6 Ways Salinas Landlords Can Effectively Prepare for Tax Season in 2022
Rental property management involves handling a lot of tasks and responsibilities. Apart from collecting rent and solving your tenants, you must file taxes correctly. For many experienced landlords, this is a routine task. But as for beginner Salinas Landlords, the tax season can be hectic, stressful, and overwhelming.
Before-tax season, effective rental property tax preparation should be every landlord's top priority. Here, we will identify 6 ways Salinas Landlords can effectively prepare for the 2022 tax season.
Rental Property Tax Preparation
1. Know the Basics of Property Taxation
Salinas Landlords should first understand the taxes they need to pay when managing a real estate property. They include:
Rental Income Taxes
The rent you collect from a real estate property is subject to income tax. During annual tax return fillings, the net rental income gets added to your other income types.
In other words, the federal government uses a unique system that determines how much tax you will pay. It provides progressive income tax rates ranging between 10% and 37% of an individual's taxable income. So your progressive income tax rate will depend on how much income you have earned in a year.
Sale of Property Income Taxes
When you sell your real estate property, the profits you make get included in your annual income. But Section 1031 makes taxes on such revenues deferrable.
It's crucial to note that some Salinas Landlords can be liable to other types of taxes. For instance, landlords who hire property managers or other employees may be subject to paying medicare and social security taxes. In addition, high-income landlords may also have to pay a 3.8% net investment tax on their incomes.
Understanding the types of taxes, you're subject to helps eliminate confusion during a tax season. You'll also be aware of how much tax you will pay.
2. Prepare Your Financial Records and Tax Documents
Tax seasons often involve a lot of paperwork. You must spend some time organizing your financial records and tax documents. Doing so will make the tax filing process error-free, easier, and faster.
Use the previous year's tax return to determine your deductions, income, and credit report. You may retrieve a copy via the IRS online portal or log into the tax software provider you used in the prior year.
Accessing your last year's tax return helps you avail the necessary paperwork for your rental property tax preparation. Some of the documentation and information you may require to include:
- Forms 1099, Forms W-2, and other tax documents showing your incomes
- Mortgage interest statement
- Records of real estate taxes paid
3. Create an IRS Online Tax Account
New Salinas Landlords should set up an IRS online tax account to effectively get ready for the upcoming 2022 tax day. The account will play a vital role in your present and future tax preparations and payment.
If you are a regular Salinas Landlord, you can easily obtain your tax return documentation. You won't have to call or email the tax agency for the same.
Besides, the system allows you to log into your account and check your payment balances. You can also make payment arrangements and access your previous reported real estate tax forms.
4. Understand the Effects of Ownership on Taxation
Salinas Landlords who own a real estate property can use various legal vehicles. However, this can affect the taxes imposed on a rental property. The following are the main property ownership options available to you:
Sole Ownership
It's the easiest approach to managing a rental property. Here, any income you generate from a real estate property gets added to your yearly income.
Co-ownership
Co-owners of a rental property is considered sole proprietors. But each owner pays a particular portion of the taxes depending on their ownership interest in the real estate property.
Co-ownership by Spouses
The IRS considers spouses as the sole owner of the property. Therefore, married spouses can file a single tax return schedule using their joint return.
General and Limited Partnerships
Landlords whose property ownership is in partnerships must file an IRS tax form 1065 yearly. The document highlights the amount of profits and losses earned by the partnership.
Alongside the 1065 form, partners must also provide a Schedule K-1. Every partner should file a Schedule E to reveal their profits or losses earned from the partnership.
Limited Liability Companies
An LLC with a single member is responsible for filing the Schedule E form and receives the same treatment as a sole proprietor. If the LLCs have multiple members, IRS considers them as partners.
5. Get to Know the Possible Deductions on Taxes
Tax deductions are also part of managing a lucrative real estate business. Leveraging tax deductions properly allows you to reduce rental properties' various costs and fees. Some of the key expenses you can subtract from your net rental income include:
- Operating expenses like insurance, advertising, maintenance, and broker commission
- Repairs
- Depreciations
- Deductible interests like mortgage, personal loan, and credit card interests
- Start-up expenses like business license fees
- Travel expenses
- Payments to employees
- Losses from casualties or theft, etc.
6. Get Help from a Rental Tax Professional
While you can file your rental tax returns yourself, hiring a qualified rental tax professional can be very beneficial. That's especially of your financial condition has become more complex. They can help:
- Prepare the correct tax and financial information from your investment'
- Leverage any tax credits or deductions you're subject to
- Give advice based on your special financial situation
- File your rental income tax returns
A qualified tax professional will also predict your income tax, including the quarterly payment estimates. They can also help reduce the risk and frustration of unwanted surprises in case of changes in tax situations.
To this end, we believe you now know how to conduct your rental property tax preparation for the upcoming tax season. Tax seasons can seem challenging for many beginner Salinas Landlords. But with proper preparations, you can save time and money.
Our tips above will help you stay ahead of your rental tax season and enjoy the comfort and leverage your tax deductions and credits. Contact property management services Salinas CA for clarification if you face any problem or don't know what to do.
5 Things You Must Do Before Turning Your Home into a Rental Property
Are you thinking about turning your home into a rental property? This can be a great way to generate passive income and help you earn more money in the long term. However, there are some things that you need to do before converting your house or apartment into a rental property. Below are a few things that you need to do before getting started.
1. Repairs
Before you start looking for new tenants, it is important to make sure that your property is in good condition and is safe for other people. This means that you will need to fix any issues with the roof or foundation and replace worn-out appliances such as a refrigerator or dishwasher if necessary.
You should also check all of the faucets, pipes and toilets in your home to ensure they are working properly before tenants move into their new place. It would be wise not to invest too much money into repairs at this stage because there’s no guarantee how long it will take until someone moves into the rental property – which could cause major problems financially speaking if rent isn't paid on time each month to unforeseen circumstances like illness or job loss etcetera.
