Do I Need A Real Estate License To Manage Property?

Professional licensure requirements in the United States are intimidating to many novice property managers.

Many times, if a property manager is working for a larger company, the company will make these requirements clear.

Both a company and its employees can receive hefty fines, mandated continuing education, or worse if an individual at the company is practicing without a license.

However, if property managers are starting out on their own, they don’t have that kind of guidance and may not even ever take into account that they need a license.

What’s worse, whether a property manager needs a license – and how he acquires that license – varies from state to state.

Each state and the District of Columbia sets its own laws by statute, which are then interpreted as needed by the individual state’s real estate board or equivalent, resulting in widely disparate laws.

Furthermore, calling up the state’s licensing board about the finer points of licensure requirements may not result in a useful answer.

Curious property managers may be able to ask their questions directly of the board and get an answer to their practice question, depending on the state.

But many boards refuse to answer pointed questions about licensure on the grounds that they cannot give anything that can be construed as legal advice or advice about individual cases.

Ignorance Is No Excuse

As a rule of thumb, no matter the state, all professionals are expected to know the licensure requirements of the state where they work.

 In other words, the burden is on them and any company they’re affiliated with, and not on the licensure board.  

Property managers should make sure they do their homework about licensure requirements and stay abreast of new developments, whether via news sources or the licensing board’s website.

In most states, property managers need to have a real estate broker’s license.

In addition, some states may have requirements for a property manager, or a real estate broker more generally, to be affiliated with a company, or licensure requirements may be less stringent if the professional is with a company.

Yet again, it’s a good idea to check with the state in question.

However, some states (as of this writing, Idaho, Kansas, – for residential property management – Maine, Maryland, Massachusetts and Vermont) do not require a license for property management.

Still other states and districts (D.C., Montana, South Carolina and South Dakota) require a license that is specifically for property management rather than including property management as a subset of real estate.

Some states, though not many, have still other requirements for managing a community association.

How to Get a License

The requirements for getting a license – what the individual needs to do – vary from state to state as well.

Most states require that an aspiring licensee be of age (over 18 or over 21).

Often licensees need to take courses and pass an exam, although these requirements may be waived if the licensee can practice law in the state.

Once the license is issued, keeping it up usually involves paying a fee on a regular schedule and possibly also taking continuing education.

Specific courses may be mandated by the state, or the license’s first renewal may not require CE, so be sure to check.

If this is all still confusing, check to see if there’s a state-level professional real estate organization that can clarify, or contact the licensing board with questions.

Even if it seems clear, or especially if there are rumors that the licensure requirements may be changing, it’s never a bad idea to get in touch with somebody to be sure.

It only takes a minute, and the consequences of unlicensed practice can be serious.

Common Maintenance Issues and How a Landlord Can Resolve Them

One of the biggest challenges that landlords face on a continuing basis is maintenance.

No matter how new or how well-built the property is, sooner or later you will have to deal with repairs and maintenance needs.

For first-time landlords, this can be especially difficult if they don’t know where to turn.

Have a Plan
Minor repairs can happen at any time, but they most often occur when it is least convenient.

You will get a phone call when you are sitting down to dinner or getting ready for bed.

To prevent the inconvenience that this can cause, you need to have a plan in place to ensure the issues is quickly and efficiently resolved.

Some issues are regular occurrences, like heating and HVAC problems, backed-up plumbing, and lockouts.

Be prepared for these situations by contracting with a company that you can call any time you need their services.

You can give the company a key and sign a contract for 24-hour service with a specified response time.

Just make sure you let tenants know that this is the procedure for these calls.

Larger problems such as a leaking roof may require a temporary fix until a more permanent solution can be provided.

In some cases, the roofing contractor may handle the situation while other times, you may need to find someone else who can stop the leaks temporarily.

Always know which companies you will contact for the various problems you are likely to encounter and find out exactly what services they provide and in what time frame they respond.

Hire Someone to Handle Maintenance Issues
For a larger rental complex, you may want to hand off maintenance calls to a service or manager.

