Managing Tenants Part Four: The Home Office (a thing of beauty and a joy forevermore)

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For the novice real estate investor, it’s mighty tempting to handle business deals and tenant phone calls from home, but having a home office or dedicated office area provides a degree of separation essential for running a successful real estate enterprise. No matter how hard you try, it’s impossible to sound professional with a screaming baby on one hip and SpongeBob blaring in the background.

Thinking like a successful business person and presenting a polished front to clients and colleagues begins with a state of mind, not a desk. Think separation-keeping business and home life apart where never the ‘twain shall meet. A home office doesn’t have to be elaborate to get the job done. Many a successful business person’s started with a separate phone line and answering machine.

Our first office consisted of business phone line coming through the dining room wall, a $10 phone and an answering machine atop a 2 drawer filing cabinet we picked up at Wally World for 25 bucks. When the phone rang, I threatened all child-units into silence, plastered a smile across my chops, imagined myself with neatly coiffured hair and a French manicure and transformed from June Cleaver to Betsy Businesswoman. The kids pantomimed their hysterics by clutching their bellies and rolling about the floor –silent hysterics as any peeps would’ve earned the little ratfinks cow-stall cleaning duty for a month.

A Place of My Own

A step up from the cabinet in the corner would be dedicating a room entirely to business use. When we built our current home, we looked for a plan with a first floor room near the front door (and the potty) to corral all the landlord office equipment and paperwork in one easily accessed spot. A single closet with shelves evenly spaced to the ceiling provides tons of room for office supplies. A cup-hook system with color-coded tabs keeps keys to each house out of the drawers and within reach. (Its super secret squirrel location also keeps nosy neighbors from knowing all our business if they stop by for afternoon java.)

Office furnishings don’t have to be elaborate or trendy, but if you’re spending tons of time staring at the walls anyway, you might as well make things pleasant. Recently, I found a totally cool MCM bookcase for $25 (that’s Mid Century Modern for all you decorating challenged individuals. You remember, the stuff your grandma couldn’t give away at her yard sale back in ’73 that’s now going bonkers on ebay). It’s big enough for all my REI books plus the writing books that should’ve taught me how to quit writing mile-long sentences interrupted with dumb tidbits of useless information.

My office: plastic tables, antique swivel-chair, lovely HP-Officejet, etc.

A nicely equipped home office would include:

• A desk: We use two plastic folding tables from Sam’s Club sitting at right angles in a corner. Not pretty, but cheap and sturdy.

• Office chair: Make it adjustable and cushyand your back will thank you.

• Phone + answering machine: Spring for a better machine if possible. The newer, digital messaging system makes yours truly sound young, hip and professional, no lie. My kids snicker every time the silly thing comes on.

• Lighting: This is surprisingly more important than you might imagine. Any extra will help, but recently we splurged on one of those new daylight bulb lamps and the difference on my poor middle-aged eyes was immediate and dramatic.

• Dedicated phone line: Out here in the boonies, cell phone reception’s beyond laughable. We pay $40/month for a basic line with call waiting, caller ID and call forwarding. Even if you use a cell phone (young whipper-snappers), a landline may be necessary if you need a fax machine. Speaking of which-

• Fax machine/ printer/ scanner/ copier: I’m totally in love with my HP Officejet all-in-one. In fact, I’d marry the thing if the mister didn’t have first dibs (might do it anyway if the ink were a bit less expensive…) If you don’t have a copy machine, this puppy will make you cry with delight every time you throw your keys back in the drawer instead of fighting the Goth chicks for copy-time at the library. And don’t even get me started on the fax machine… so lovely.

• Filing cabinet: Word of experience–don’t skimp here! The cheap-o model we started with drove us to the loony bin and back– drawers sticking every which way, files falling sideways and out the back. Look for solid construction and file drawers with *sides* not rails. Hon’s a good brand available at most office supply stores.

• Shredder: Self explanatory, really, but be careful-one ate my fingers during a feeding frenzy and the result was very ugly (and painful.) I’ve given all my kids shredder lessons since that time and having a mangled hand to wave around illustrated the point quite well.

The Holy Grail: The IRS Home Office Deduction

Lots of folks are afraid to take the home office deduction, fearing they’ll trigger an audit or worse. But these days, with hundreds of thousands of folks working from home, the deduction is much more common and fairly simple to figure, as long as you have dedicated space used only for business purposes. Our accountant suggested we forget the idea of putting a sleeper sofa in our office, suggesting that making the office a multi-purpose room (office + guestroom) would muddy the waters, making the deduction harder to justify if we were ever challenged.

There’s no reason to forgo a legitimate deduction and, over time, this one can really add up. This year, ours is running in the $3000 range-nothing to sneeze at, for sure. For a simple calculator, check here to see how much your deduction might be. You can learn about the legalities through a simple, online search. (Here’s a good place to start.)

Home Offices are Good and Stuff

For any type of real estate related business, you’ll need a separate phone line or cell phone, answering machine with caller ID, and a filing cabinet. Later, you may want to add a fax machine, a computer just for your business, printer and (gasp!) perhaps a real desk.

Our home office is one of my favorite spots. Business stuff stays where it belongs-away from my kitchen. The ability to turn the volume up on the answering machine and close the door means we hear incoming calls and messages from most anywhere in the house, but can choose to ignore them all we want. During office hours, we set the answering machine to pickup after 4 rings, giving plenty of time to get to the phone if we’re advertising a vacancy or just feel like playing big-shot real estate investors for the day.

One of these years, I plan to outgrow my home office, but in the meantime, it’s probably my most favorite spot…

… right after that fishing hole just down the street a’ways.

Another look at nirvana: Even the drapes are deductible.

Cool MCM bookcase, file cabinet and other stuff.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.