Also, if any damage does happen after someone has moved in, the onus lies with them as opposed to you for maintaining their space, so much less liability overall.
If there are issues that need attention now, it’s usually worth getting these done before anyone moves into your investment property. Remember that they may not be covered under tenancy agreements and should only be considered a last resort type option.
2. Consult a Property Management Company
Property management can be a daunting task if you’ve never done it before. That’s why it’s a good idea to consult with a property management company. The company offers property management services such as finding new tenants for your home and rent collection.
They can also advise what needs to be done to make your property more attractive to potential tenants. For example, suppose you live in an area with a lot of competition from other landlords. In that case, the property management company may suggest painting the exterior of your home or adding some new appliances.
Additionally, property management companies can help you compile lease agreement documents. The agreement would protect both landlord and tenant if anything went wrong or fell through during their tenancy.
3. Get the Necessary Permits for a Rental Property
Rental property requires special permits to ensure that everything is done according to code. Some of these permits include a rental license, zoning permit, and certificate of occupancy. You can get more information on the specific permits required in your area by contacting your local municipality.
You should also check with city hall and see if there are any restrictions on how many people live at one address. Some cities have rules about the number of occupants allowed per square foot. If this is not specified, contact an attorney specializing in landlord-tenant law for more information.
This might seem like an obvious step, but many landlords forget about getting these documents until after they've already started showing their rentals when it's too late. Always ensure everything has been taken care of in terms of permits and legality beforehand. You don't want to find yourself dealing with fines or legal troubles in future.
4. Adjust Rental Property Insurance
When you make your property into a rental, the insurance needs to be adjusted. Rental properties come with their risks, and your insurance policy must cover these risks.
For example, if someone breaks into your property or there is damage from a fire, the insurance company should cover the costs of repairing or replacing any damaged items.
It is also important to have liability insurance if someone gets injured while on your property. This type of insurance can help protect you financially if the tenant decides to sue you for negligence.
The homeowners' insurance policy that you currently have may not be enough to cover a rental property. Make sure to speak with an insurance agent to determine what type of policy you need and how much coverage it will provide.
Again, this should be done before you start advertising your rental property. It's important to have everything in order, so there are no surprises down the road. Seek help from Salinas property manager on the best insurance policy for your property.
5.2 Determine Rental Property Charges
Determine the property rental pricing for your property. This can be done by determining how much money you will need to make each month to cover all of the costs of owning a home, such as maintenance, insurance payments, utilities and taxes. Then subtract those expenses from your gross income to determine what type of rent payment would work best for you.
The rent set should not be overpriced. Overpricing may discourage tenants from renting the property. In addition, too low rent can make it difficult to cover all of your monthly expenses. Check in the neighborhoods and see what other landlords are charging before deciding how much you will charge.
Several other factors determine property rental pricing, such as location and amenities offered. Still, these two items should be considered first when setting up a price range for potential tenants. It's important to be fair and reasonable when pricing your rental.
These are the top five things you must do before turning your home into a rental property. By following these tips, you can avoid legal problems and make the transition into a landlord much smoother. If you need help with any of these steps, contact Coast & Valley. We have experience in the rental property industry, and we'll help you turn your home into rental property seamlessly.
7 Lease Terms Your Salinas Tenant Might Not Understand (and How to Clarify)
The lease agreement is an important document for both the landlord and the tenant. It spells out what parties are responsible for which parts of the lease and any terms that might not be clear. Many tenants don't understand lease terms throughout the process, but you can do a few things to ensure they're less confused. Here are seven lease terms your Salinas tenant might not understand and how to clarify.
1. No Smoking
No smoking is a pretty standard lease term that most tenants are familiar with. However, there may be some confusion about what is in the "no smoking" clause. Does it apply to cigarettes, cigars, e-cigarettes, or all of the above? Make sure your lease is specific about what types of smoking are not allowed on the property. Also, ensure you include any rules on smoking in the lease agreement.
The no-smoking clause should also include details about what will happen if the tenant violates it. Will they be fined and given a warning or evicted? Make sure both you and your tenant are on the same page about this, so there are no surprises down the road
2. No Pets
Many landlords don't allow pets on their lease, and some tenants believe they can bring a pet anyway. If your lease is clear about not allowing any animals without written approval from the landlord first, include that in the lease agreement.
If the property management chooses to change this lease term during the tenant's stay, they should update the lease terms. Even if you don't mind pets, your renter may have allergies that would be negatively affected by an animal on the property.
When it comes down to it, both landlord and tenant should understand what is in the "no pet" clause of their lease agreement for Salinas.
If you allow a pet, make sure your lease specifies what type it is and how much the tenant will pay for any damages they might cause to the property. This way, there are no misunderstandings over who should pay for vet bills if their animal gets hurt on the premises.
3. No Vehicle Storage or Junk Vehicles Lease Terms
Again, these lease terms are pretty standard, and most tenants will be familiar with them. However, it's important to make sure your lease agreement is clear about what is in each of these clauses.
In the "no vehicle storage" clause, does this mean that the tenant can't store a car on the property at all? Or just that they can't store it in the driveway or on the property without approval from the property management?
The "junk vehicles" clause is a little more specific, but there may still be some confusion about what it means. Does this mean that the tenant can't have a broken-down car on the property? What if they're fixing it up, and it's not running?
Companies offering property management services should ensure these lease terms are very specific. If you want to change the car storage rules over time, ensure that the lease agreement is updated and both parties understand.
4. Yard Maintenance Lease Terms
This lease term can be tricky for both landlord and tenant to understand. What is in the yard maintenance clause, and who should do it?