You have several options to choose from:

  • An answering service takes calls from tenants and contacts the appropriate repair company to handle the work based on your instructions. They relay the problem to you on the next business day or with the call logs.
  • A property manager takes care of all tenant problems, including maintenance requests. The manager updates you or contacts you for unusual problems.
  • Pay a tenant to handle simple maintenance issues in exchange for reduced rent.

No matter which option you choose, you must have a clear plan of action for the most common repairs and maintenance problems.

Make sure that you relay the important information to all parties, including when you want to be contacted and how you will be informed of any resolved issues.

You also want to have a standard process for what to do when something unexpected arises that is not part of your plan, such as a flooding or a fire.

When major issues occur, you should have an emergency plan in place and procedures for the next steps.

You must provide a valid number where you can be reached or another person to act in your stead if you cannot be reached.

Having a complete maintenance plan in place helps you and everyone else know what to do when something happens.

It is also important that you relay the basic procedures to your tenants.

Let them know what steps will be taken and the timeline that they can expect a phone call or the issue to be resolved.

By having a plan in place, it protects you from minor repairs turning into major problems, and it keeps your tenants happy.

How To Repair a Leaky Outdoor Faucet

Outdoor faucets eventually begin to leak and it can become an annoying issue.

Sometimes more water comes out of the faucet than it goes into your hose or sprinkler system.

You can fix the outdoor faucet pretty easily in most instances, but depending on the size of the leak, you may need to replace the entire faucet.

 

The Seals and Gaskets Wear Out in an Outdoor Faucet

The #1 repair for a leaky outdoor faucet is a seal or gasket that needs to be replaced.

They’re often made of rubber or even plastic today, so over time, they just wear out.

You’ll be able to access them by taking the removing the handle of the faucet to access the interior hardware through the retaining nut.

When you’re there, check to see how tight it actually is.

A loose retaining nut may be the cause of your leak.

If the retaining nut is tight, then you’ll need to remove the faucet stem.

It’s usually easier to remove the stem by installing the handle again so you can grip it.

Sometimes you have to even turn the handle to remove the faucet.

Replace the Washer Assembly In the Stem

With the faucet stem out, you will notice that there is a washer assembly that can typically be accessed by a Philips head screwdriver.

Unscrew the item and you’ll be able to see which washers have failed. Keep track of how the parts go together so you can replace the faulty item and then reinstall the washers on the stem.

You may also need to replace the stem packing or remove the vacuum breaker cap to locate the faulty parts.

The vacuum breaker can sometimes fail because of dirt or sand that gets inside the faucet itself.

If you clean the breaker, then you may fix the leak.

If all of that fails to work, then you will likely need to replace the entire faucet.

If your faucet is screwed onto your plumbing, then you can just remove the old faucet and attached a new one.

If it is a one piece unit, however, you’ll need to cut it off and then solder the new outdoor faucet on.

By following these steps, you’ll know how to fix a leaky outdoor faucet.

It only takes a few minutes to repair and in return, you won’t be risking future water damage to your property once it gets fixed.

How To Check For Evictions

Part of the tenant screening process for any landlord must include an eviction search. Tenants that have past evictions may not be a true reflection of their potential value in a lease, but it does indicate that they are a high-risk tenant that may not be right for you. Eviction records are considered part of the open public record, so these red flags are pretty easy to spot. The easiest way to check for evictions is to have a credit check as part of the tenant screening process. Evictions are typically on a credit report and you’ll also get to see a brief overview of a tenant’s financial situation at the same time. You’ll need written consent to receive this report, so don’t just run the credit check because you could find yourself at risk for litigation, fines, or both if you do. Here are some other ways that you can check for evictions as well.

1. Obtain Information About Previous Residences.

During the tenant screening process, it is not uncommon to ask for up to 3-5 years of previous addresses. This gives you two pieces of good information: how stable the household structure is and information to contact a previous landlord. To speak with the landlord, however, you’ll need written authorization that can be sent via email or fax to get the information that is needed.

