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.