Some landlords will agree to pay for all of the lawn care on their property. Others may only agree to pay for basic lawn mowing and not yard work. You and your tenant must know what is included in "yard maintenance" to prevent misunderstandings or miscommunications in the lease agreement.
5. Attorney Fees in a Lawsuit
This lease term can be a little tricky for tenants to understand. If you sue them in the future because they haven't paid their rent or damaged your property, what expenses will you have?
Some landlords agree to pay attorney's fees if their tenant wins the case against them. Others leave it up to the judge and let them decide whether or not the landlord should pay for attorney's fees in a lawsuit.
Agreeing to pay legal expenses if your tenant sues you is usually best so that it doesn't become an issue down the road. If you don't want to agree or can't afford to, make sure this lease term is clear about what will happen.
6. Restrictions on Property Use
Property management companies in Salinas often put restrictions on the use of their properties. This lease term ensures the tenant uses the property for its intended purpose - living, not business purposes.
This lease term can be tricky because it's vague. What does "business purposes" mean? Is a small home office allowed? What about running an online business out of your home?
Again, it's important to be very specific about what is and isn't allowed in this lease term. If you're not sure, ask your property management company for clarification. They should be more than happy to help you out.
7. Property Rental Pricing (Deposit and Fees)
The lease agreement should also include a section on the property rental pricing. This includes everything from deposits to fees and will affect your tenants' budgets as well as their plans for renting your unit.
As a landlord, you must know the different fees to determine how much money is due each month. You may also want to include a monthly rate for utilities, so your tenant knows how much they'll be paying every month.
It's also important to let your tenant know the deposit fee at lease signing. It will affect their budgeting and moving plans if there are other fees that they can't afford on top of the security deposit.
Conclusion
These are just a few lease terms that can confuse landlords and tenants. By being specific in your lease agreement, you can help to avoid any misunderstandings down the road. If you're unsure about anything, don't hesitate to contact commercial property management firm Salinas for clarification.
6 Important Financial Reports for Your Salinas Investment Property
Financial reporting refers to the conventional practices that give investors an accurate picture of the company’s finances. While most people know its importance since it is a legal requirement in most nations, financial reporting has an untapped power. Financial reports provide real estate owners with in-depth insights into the property’s financial information. In other words, they indicate how well or poorly your real estate properties are doing.
The reports also allow you to know your rental properties’ expenses, revenues, cash flow, capital, and profits and make informed decisions about your finances. Here are the six essential investment property financial reports that you should have for your Salinas investment property to maximize your earning potential.
Balance Sheet
Balance sheet is one of the investment property financial reports. It is also referred to as a statement of financial position since it provides you with the monthly state of your finances. It highlights the assets, liabilities, and equity of your rental property at a particular time.
You can find your debts, actual balances, and security deposits in your balance sheet. In the balance sheet, the sum of assets should always be equal to your liabilities and equity. Assets such as cash, furniture, land, machines, buildings, fixtures, and equipment generate cash flow that increases your property’s valuehttps://luxurypropertycare.com/rental-property-important-financial-reports/.
On the other hand, liabilities are money that you owe outside parties, including accrued expenses, mortgages, loans, and warranties. Equity, also known as shareholders’ equity, is the property’s assets minus its liabilities. It represents the initial investment into the property.
Income statement
The income and expenses of properties vary. The income statement, also called the profit and loss statement, tells you about your rental properties and their future performance. The income statement is prepared monthly, quarterly, and annually and describes the investment’s cash flow.
With this report, you can calculate your expenses and compare them with the budgeted goals. In addition, it can help you know the profits you may earn over a given period from the investment. Also, you can know how much to pay for the rental properties by looking at the report. The income statement contains the following useful information:
Gross Income
The section contains the income for a specific period. These items will be listed separately and include:
- Capital
- Interest received
- Tax credits
- Laundry
- Covered parking
Operating Expenses
It is another section in the profit and loss statement that lists the different expenditures. They are money paid out to run the investment property. The type of property will determine your expenses. Common real estate expenditures include:
- Rent
- Accounting fees
- Legal fees
- Property taxes
- Management fees
- Insurance
- Marketing costs
- Maintenance costs
- Repairs
- Utilities
- Garbage removal
You can also add depreciation and interest in the expense section to know how much the property makes. The Internal Revenue Service allows investors to deduct these two expenses from their tax returns. The most important things to note in the income statement are drastic changes in income or expenditures. Income decline is a bad sign, so you should identify the issue.
Also, a significant increase in expenses should prompt you to find what is causing it. Ensure your repair and maintenance costs are not overly low. While lower maintenance costs mean higher net income, it may also indicate the property has been neglectedhttps://www.millionacres.com/real-estate-investing/understanding-a-real-estate-income-statement/.
Income statements are critical when seeking to get a loan. Lenders often ask for these statements when assessing whether to approve your loan to buy the property. You also need to know which income statements to review when looking to purchase the property. Moreover, income statements will help you closely monitor your property’s current revenue and profits.
General Ledger
General ledger is another investment property financial report. The report aims to give you an overview of your investment property’s transactions. It gives a brief description of the items listed in the income statement and balance sheet. Additionally, it classifies the property’s transactions as assets, liabilities, revenues, expenses, or equity and records them. It acts as the master list; therefore, the relevant professional should prepare it with utmost accuracy.
Accounts Payable and Receivable
Accounts payable is a report reflecting your property’s financial obligations and short-term debts. The report enables entrepreneurs to make payments to the right vendors. Property owners will also avoid delinquent accounts if they have this report. Delinquent accounts refer to accounts whose due dates have passed, and payment has not been made. These include payments like mortgage, loans, advertising, and replacement parts.
On the other hand, tenant accounts receivable report allows investors to manage the money they receive from tenants. These include rent, pet deposits, late fees, and utility fees. The report highlights individual tenants’ delinquent accounts.