2. Contact the County Court of a Previous Address.

If you don’t get authorization to speak with a former landlord, then take advantage of the open public records. Check the eviction records for that county. If a tenant was ordered out of a residence, then a writ of possession will be on file for the property in question. Unless it is a rural county, there’s a good chance that this information can be found online.

3. Look for Judgments on a Tenant’s Records.

When you pull the credit file for a tenant, you may not see an eviction in place. What you may see in its place is a judgment from a lawsuit that was initiated by one of the previous landlords of that potential tenant instead. You may need to pull credit reports from all 3 major credit reporting agencies in the US to verify judgment records.

4. Request a Tenant Screening Report.

A number of professional agencies provide complete tenant screening reports based on the personal information an applicant provides you. In return for a service fee, which can often be charged to the applicant, the organization creating the report will obtain a criminal history, credit information, and a complete examination of any public records that will give you an idea of how risky a tenant may be.

5. Not Every Eviction is Something That a Landlord May Initiate.

There are some jurisdictions that allow law enforcement officials to initiate an eviction based on the arrest of a renter for a drug charge or other illegal activity. Landlords in this situation are generally given 30 days to evict the tenant on their own, but law enforcement will complete the eviction at the end of 30 days if the landlord has not done so.

6. It is Important to Remember That Not Every Eviction Attempt Winds Up in an Actual Court-Ordered Eviction.

When a landlord gives their tenant a notice to pay or quit, that means a tenant has the option to actually quit. That means they must move out of the rental property by a certain date. This action is considered to be an eviction, but it is not a court-ordered eviction. The same is true for tenants who might move out by a notice date for other lease violations, such as having a pet that is not allowed. This is why it is important to check all references and records and not just rely on public information or references only.

7. Evictions on a Credit Report Can be Disputed.

It is also important to realize as a potential landlord that credit-based eviction information may be placed there in error. A potential tenant may not have been evicted, but a previous landlord may not have stopped a court proceeding and received a default judgment because notice wasn’t given as indicated. It’s unlikely, but it does happen. If an application is in the process of disputing an inaccurate eviction report on their credit, then this should be combined with other screening information to render an empowered decision. Screening for a past eviction is an important part of any tenant application process. If you are not doing this already, then follow these steps to begin locate eviction information now so that you can limit your risks.

The Top 5 Tax Deductions For Rental Property Owners

There are many landlords who pay more taxes than they should every year, usually because they aren’t familiar with the deductions they can claim. It takes a thorough understanding of tax law and strategic planning to take advantage of all available deductions. Here is a guide to the top five deductions you should claim.

1. Deducting Interest
Perhaps the most important deduction to take is on interest payments, which can represent a significant amount of money each year. This can cover many types of interest payments, including interest on mortgages and loans that were used to purchase or improve your rental property. These interest rate deductions also extend to credit card interest payments that were used to purchase goods or services in relation to your rental properties. Remember that this doesn’t apply to the principal that you initially paid for the property, only the interest accrued.

2. Repair Deductions
The cost of repairs can add up significantly over the year, but the good news is that these repair costs can be deducted from your taxes. Repairs to your property can take many forms:

  • Fixing leaks
  • Repainting
  • Patching a roof
  • Plumbing work
  • Replacing a broken door
  • Plastering a hole in a wall
  • Replacing a shattered window
  • and more

Be sure to keep receipts and records of all repairs you make. Also be aware that you can only deduct repair costs made the year you performed them, so be sure not to wait on this deduction until next year.

3. Travel Costs
Do you find yourself traveling constantly to repair property, pick up building supplies or meet with a tenant to discuss a problem or complaint? The great part about travel-related expenses is that they are all deductible. This even applies to overnight travel involving flights to other cities. For example, if you attend a real estate conference to help you understand how to improve your business, the plane ticket and hotel costs would also be deductible. At the same time, overnight travel is likely to be the most scrutinized by the IRS when you file your taxes, so it’s important to keep thorough records that can back up your deduction in case of an audit.

