The Minimalist’s Guide to Managing Rental Property
Anyone who invests in a rental property does so to make money, and when done right, renting produce a reliable side income.
Sadly, many landlords find that their rental efforts backfire.
In these cases, rather than supplementing incomes, landlords land in debt. In extreme cases, that debt is so substantial that they have to sell that property and forget their plans. That’s bad news, considering the effort that goes into buying a house, and it’s something you must work to avoid.
The trouble is that most rental articles out there focus on how to make money. Few resources focus on the funds you could end up losing. That’s why we’re going against the grain today, by talking you through some landlord mistakes that could land your finances in the red.
If you’ve had a financial setback, this article can help.
Contents
Create a Monthly Financial Budget
The starting point for your improving your personal finances is to create a personal monthly budget, and it applies to rental property owners.
Action Steps To Consider
- Create a budget, even if that budget is simply on notebook paper.
- Separate your expenses between fixed and variable, and take a hard look at your variable spending.
- Take steps to cut your variable expenses each month and put the amount you save into a separate savings account.
- Consider using a budgeting app to monitor your spending
- Save 5% of your monthly gross income
Create your budget and stick to it.
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Analyze Your Pricing
Charging the wrong price for your rental property can hurt your ability to generate income.
That applies no matter which side of the rental divide you land on. If you charge more than the market price- in an attempt to increase your rental income– you’re going to struggle to fill your property, and that could leave you having to pay a mortgage on an empty space.
Even if you bought the property outright, a lack of tenants means that you won’t earn income.
At the same time, charging too little for a property can cause issues. While it does mean you’ll find tenants, you could soon struggle to cover property costs.
To avoid this, you need to spend plenty of time checking out local rental prices. Subscribe to estate agent newsletters, and watch the market for a while to make sure you get your rental price right from the off.
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Manage Your Rental Income
Often, landlords see rental income as expendable. But, spending all your money here could spell trouble.
That’s because, as a landlord, you have a responsibility of care. If tenants call about problems, you need to repair things fast. If the boiler breaks, that could mean needing a few thousand to hand if you want to avoid losing your tenants.
Equally, you need the cash to repair any broken appliances or floors right away. Failure to act fast enough could see you facing even larger costs, and if tenants have injuries as a result of your negligence, you may have to deal with personal injury attorneys. In an ideal world, you should keep a relatively large amount of rental income to one side in case of problems.
Check Tenant References
This last point seems obvious, but it’s surprising how many landlords neglect to check tenant references.
The problem here is that you may find tenants stop paying their rent, or even do damage which they don’t pay you for. That would leave you with an empty property, and extreme repairs costs. Make sure it doesn’t happen by always asking for tenant references. Make sure, too, that you do adequate ID checks to protect your property and your finances.
Be Disciplined
Most important, you must be disciplined enough to apply these steps month after month. Your consistency will help you improve your finances and successfully rent your property.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(amazon author page) amazon.com/author/kenboyd
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/