4 Ways to Be a Smarter Landlord

It doesn’t matter if you’re managing a local or out-of-state property, you never want to bleed money. You want your property to remain profitable and be occupied by residents who adhere to the rules. Sounds easy in theory, right? But it’s not so simple.

Although investing comes with financial reward, it also takes a lot of work. The day-to-day operation can be especially burdensome for new investors. Here are four ways you can be a smarter landlord and avoid common rental property pitfalls.

1. Prepare for Repairs

You need to factor property repairs into your budget from the very beginning. There’s no way around it – things will break. And if you don’t have money set aside, it can put an unpleasant strain on you.

Put away a safety net of at least 1% of your property value. If your property is over 10 years old, start saving even more – 1% likely won’t be enough.

2. Don’t Forget About Uncle Sam

In a perfect world, all of your rental income would be money in the bank. Unfortunately, that’s not the reality. You’re required to pay taxes on rental income, so always keep that in mind when you want a true picture of how your property is performing.

If you aren’t 100% comfortable managing your own taxes, hire a CPA. If you decide to manage them yourself, projecting your liability incorrectly could mean cutting a larger check for taxes at the end of the year than you expect. Plus, a professional has the inside scoop on deductions and other tax benefits you may not be aware of.

3. Delegate to the Right People

You’re not superhuman. You need help from the right people to make your property perform it’s very best. Keep a solid team of contractors you can call for repairs and avoid DIY unless you have the skill. Also, don’t cut corners or hire contractors without the proper credentials just to save a few bucks.

If you work with a management team, pass the reins and let them lead you in the right direction. Our best clients take a completely hands-off approach. Because we know the business and the market, we can negotiate fair prices for bids and operate the property while they sit back and enjoy profits.

4. Limit Communication With Tenants

Smart investors avoid communicating with tenants altogether when they hire a management company. Interacting with residents is the manager’s job.

Tenants tend to expect leniency from landlords. So when a property manager enforces lease terms, they look to the landlord for reprieve. Encourage your tenants to speak directly with the property manager to reduce back and forth.

If you manage your own property, we understand there’s no way around communicating with your tenants The key to being a successful landlord is staying professional and keeping your relationship strictly business. When you cross the personal and professional line tenants have room to take advantage of you.

Originally published on the LEAP Property Management blog.