4. Depreciation Deductions
Depreciation is one deduction many landlords don’t quite understand; however, this can add up to big savings every year. The basic concept of real estate depreciation is that the IRS allows landlords to claim a “paper loss” on the value of their property. This is based on a model that stipulates that properties will lose value over 27 and a half years, which brings the value of their property from what they originally paid for it to the price of zero dollars.

Each year you can claim 2/55ths of the purchase price for 27 years. The formula for depreciation can be much more complicated and often requires an accountant for proper calculations. It’s worth the extra work, though, due to the amount of money that can deducted. Don’t forget to deduct the cost of using your accountant either, which is also permissible when it’s related to real estate activity.

5. Insurance Premiums
If you own a rental property, you’re probably paying quite a bit for insurance. This includes flood, fire, and theft insurance, as well as certain liability insurance expenses. You might even be paying for your employees’ workers compensation and health insurance. Thankfully, all of these insurance premiums are deductible.

As you can see, there are numerous deductibles available to landlords that you can use to maximize your savings. Include these five on your list of deductibles, and you’ll be doing your rental property taxes the right way.

 

Please note: These articles are for informational purposes and we advise you to consult an attorney for more specific information related to your situation.

What Is a Wrongful Eviction?

There are always going to be problematic tenants from a landlord’s perspective.

From the tenant’s perspective, there are always going to be problematic landlords.

A vast majority of tenants and landlords have a mutually beneficial relationship that works for both groups.

When that relationship turns sour or there is a lease violation, however, a wrongful eviction can easily happen.

What is a wrongful eviction?

It is when a property owner, a landlord, or an agent acting on behalf of either party forces a tenant out of a residence without legal authorization to do so.

There are a number of ways this might happen.

1. By changing the locks on the building in question after removing personal effects.

2. By shutting off the utilities to the building.

3. By bullying the tenant into leaving the property through abuse and intimidation.

Tenants often have a lot of leeway to correct the issues that they may have created.

Most landlord-tenant laws require that a property owner, landlord, or agent give that tenant every opportunity to rectify the situation.

That’s why a specific eviction procedure must always be followed.

Landlords Almost Never Have Authorization To Remove Tenants

Only in specific jurisdictions is there any authorization for a landlord to physically remove a problematic tenant.

Most of the time the tenant who is in violation of a leasing agreement must be notified that they are in violation in writing.

They will be given a specific time frame to rectify that violation so they can return to compliance.

The most common reason why a tenant falls out of compliance with a leasing agreement is because of a non-payment of rent.

Any violation of the lease can be grounds to send a violation letter, but landlord-tenant laws have a specific amount of time that ranges from 3-30 days to rectify the violation.

Only if the violation is not rectified by the deadline given on the notice can a landlord then proceed with a formal eviction.

To do so, an “unlawful detainer” must usually be filed in the local court system.

Did You Know Tenants Can Evict Themselves?

Landlords, property owners, or their agents can also be “evicted” by tenants for the same reasons.

If a landlord fails to live up to their obligations in a leasing agreement, a tenant is allowed to send notice of this violation in writing and be guaranteed protections against retribution for such an act.

If the property being rented does not meet basic needs in a specific time frame, often just 24 hours, a tenant may “evict” themselves from the lease without penalty.

Tenants who legally break a lease must still surrender the property in a condition that is equal or greater to the condition they received it.

A security deposit cannot be used in this situation to correct an issue that was reported as a violation of the lease by the tenant.

Otherwise all other applicable security deposit laws are generally enforceable during the separation process.

Why Can’t Self-Remedy Options Be Legal?

It would be a lot easier to be able to just evict some tenants without court intervention and legal fees, but the rights of a tenant cannot be overlooked.

It might be your property, but it is a tenant’s home.

The law protects this right.

You entering a home without permission or a legitimate emergency could be construed as breaking and entering and that means a tenant has a right to defend themselves and their property in many jurisdictions.

That’s why letting the court system and law enforcement handle a problematic is a good idea.

