If there was one common and recurring mistake that many new and inexperienced landlords make, it is the fact that they don’t always consider property investing as a business.
If you invested a substantial sum of your money in a business venture you would no doubt be in the office or on the premises on a regular basis to keep an eye on things and make sure everything is going to plan.
Being a landlord may not appear such a hands-on type of business at first glance, especially if you have a tenant in place and the rent is coming in each month, but this approach could soon start to cost you money.
Here is a look at some of the aspects of being a landlord and what you need to do to protect your investment and get the best return on your money.
Keep up to date with repairs
You should aim to keep on top of repairs and review the internal and external condition of the property on a periodic basis.
Arrange to paint commercial premises as soon as there are obvious signs of wear and tear on the outside of the building especially, as a tired looking building will not attract new tenants and might even prompt the existing one to start looking for somewhere else.
A relatively inexpensive coat of paint can easily help to maintain or improve the value of your asset and your rental yield could be increased by doing repairs and renovations that allow you to command a higher premium on the rent.
Whilst it is tempting to cut corners and skip a few minor repairs to save money, this will almost certainly prove to be a false economy. If the property is not a good state of repair it could longer to find a tenant and you may have to settle for a lower rent.
You should always consider it a worthwhile exercise to draw up a depreciation schedule.
Far too many landlords don’t have one and therefore miss the opportunity to claim back some tax on allowable items. A depreciation schedule is a list of items that can be depreciated at a particular rate each year, which you are allowed to claim a deduction for against your taxable income.
If you are not sure what it involves or need some professional help to put the schedule together, look for someone local who can assist in putting it together. The cost of getting a report would probably be only a few hundred dollars and it could actually save you thousands of dollars in return.
If you are unsure as to how or what you claim back, there is some guidance on the subject available from the Australian Taxation Office, or the IRS if you are in the United States.
You can claim a deduction for certain expenses that you incur for the period when your property is either rented out or awaiting a new tenant. If your property was only available for rent for a part of the year and not the whole 12 month period, you would have to apportion the rental expenses to account for this fact.
Get a good accountant
If you are considering further property investments or simply want to make sure you do everything right with the one you have, consider hiring an accountant with specific property experience.
Their fees will often be justified when you obtain valuable advice that can help you claim the right amount of expenses. Having an accountant that fully understands property investment will also demonstrate that you are a business-orientated landlord and also help maximize the return on your asset.