Monthly Bank Statements with Reconciliation
Monthly bank statements with reconciliation are also part of investment property financial reports. They are financial statements that compare the bank records of the landlord and that of the rental property. The report ensures the property’s bank account statements reflect on the balance sheet and general ledger.
Rent Roll
Lastly, rent roll is another important financial report that applies to all types of rental properties, including commercial buildings, family homes, and office buildings. It provides crucial details about the rental property’s future, enabling you to make sound financial decisions.
Rent roll evaluates the investment property's current financial position and makes reliable predictions while considering aspects such as renewal rates, scheduled rents, and revenue generation. Furthermore, you can use rent roll to calculate your internal rate return, net operating income, and gross rent multiplier.
It is imperative to have an efficient and reliable accounting system to monitor your investment property's financial position. The reports allow you to track your income and expenses and see if your business is profiting or losing. You can practice efficient accounting by hiring a property management services.
Property management companies come in handy if you lack accounting experience. Preparing financial reports can be exhausting and time-consuming, especially if you lack knowledge and experience. The best residential property management firm Salinas will ease the burden by offering competent services.
Conclusion
The financial reports highlighted above will help you understand your investment’s financial conditions. You need to constantly monitor your gross income and expenditures to ensure your rental properties offer maximum returns.
Screening for Tenants? 6 Things You Must Do Before the Lease is Signed
It is essential to screen renters to guarantee that they would pay their rent promptly and take good care of your rental property. It takes time to screen renters, and as a landlord, you don't want your apartment to be empty. However, vetting prospective renters is an important part of the lease process before proceeding to tenant placement. The lead qualification will assist you in weeding out bad renters, leaving you with dependable, long-term tenants.
To create a really effective tenant screening procedure, each stage must be formalized. Many realtors and landlords overlook critical areas of renter screening because they do not have a set strategy in place. However, by developing a tenant screening guideline, you can ensure that nothing is overlooked and that you will be streamlining each stage of the process to save money and time while safeguarding you and your property.
This article explores six essential tenant screening elements to include in your tenant placement process.
Why do you require extensive tenant screening?
There are many reasons why you need a complete, exhaustive tenant screening procedure, but the most important is? That would be your wallet.
The fact is that your renters may help or hinder your success as a property owner. The unsuitable ones could:
Ruin your property.
Avoid paying rent.
Squatters cost you a lot of money in eviction fees and trouble.
An excellent renter, on the other hand, is more like a golden ticket. It implies steady, on-time rent, a well-maintained property, and, ideally, no vacancies for many years to come. A suitable screening method is essential for doing this.
Screening Requirements During Tenant Placement
Make a list of pre-screen questions
Make a list of things to ask prospective applicants. You may wish to have one set of questions for pre-screening and another for committed applicants who decide to visit the house in person and make an application. Your list may contain the following questions.
• Why are you relocating?
• How would you describe your present living situation?
• When do you intend to relocate?
• How much money do you make each month?
• Can I obtain references from your previous landlords and employer?
• Will you allow us to do a credit and criminal check on you?
• Will you send in a rental application?
• Are you a smoker?
• Do you have any pets?
• Will you be sharing the apartment?
By developing a set of queries that all candidates must answer, you may further shield yourself from discrimination claims while also gathering vital details about prospective leads. Furthermore, as you begin to know the candidate better, you offer yourself a chance to put your intuition to work. If the renter appears to be a suitable fit thus far, you should arrange for a rental property viewing.
Organize a Successful Showing
A rental property viewing is more than just a chance for the prospective tenant to examine the property; it is also a chance for you to assess the prospective tenant. This is your chance to meet the renter in person, so make the most of it. If the renter is late, unready, rude, or appears disinterested, take notice of it and look at not proceeding with the process.
If the viewing goes well, you can proceed to the next stage, which is to request that the renter fill out a rental application.
Require Rental Application
Create a procedure for obtaining rental applications, calculating application fees, and processing applications. The application procedure will comprise applicable background investigations, credit checks, job history, and other processes in analyzing an interested lead.
While you may manage the application process on your own, engaging with a reputable property management firm, such as Soledad property management company, can significantly speed and simplify the application process and assist you in selecting the best property rental pricing.
Contact a Renter's Employer
We recommend contacting your renter's employer to confirm how long the tenant has been with the organization and what role the tenant has. Keep in mind that companies may only provide the renter's dates of work in particular cases.
Verifying a tenant's employment and income is a crucial stage in the tenant screening process since you need to ensure that your renter has enough money and will remain to have sufficient income in the following year to cover the rent. W-2s, paystubs, bank statements, and employer validation are all effective ways of doing this.
Furthermore, you'll have to develop a different method for analyzing entrepreneurs, freelancers, and other prospective tenants who aren't salaried workers in order to evaluate their financial suitability and income stability. You wouldn't want to exclude these driven and often dependable tenants from the process in this day and era of side hustles and startups.
Contact Previous Landlords
Determine how to initiate contact with the previous landlords of your applicants and the relevant questions to ask to learn about the applicant's payment history, rental history, and tenant behavior. Make sure this applies for each applicant to guarantee a fair and equal tenant placement procedure.
Examine The Credit Score and Do a Background Check
A credit check shows you a renter's financial history and credit rating, allowing you to determine how financially sound the tenant is. A renter background check will inform you whether the renter has ever been convicted of a crime. We propose taking into account the severity and nature of crime: theft, assault, felonies, and arson are relevant to owners, whereas less serious offenses may not be pertinent in a rental situation.
Having a renter screening checklist guarantees that you properly (and fairly) assess every potential renter interested in staying in your rental space, as well as standardizes the vetting procedure for you as the landlord.