It keeps everyone safer and although it may be an added cost, it is generally a cost that is worth spending.

This process also eliminates any litigation costs that may come from accusations that a landlord stole or damaged personal property during the process.

Just like most tenants won’t need to ever be evicted, most tenants that receive a violation notice will rectify the situation.

For those that receive a court-ordered eviction, they will leave before law enforcement arrives.

Only a small minority of tenant will need to have a full eviction, just as a small minority of landlords break leases on their end as well.

What is a wrongful eviction?

It is any process that attempts to remove a tenant from a property without legal permission.

Make sure to follow the steps outlined in your local landlord-tenant law today so that you can stay in compliance.

How To Fix a Burst Pipe

When you have a pipe burst in your home, either because the weather turned cold or there was a failure in the craftsmanship of the pipe itself or its joints, then here’s some good news: you don’t need some serious plumbing skills to fix the problem.

You’ll just need a few tools, some solder that is lead free, and some replacement pipe and fittings.

The first step is to make sure that you’ve turned off your water supply.

Look for the main valve for your water in a heated area of your home.

Many times the water shut-off is located near the water heater, furnace, or primary electrical box.

Open up the lowest fixture you have to make sure your plumbing system completely drains.

 

1. Allow your pipes to thaw out.

If you have frozen pipes that have caused the burst, then you’ll need to make sure they’re completely thawed out before you begin the repair.

Wrap the pipe with insulation if necessary to make sure the ice begins to melt.

2. Cut out the damaged section of pipe.

When you’ve located where the pipe has burst, you’ll need to cut out that damaged section.

The easiest way is to use a pipe cutter.

Rotate the the cutter around the pipe and keep tightening it a little bit with every rotation until it cuts all the way through it.

You’ll likely have burrs on the cut.

You can clean these up with some steel wool.

Avoid using the kitchen steel wool pads, however, because the detergents can make the job more difficult.

3. Cut a new section of pipe to install.

You’ll need new pipe to replace the burst pipe.

Cut the new pipe to the appropriate size.

Because you’ll be connecting the new pipe to the undamaged plumbing, you’ll need to cut it a little shorter to accommodate the fittings that you’ll need for a water-tight seal.

Make sure you’ve got the same diameter of plumbing pipe as well.

Most homes have ½ inch pipes, but this isn’t always the case.

4. Clean the ends of the pipe.

You’ll need to take that steel wool and make sure all of your pipe and fittings are cleaned up on the edges so that they’ll be able to form an adequate seal.

Take your time during this part because clean fittings and pipe ends are essential for a good connection.

5. Begin the soldering process.

You’ll need to spread some soldering flux on the outside of the pipe end where you’ll be connecting it to your existing plumbing.

Then slide the valve fitting onto the end of the pipe and heat the valve fitting where it connects.

You can hold the flame right up to the pipe, but make sure you’re wearing safety glasses.

As the connection heats up, you’ll want to push some solder into the joint where the valve connects.

The solder melts from the heat and will seep into the connection, sealing it off.

6. Continue until repaired, then turn on the water to check for leaks.

Make sure that the solder has cooled and sealed every joint that needs to be repaired and then turn your water back on to check for leaks.

If you have leaks, you will need to start over from the beginning.

It takes some practice to get soldering down, so take a few minutes to practice your technique before attempting the repair.

In doing so, you’ll be able to solve your own plumbing problems and know how to fix a burst pipe.

3 Ways to Cut Down on Time Spend Collecting Rent

You have solid tenants in your properties and you enjoy being a landlord. Although you had success filling up your properties, you don’t want to rest on your laurels. By seeking new ways to enhance your property management skills, you can help to set yourself up for further success and simultaneously improve your work-life balance that may have been neglected. No one wants to spend hours of their day traveling to their many properties in order to collect rent in person. With the modern family’s busy schedule, coordinating in-person payment times is a difficult prospect. Worst case scenario, you chase around payments and deal with more frustration than you need to. These three rent payment collection methods will save you great time and energy, allowing you to focus on other important aspects of your property management business.

