- AMG Props
Real estate investing is something anyone can pursue with a little hard work, research, and dedication. However, once you buy your first rental property, there are a few tips for first-time landlords that can help you avoid the most common mistakes.
By following the insights of other real estate investors, you can achieve greater success with your new rental property.
1. Keep Your Finances Separate
Before signing your first tenant, you should open business accounts for your rental property. This will help protect your personal finances and make it easier to manage the finances for your investment property.
When you want to invest in your rental property, you’ll find that the separate account will make it easier to determine how much capital you have to invest.
2. Prioritize Bookkeeping
One of the best tips for first-time landlords is to keep an accurate accounting of your expenses and income capital. Your ledger should also differentiate between the deposits you collect from tenants and rent payments. You might find it easier to use bookkeeping software rather than trying to maintain your accounts in a paper ledger.
3. Keep Written Records
A lawyer can draw up a standard lease agreement, leaving blanks for you and your tenants to provide the necessary signatures and dates. Make sure the lease covers the length of the lease, rules of conduct, pet policies, and any other important issues.
Additionally, notify your tenants in writing when you need to gain entry to their units or need their compliance with any other issue. Even though you might also provide a verbal notification, the written notice helps to cover your legal obligations.
4. Save for Taxes
First-time real estate investors may forget they are on the hook for their income taxes. The rental payments you receive are taxable income, so keep track of that revenue throughout the year. You should also keep track of expenses, such as the cost of repairing your investment property, since most expenses are deductible.
5. Obtain Your Certificate of Occupancy
You are responsible for knowing the housing laws in your community. You’ll get a great overview of the laws that govern landlord/tenant relations in your state by taking the course to obtain your certificate of occupancy. You can take college courses that cover the same material if you’re not required to obtain the certification.
6. Establish Rules for Communication
When asking real estate investors for tips for first-time landlords, an issue that frequently arises is how tenants communicate with their landlords. You should have a business number that your tenants can call during normal business hours.
Make sure to advise your tenants not to call after normal business hours unless there’s an emergency, such as a fire or plumbing problem.
7. Invest in a Good Tenant Screening Service
Poor-quality tenants can cheat the system and make themselves look good on paper. You can avoid approving tenants who are bad risks by running a thorough background check on each applicant.
The $50 fee per applicant will be a worthwhile investment because it will give you the applicant’s employment, eviction, credit, and criminal histories.
Contact AMG Props to learn more about our property management services and how we help property owners manage all aspects of their rental properties.
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