Property management companies can look after your property well. A reputable Property Management Company will efficiently manage all rental applications, tenant correspondence, and screening reports. You might want to consider working with Soledad property management company. By working with us, you can completely streamline and simplify the renter screening process through our tenant placement services.
10 Ways to Save Major Money on Rental Property Maintenance
Rental property maintenance is one of the largest expenses that you will incur as a landlord. Owners spend an average of $2,300 per rental unit per year on rental property maintenance. This makes sense, given that most landlords own multiple rental properties. The costs can be even greater if your rentals are not well-maintained, to begin with, which is why it's so important to create and implement a regular rental property maintenance plan for your properties.
1. DIY Maintenance Whenever Possible
Many small repairs can be done by yourself rather than hiring a contractor or plumber. It may take some time, but the savings in money and labor will more than makeup for this effort. Such things include changing burnt-out light bulbs, unclogging toilets, replacing faulty faucets, and more. This list of do-it-yourself home repair tasks can be especially helpful when trying to fix things on your own.
2. Get Rid of Lawn Care Services
This is not always possible, but it can save a lot of money if you have a large yard or lawn that takes up considerable amounts of time to maintain yourself. These services are not cheap, even if you get a discount since the person doing the work is likely an hourly employee. The best way to avoid this cost altogether would be to rent out a house with no yard or live in an apartment with some form of a landscaped courtyard or common area that provides green space for tenants.
3. Hire Professionals Only When You Need To
If you do need to hire someone, only pay the premium rate when absolutely necessary. For example, if you have an appliance that needs to be repaired or replaced, it is almost always possible to find a better deal than what the company you bought the appliance from offers. This means calling around for prices or asking friends and neighbors who they used, or finding online reviews for local businesses that offer these services. Keep in mind that any time your rental has something major like plumbing work needing to be done, there will be significant costs involved, so getting multiple quotes should be done first before hiring anyone.
4. Do Your Painting
Many landlords don't realize how easy it is to paint their rental units whenever necessary. Not only is it very simple, especially if you can afford to invest in high-quality rollers and brushes but also inexpensive. This may be another one of those tasks that would be helpful to learn how to do when you are trying to fix things on your own. If the paint job isn't perfect, consider this part of the charm of renting out an older house; no one expects perfection when it comes to old buildings with history behind them.
5. Utilize Public Service Resources for Repairs
One way to save money is by asking your local public services department for help in making repairs. For example, many towns provide free plumbing or electrical assistance, which can make any necessary repairs significantly easier and faster without having to pay a private contractor. You can find out about these resources by contacting your city hall, local community center, or library.
6. Negotiate for Better Deals on Insurance
Renting insurance policies are almost always overpriced; this is especially true if you own multiple properties or live in an area with a high chance of property damage caused by natural disasters such as hurricanes and floods. It's important to shop around among different insurers to get quotes at least annually because premiums will fluctuate depending on the insured value of the rental unit and the type of dwelling it is. If you have a fair amount of equity built up in your rental, you may want to consider giving up some coverage for a lower premium, but be that the liability limits you have for this particular type of property.
7. Hire a House Sitter When Traveling
This can save you money on pet sitting services and provide you with an extra layer of security. The house sitter will let in maintenance workers when they come by to fix things, pick up any packages that come for tenants, and collect rent if necessary. Furthermore, there may be a travel cost involved only once but then the savings every time after that until you use it again or sell your rental property should more than makeup for it. If you want to find someone trustworthy who is available when needed, check with family members or neighbors first before getting online bids from strangers since references are essential when choosing someone to take care of your home. Also, make sure they are bonded and insured to protect you in the event that something unfortunate happens.
8. Utilize Your Tenants for Repairs & Maintenance
Before embarking on any major repairs or renovations, consider asking your tenants if they would be willing to contribute financially towards making necessary updates. Often this can come in two forms: either a lump sum when signing the lease or monthly contributions during their tenancy. This is especially beneficial if you have just one tenant since it only requires communication, whereas hiring someone else to do work on the unit will involve coordinating between them and whoever you hire. Furthermore, it will save you time because you won't have to worry about getting bids from contractors then sorting through quotes before getting started.
9. Enlist the Help of Your Tenants for Repairs & Maintenance
This is another strategy to save money on repairs and rental property maintenance, though it's not recommended you utilize this too often since it can go both ways. It may be an incentive to have your tenants complete work if they aren't responsible enough for certain tasks by providing them with cash or free rent in return, but one problem with this approach is that there is no guarantee they will finish the job. Another issue might arise if the tenant does something wrong, like bricklaying a wall incorrectly or doesn't do anything at all, which ends up costing more than doing it yourself would have. However, there are some instances where allowing your tenants to make minor improvements themselves will save you some money.
10. Renew Your Rental Insurance Every Year
Rental insurance policies are one of those things that automatically renew themselves for the same price as the original purchase unless you cancel it, so this is a service that's going to run for as long as you continue renting out your property. The problem is that many people forget about it or don't bother canceling their old policies after they've bought a new one and end up paying double the premiums, which isn't a good deal. For these reasons, be sure to contact your insurance provider every year before the annual due date on your plan to make sure everything is in order, and there aren't any unnecessary charges being added by mistake. In addition, always double-check with them before starting work on your home since some projects might invalidate your current policy and force you to buy a new one which will cost more if you wait too long.
In conclusion, these are some of the ways to save major money on rental property management Salinas. Although they may not be the most exciting things in the world, it is important to keep up with them because there is always something that will need collecting rent for, fixing, or updating during your time as a landlord. However, even if you end up doing everything yourself, these strategies won't have helped you that much since keeping busy around the house is far from anyone's idea of fun. Therefore, use them only when absolutely necessary and try to make sure they are kept to a minimum so you can maintain your sanity along with your wallet without letting one affect the other.
Why is a Real Estate Market Analysis Important?
