Landlording 101: Reducing Stress and Maximizing Profits

For many, purchasing real estate to rent out seems like a quick and easy path to financial freedom. However, once they begin, they soon discover that the experience can all lead to some unexpected and very troubling headaches. It can seem overwhelming at first, but there are a few tips to help navigate the problems and help you feel better about your investments.

Technology Makes Life Easier

There's a new app that makes life easier for both the tenant and the property owner. It's called Cozy and it does most of the work for you. Once you put in your particular details, Cozy helps you collect applications, screen those applications for the most promising tenants, and can even assist your renters to pay their rent more efficiently. Once the landlord and tenant save their settings, the rest is done by the program.

Make Sure You're Taking Full Advantage of Tax Breaks

As a property owner, you're already taking advantage of some tax breaks, but you may not be aware of just how many deductibles you can claim. For instance, all repair costs and upkeep is tax deductible. The government allows this because it creates a better situation all around. Maintaining a property in better condition means you can charge higher for rent, which means you'll also pay more in taxes.

Additionally you can deduct the interest on your mortgage, as well as the cost of buying the property. The IRS does restrict how the cost of the property can be deducted, so check with your tax advisor to learn how you can qualify for this break.

Business-related travel, maintaining a home office, and insurance policies are also tax deductible. Anything that involves the cost of conducting your business as a landlord has the potential of becoming a deduction. If you own multiple properties and consider the option of financial consolidation, the tax deductions and reduction of the number of loan payments may work together to boost your yearly income.

Allow Pets

Certainly, there are reasons to shy away from this option, but, if you can attract a responsible pet owner, those risks are limited. In exchange, you can require additional security deposits, which are typically non-refundable. Many landlords require a security deposit per pet, so that can add up. On top of the deposits, a monthly pet rent can increase your income. A monthly pet rent of $15 to $25 per pet can add up over time .

Another good reason to reconsider your stance on allowing pets is that it will help you attract long term renters. It's difficult to find a home that will welcome pets, so, when a pet lover does find a suitable place, they will likely stick around for years to come.

Raise the Rent, But Not Too Much

This can be tricky. You want to maximize your earnings, but you don't want to raise the rent so high that you'll end up with an empty property. The key to staying competitive is to maintain a watchful eye on what other similar properties in your area are charging. You'll want to look into this ahead of time, because it can be problematic to increase the rent after the lease has been signed.

Generally, you'll want to charge a rent that's higher than other properties in the area, but only slightly. You can justify the higher rent by adding a washer and dryer or pointing out some of the property's most attractive features. If you can make your rental property irresistible to prospective tenants, they may be more willing to pay the extra rent.

Taking care of your property and your tenants doesn't have to result in headaches By taking advantage of government allowances and doing minor things to make your property more appealing to renters, You can find it easier to attract and retain responsible renters. It all depends on how well you know your area and the people you hope to attract.