Closed]

In the Real Estate Business, like ours especially, there is no sure thing.

Tenants can damage a property that is 100% in good condition down to nothing.  

Roof repairs, caused by fallen trees, Cable Dishes on homes, natural disasters from heavy winds, can puncture that theory to pieces. (budget)

When you run a Profit and Loss Report each month and throughout the year, you can tell by your bottom line per property, what property is creating revenue and which ones are causing you grief.

You also have to take into consideration the Vacancies, length of Vacancies, and how the market is doing at the time.  You may someday have to decrease your rents, and then again, thinking positively, raise rents.

So I would just relax, make your tenants happy, but also staying firm when needed, take care of repairs when needed, and keep your eye on your Profit and Loss Reports by class and you will know when to make changes.  

My husband and I always told ourselves, if we make $100 clear on each property and each unit, we are good.  Of course many times we made 100% on our properties each month, (paid off homes).  But then next year we had a ton of roof repairs, garage roof repairs, and vacancies and other junk that just came up.  

If being a landlord was easy and a sure thing, everyone would be a landlord.

Nancy Neville