Investing in real estate is a smart move. Investing in real estate smartly is an even better move. In order to make the most profit from your real estate investments, you should hire a property management services company to conduct a full real estate market analysis on every property you are considering to purchase as an investment property. Here's what the analysis is and multiple reasons why a commercial property market analysis is vital to your real estate investments.
What is Commercial Property Market Analysis?
The property market analysis is a tool used by wizened property investors to ensure that their money is well-spent. Nobody enjoys making a bad investment as the money lost is rarely, if ever, regained. The analysis provided by a good commercial property management firm in Salinas CA allows you to see what a property is really worth based on the surrounding property values. Then you can bid or buy at a price that is more in line with the value of the property and not lose money.
1. Keep More Money in Your Pocket for Other Investments
If you could buy two properties for the price of one, and the two properties would garner more profit in a month than just the one, you'd buy the two. Additionally, if the two properties together cost less than the single property, you've just essentially doubled your profit and you kept some extra cash in your back pocket to invest in a third property. That's smart investing, but you wouldn't know it if you just buy properties on a knee-jerk reaction. The market analysis you receive on all three properties you're interested in would reveal which two properties will give you the most bang for your buck and the least headaches for the immediate future.
2. Locate Properties With Historically High RORs
Part of a market analysis is viewing historical data for a given area. Just because a property is located near Beverly Hills, for example, doesn't necessarily mean it will be a profitable property. Examine the historical data on the property and the area as a whole. Compare it to neighboring properties several blocks over or a couple miles away. If the historical data shows that the value of your investment only climbs over time, or has a few minor dips, it's a worthwhile property to consider for your portfolio.
2. Use Demographic and Statistical Data That Dictate Property Usage and Potential Value
Let's say you're interested in a commercial rental property. It has multiple units to rent to tenants, and some of those units are already generating income because the property has some tenants. Examining the demographic and statistical data of the tenants the building currently has, as well as the data about the area surrounding the property, tells you whether or not the property would make a good investment. If the building is run down, needs frequent repairs by tenants not responsible for repairs, and/or may need more upkeep than you can manage, you may still consider it a worthwhile investment if you can afford property management services from property management companies. If your investment budget is tight, and the demographic and statistical data suggest you'd be in the hole before you even advertise open and available units, you may want to leave this property in the listings.
4. Determine If the Property Is Overpriced for Its Location
When the real estate market is strong, you want to jump right in and take advantage of the potential profits. The trouble is, if you buy properties that are overpriced for their location, usage, etc., you lose. A real estate market analysis can tell you exactly what you should pay, and if the seller isn't willing to negotiate down to the more reasonable price, there are other properties you can pursue. The sad thing about most real estate investing greenhorns is that the leap before they look and often pay far too much for properties they should have bought for less. It's a tough market, but holding out for better pricing on better investment properties is how the best investors do it.
5. Once You Own a Property, Market Analysis Helps You Set Reasonable Property Rental Pricing
Once an investment property is yours and you have made the choice to rent it out (if it isn't a rental property already!), the market analysis helps set rental pricing. You can look at all of the information you gathered before you bought the property to determine what a fair rental price is/would be. When potential renters come across the property and discover that you are offering a very reasonable rent price, they are sure to jump at the chance to rent from you.
In Conclusion...
Real estate investing is exciting, but like all investments, you could lose your shirt if you aren't diligent about research. A commercial property market analysis is your research and your insurance against a larger percentage of the worst mistakes you could make. Find the right firm for this service, and use it consistently for every property you are considering. The added expense of the analyses you receive more than pay for themselves in the long run because you aren't buying into bad investments. That doesn't mean you won't make any mistakes at all along the way, but your due diligence with the analyses prevents you from making a lot of mistakes you would have regretted.
7 Apartment Management Tips to Attract Quality Tenants (From a Seasoned Property Management Company)
An apartment management company can maintain a high occupancy rate in a wide number of ways, ranging from fair policies and pricing to providing quick maintenance and customer satisfaction. Assuming that these basics are in place, here are seven ways apartment management staff can attract the best tenants.
7 Apartment Management Tips
For the most part, property rental pricing is not an exact science. There are many factors that come into play that can affect how much property management services should charge for rent.
Pricing is one of the most important factors when it comes to finding the right tenant. It can be difficult to determine what the right price would be, but research has shown that properties that are priced too low or too high have a higher risk of not being rented out at all.
If you set your price too high, you will have to wait for months before someone decides to take it off your hands and if you set your price too low, you may get more foot traffic but have fewer people willing to rent because they think it’s overpriced.
For example, in apartment property management in Salinas, it is easy for property management services to attract high-quality tenants and have close to full occupancy because not only are the apartments attractive and well-maintained but the price, too, is realistic, within the target range of what people in Salinas expect to pay.
2. Apartment Management Should Provide Customer Satisfaction
From a business perspective, a tenant is a customer. In fact, according to an experienced luxury property manager, customers, like the guests at The Ritz, may not always be right, but they are still customers.
Property managers should treat a new resident like a customer who pays the rent and not just like someone they see once a month to collect money.
A happy tenant is one who will always pay on time, keep up with their end of the lease agreement, and be willing to work out any disputes they may have with neighbors or the property management company in a reasonable manner. In return, property managers should do everything possible to make sure that their tenants are as content as possible.
They should provide excellent customer service that exceeds their residents' expectations. It’s not enough to simply pay lip service to the value of keeping tenants happy. Providing excellent customer service does not have to be complicated. It can be as simple as inspecting the air conditioning unit and smoke detectors in preparation for renting a property in summer. It can also be as simple as listening to their needs and fixing maintenance issues.
3. Create a Marketing Campaign to Attract Tenants
Marketing campaigns are a great way for property management companies to attract tenants. They are important because they help the company make its brand known to potential tenants. Marketing campaigns help the company create a relationship with potential clients.