 

1. Electronic payment

One of the easiest methods for collecting rent payments is accepting electronic payments. Most people these days don’t deal with checks on a regular basis, so keeping a checkbook around solely for rent is an inconvenience. Electronic payment systems cut down on problems such as checks getting lost in the mail and dealing with checks filled out incorrectly. With some electronic payment systems, tenants can use debit cards and credit cards to make their rent payments at their convenience. You pay a fee for the service, but you also save time not having to deposit checks. Some electronic payment services also allow your tenants to send electronic checks instead of physical checks.

 

2. Billpay

If you don’t want to utilize an electronic payment system, talk to your tenants about setting up bill pay through their banks. Many banks utilize a bill pay system that transfers money from the tenant’s account to your account. If you share a bank with the tenant, the bank may deposit it directly into your account. Otherwise, the bank cuts a check so you don’t have to worry about insufficient funds. Banks with reputable online banking features make it easy for tenants to set up bill payments. If you want to make it easier, talk to the bank to get yourself set up in their system as a payable company.

 

3. Recurring payment

Electronic payments and bill pay both feature the option to set up recurring payments. There are plenty of benefits that come from setting up recurring options. The major benefit is making sure that your tenant never misses a rental payment. Automatic recurring payments take the money directly out of the account without any outside intervention. If an automatic payment doesn’t process correctly, you know it within a few days of the automatic payment date, instead of wondering if the tenant forgot to send the rent payment.

 

Accepting rental payments is an integral part of being a landlord. When you increase the efficiency of your rental collection methods, you set up a foundation to also increase the quality of your business operations. When you have efficient processes, you decrease the amount of time you spend collecting rent, which allows you to have more of your time to enjoy for yourself. You’ll also be able to spend more time bettering your business and rental properties, which could boost your income higher than ever before.

 

Good Landlording: Addressing Prospective Tenants

With many potential tenants falsifying application forms, landlords need to get creative when screening tenants.

Ideally, an effective screening process can detect bad tenants before they sign the rental contract.

This guide helps landlords navigate all the necessary screening considerations and shows how to create lie-proof application forms and run background checks.

1. Be Proactive About Prescreening

At any given time, there could be hundreds, if not thousands of people looking for a new apartment or single-family home.

This constantly changing group consists of good and bad tenants alike. Fortunately, landlords can weed out most of the bad applicants before they even glance at a rental application, saving a great deal of time and money.

The first step in weeding through potential applicants is establishing standards and rules on the property advertisement.

At a basic level, these standards should include a minimum income requirement, pet policies, statements regarding previous evictions and criminal records, and any other policies the property managers may have.

By clearly stating these baselines, a majority of the bad applicants will look elsewhere.

When reaching out to potential applicants, landlords can easily gauge their character over the phone or in person.

Landlords should be sure to ask the right questions and always make property rules and standards clear whenever possible.

An ideal tenant should be financially secure, have a clean background, keep a tidy living space and have no eviction record.

These qualities, or a lack thereof, will make themselves apparent in the application process.

2. Create a Legally Airtight Tenant Application

The best tenant applications provide an accurate look into an applicant’s life and personality, asking all the right questions and avoiding the wrong ones.

At an absolute minimum, application forms should include the follow questions:

  • Basic information (name, date of birth, Social Security number, phone number, address)
  • Employment information and contacts (current and past employers, monthly salary)
  • Previous and current rental information and contacts
  • Eviction records (ask how many, not just if they’ve had an eviction)
  • Release of information signature

Asking the applicants other questions, such as how many people intend on living at the property or if they have any pets, can help develop a  better understanding of their situation and avoid future complications.

Some questions, however, are not allowed. According to Federal Fair Housing laws, these include any questions relating to race, sex, national origin, color, religion, familial status, and handicaps.

It is illegal to discriminate against any of these qualities and doing so can result in a hefty lawsuit.

Individual states may also have variants and extensions of these characteristics, such as age or sexual orientation.