Property management services have been utilizing marketing campaigns for years now in order to attract more tenants. This is because marketing can be a very valuable tool in today’s competitive market.
Keeping the right tenants happy is all about living up to promises made during a marketing campaign. For instance, if advertising promises an apartment with attentive and knowledgeable staff, then apartment managers need to groom their teams to live up to this reputation.
Customer satisfaction combined with word-of-mouth advertising will help keep any business in any market thriving.
4. Respond as Quickly as Possible to Maintenance Requests
Property management companies often need to respond to maintenance requests at a moment's notice. This gets more complicated when they have multiple properties, and a request comes in for one property, but the apartment manager is dealing with another property. It can be hard to keep up with all the requests, so it's important for these companies to develop a system to respond as quickly as possible.
If a request is made and not responded to quickly enough, it may be necessary to schedule emergency repairs and this will cost more money than it would have if the manager had responded quicker. It's also important that apartment managers know about any problems before they become an issue of their own accord.
5. Landscape and Improve the Property Grounds
Landscaping can be a great way to increase the curb appeal of a property. It can also help with attracting attention by making the property more desirable for potential tenants.
Property management companies should be taking advantage of this trend by investing in landscaping. There are many options available to them, including ground cover and trees. They should also be doing more with the outdoor space to give the residents some scenic beauty.
6. Make It Easy for Tenants to Find Their Apartments Online
This is a great way to increase the chances of your property being rented out. This will also keep tenants from walking around and just looking for properties, which takes time and effort.
Ultimately, it will help the tenant find what they need more easily without the headaches of having to go through a lot of listings that don't apply to them. It's important for property management companies to have an online presence because it's so easy for tenants to search on various websites and apps.
7. Offer Luxury Amenities for Tenants
Property management companies should offer luxury amenities for their tenants in order to stand out from the competition. The presence of these amenities not only provides a sense of luxury and comfort but also attracts higher-end tenants.
Offering luxury amenities not only makes the tenant’s stay more enjoyable but will also increase their chance of retaining a tenant. These amenities could be a pool, large-screen room, clubhouse, library, or gym. Many apartments in New York City offer an impressive number of amenities to improve their occupancy levels.
Conclusion
With the increase in people looking to rent apartments, it is essential for apartment management staff to build excellent relationships with their tenants. They should be able to work together in order to get rid of any problems that may arise. This way, they will also be able to create a sense of rapport with tenants.
One way that apartment management staff can build relationships with their tenant base is by being accommodating and understanding when there are complications in the rental process. They should always try their best to find solutions that would make all parties involved satisfied and avoid any unnecessary tension.
6 Tips For Making Money on a Commercial Property
As a property owner, you know there is value in the land and buildings that make up your investment property. Essentially, it is because you put money into making upgrades to attract commercial tenants. But when it comes to maximizing the potential of your commercial property, are you following these six tips for making money on a commercial property?
1. Place a Bid on a Commercial Property Being Auctioned
If you are looking to buy a property at a lower price, try asking your real estate agent about the lists of properties being auctioned. You can also check out county courthouse records online for details about foreclosure auctions. If you can get in on these auctions, you might be able to pick up the building without buying it at a high price. However, you will have to be willing and able to put up the cash quickly, as these auctions generally take place within days.
If a bank is looking for a buyer for your commercial property, they will often hold an auction. If you know the right time and place of the auction, you can get it at a lower price and sell it at a higher price. This means that you will cash out to a larger amount.
2. Consider NNN Lease Properties
NNN lease properties are also known as triple net leases. This means that the tenant has to pay for all expenses associated with the property, like taxes, insurance, and maintenance. For instance, if your building already has tenants in it, there is no need to spend money on marketing or finding new ones because they are already paying you every month. Also, in NNN lease properties, you will not have to spend money on repairs. Ideally, if there is any repair that needs to be done, the tenant will be responsible for doing it. With this knowledge in mind, you can already see why NNN lease properties are a great way to get your income up the sky.
3. Consider Mixed-Use Properties
Mixed-use properties are also an excellent way of making money on a commercial property. Mixed-use properties are a combination of retail units on the ground floor and offices above it. This is a great way to get more money coming in because you will have two tenants that pay rent every month.
4. Consider Long Term Leases
When considering long-term leases, you may be inclined to believe that they are not that profitable, but they are. Provided you have the services of an excellent commercial property management Salinas, and you will be able to make some good money on the long-term leases. Long-term tenants will help you stabilize the property, whereas short-term ones might not meet rent payments every month. This can end up costing you thousands of dollars in losses. Also, long-term tenants will help you to ensure predictability. If a certain tenant is paying rent on time and is well-liked in the community, then it may be in your best interest to keep them there as such long-term leases are more likely to pay off.
To secure such long-term tenants, you will have to work hard and ensure that your property is in the best possible condition. You must also make sure that you are not charging excessive rent because this may scare off potential long-term tenants. Most people want their own space and prefer privacy over other luxuries.
5. Analyze Rents Before Approving a Lease Agreement
Before approving any lease agreements for commercial properties, make sure that you analyze the rents forefront. This is important because there may be some properties that are being overcharged. Also, make sure that you keep a record of your predictions and then, later on, check if they match up with the actual values. It is always possible to undercharge on monthly rentals compared to the market value, but it is easier said than done to get tenants to agree to do that. Moreover, analyzing rent before approving a lease agreement is also essential because it is the first factor that you will have to rely on while making decisions regarding commercial property management.
You should always remember that it is always better to keep your expectations from the rent as low as possible. This is because of all the risks involved in commercial property management Salinas. Also, it is essential for you to ask for rent upfront since asking for payment at the end of the lease period can prove very complicated.
If you are a newbie property owner, it might be difficult for you to determine whether or not you have set the right rent at your property. Still, you should always keep in mind a lot of things while analyzing rent prices and tenancy agreements.
6. Keep Up With the Real Estate Market
You need to keep up with what's going on in the real estate market to be aware of how much your properties are worth and their current market price. If any of these properties are likely to give you more returns, it might be a good idea to put some effort into these properties instead of the others.
Furthermore, even if you have high hopes for one property, this doesn't mean that you should give it more than your undivided attention. Always remember to take care of all of your investment properties so that they can give you massive revenue margins. Keeping up with the real estate market is also crucial because it enables you always to be aware of what's happening in the market. It is also important that you get information about the market from trusted sources. You should not simply rely on advertisements or tips from other people.
In conclusion, commercial property ownership is a very lucrative business. Nonetheless, the market can be unpredictable, and you may lose money if you are not careful. By reading the tips above, you have learned about some things that will help your investment grow more rapidly. Nevertheless, never take anything for granted because even the smallest details could significantly impact your finances. If you don't know what you're doing, it would not be easy to make money in this market. Keep the tips above in mind before investing in a property, and you will soon learn how to make smart business decisions.
How to Choose the Right Tenant for Your Rental Property
Being a landlord comes with various responsibilities. The most important consideration is to ensure you have valuable tenants in your rental property.
However, obtaining tenants isn't an easy task. You want to do due diligence to ensure you get the right tenants for your rental real estate. Here are tips to help you choose the right tenants for your rental property.
Check their Credit Score
Analyzing your potential client's credit history will help you know the kind of person you're about to admit into your property.
A tenant with a higher score is an excellent person to allow in your rental property. It shows that a tenant is a responsible person who will pay rent and other bills on time. Such tenants can also take good care of your property, and this will help you avoid damages.
The tenant will have to pay a small fee to get the credit score report. Ideally, you want to analyze the credit report and find out if the tenant has outstanding debts and the payment history of various items.
Observe Potential Tenant's Behavior
At the property showing, you should carefully observe how your potential tenant behaves. This is the best time to tell if the person is a good match for your property.
Whether the property showing is virtual or physical, you need to pay close attention to the tenant when talking and giving gestures.
First, determine whether the tenants shows up on time for the show, behave politely, and if they are respectful of your property. Here are several things to question a potential tenant:
- Reasons for moving
- The desired moving date
- Willingness to give current landlord's contacts
- Ask whether he/she smokes, has pets and/or roommates
Ensure your tenant selection is professional and straightforward to get quality feedback and make informed decisions. If the tenant shows up late, is rude, disrespectful, or refuses to fill the rental application form, then forget about the person and move on to the next. However, if you do not see any red flags, allow the person in.
Conduct a Criminal Background Check
With the current increase in crime rates, performing a thorough criminal background check for the tenant is imperative. You want to know if the person has a clean record.
Allowing a tenant with criminal records can be risky to you, other tenants, and your property. You can obtain criminal information from various courthouses and check for both serious and minor offenses that the person might have committed in the past.
Ask the tenant to give you his/her name and date of birth to check the criminal history. Remember, some people will try to provide false information, so you need to use valid details to check the criminal record.
Analyze the Tenants Rental History
Another way to know the tenant's character is by checking the previous rental history. If possible, ask the tenant for the previous landlord's contact. Call the landlord and inquire about the tenant's overall behavior.
Find out if the tenant paid rent on time, took care of the property well, and maintained peace with other tenants. If the person was troublesome, then do not move forward with the tenant. Such tenants are a threat, and you may never have peace if you admit them to your rental property. Here are a few questions you might ask the previous landlord:
- Does the tenant pay rent on time?
- Did he/she keep the rental property in good condition?
- Was he/she respectful to you and other tenants?
- Does the person keep a clean environment?
- Did he/she give a 30-day notice before moving?
- Did you incur any damages caused by the tenant?
- Did you evict the tenant? If yes, what were the reasons for eviction?
Please pay close attention as you get the answers and determine whether the person is worth it. Remember, if the person is a first-time renter, a student, or a recent graduate, you should not expect a rental history since they're just starting life.
Choose a Stable Tenant for Your Rental Property
As a landlord, you expect timely rent payment from your tenants. This is only possible if you have responsible people in your rental property. In this case, it is imperative to choose a financially stable tenant who can pay rent and other bills on time.
To be sure of this, contact the tenant's employer to determine how much the person earns. Since the tenant will fill the form with the current and previous employment history, you can obtain much information from the form.
Find out if the tenant keeps switching jobs. If this is the trend, then be sure that the person will likely not stay at your property for long. You can avoid letting in such people because it will take you back and start looking for another tenant earlier.
If the person has not shown consistent employment, you might experience rent payment issues in the long run. So, it'd be best to avoid them.
Know Details of Rental Application
Knowing what the rental application entails will make your tenant selection seamless. The application gives much information about the tenant's employment history, contact details, and employer contacts.
Once the tenant fills the form, you can obtain much information needed and make informed decisions whether to let the person into your rental property or not.
You may want to know the tenant's history of eviction, a conviction of a felony, bankruptcy, and smoking and rent payment habits in the rental application.
Trust Your Instincts
While all the above tips are crucial to consider when selecting the right tenant for your rental property, you should also learn to trust your instincts. If you do not feel comfortable after doing due diligence, trust your instincts, cut off the deal, and move to the next tenant.
Sometimes, things may look good on paper, but you later discover that the tenant was the opposite of what you thought they are. That is why you should never go ahead if you are not at peace.
Hire a Professional Property Manager
Using the tips above can help you identify the right tenant seamlessly. Once you find the tenant, monitor your property closely and ensure it stays in good condition. You may want to work with a Salinas property property manager. Property management companies can take good care of your apartment. This gives you peace of mind knowing your property is under excellent property management services worth a bang for your buck.