3. Run Background and Credit Checks

Background and credit checks are among the most accurate ways to gauge the reliability and character of a potential applicant.

Thanks to a number of tools and services, running both checks is usually an easy and inexpensive process.

Background checks include information such as the applicant’s criminal record and eviction history.

Checking these figures not only helps landlords assess whether an applicant will avoid criminal activity and be a good tenant, but doing so is also a good way to check the applicant’s honesty.

If the information on a criminal record and an application form don’t match up, it should serve as a massive red flag.

Credit checks help assess whether the applicant can pay consistently and responsibly.

A credit report usually includes information such as the applicant’s credit score and public financial records.

4. Get Creative With Screening Methods

While application forms and background checks usually provide most of the necessary information, it doesn’t hurt to go a little further.

This may include calling previous and current landlords and employers, as well as taking a look at social media accounts to gauge personality.

5. Know How to Deal with Approvals and Rejections

Approving an applicant is relatively straightforward.

A landlord contacts the new tenant with a message of congratulations and a list of next steps.

Rejecting an applicant, however, isn’t always as easy as saying “no.”

Landlords should document the reasons for the rejection and make these clear in a dismissal letter, which helps avoid any potential legal trouble down the road.

 

Time-Saving Financial Management Tips for Landlords

Being a landlord requires a significant amount of time and financial investment. One way to reduce the amount of time spent managing a rental property is to streamline how finances are handled. These financial tips can shave valuable hours from your weekly landlord duties.

 

Discuss Property Purchases with an Accountant

An accountant can offer useful financial suggestions regarding investment real estate purchases. While you may be an expert at management, your accountant is the expert at tax-friendly property financing, calculating property depreciation, the financial benefits and drawbacks of incorporating rental properties, and documentation for tax season. This expert advice can save you both time and money, and may prevent you from making costly mistakes. For example, people who are purchasing a sixth rental property may not be able to receive financing without incorporating their rental properties into a freestanding business. An accountant will be able to spot this problem and recommend an attorney to file any necessary paperwork.

 

Consider Accepting Online Rental Payments

Are you still accepting paper checks for rental payments? You aren’t alone. Paper checks are still a popular way of collecting rent, but this payment method is antiquated. Online rent payments are much quicker and can save a lot of time and potential hassle. With online payments, you can immediately see when a rent payment has been made, and you don’t have to worry if a check is lost in the mail. You can also send email reminders a few days before the rent is due.

Some landlords avoid online rental payments due to the cost of processing fees. While these fees are a reality, when you factor in the elimination of returned check fees and quicker payments, you may actually end up saving money by accepting online payments. In addition, offering online rental payments can be a selling point to young professionals who seldom write checks.

 

Try a Digital Financial Management System

By law, landlords must record their rental income, keep track of their rental expenditures, and produce documentation that supports their bookkeeping when requested. Each year, these record keeping requirements can yield hundreds of pages of documents that must be stored and examined during tax time. With a digital system, bank statements, rental payment records, and other documents can all be uploaded and stored within a single software program. Landlords can also scan paper receipts and store them digitally. Many programs automatically detect essential information from these financial records and use the data to create up-to-date spreadsheets. Digital records are also safer than paper records. For example, a fire can destroy paper records and computers, but digital files stored on the cloud (securely stored on the Internet) will remain safe.

 

Schedule Annual Property Inspections

Booking regular property inspections may seem like a waste of time, but they can uncover small problems that can quickly turn into expensive time-consuming projects. An annual roof inspection can detect a few missing shingles or a small leak before water damage and mold occur. Examining the bathroom can uncover deteriorating caulk, which can lead to expensive water damage. Recaulking a tub or patching a small leak may take a day to complete. Fixing water damage and mold from an overlooked problem could be an expensive two-week project.

To avoid wasting time while managing rental properties, it’s important that landlords establish a system that will help avoid unpleasant surprises and minimize bookkeeping. Learning new software or meeting with a property inspector will require a few extra hours of time, but these investments will easily yield dividends for years to come.