Owning real estate is an investment that will pay off for many years to come. Residential real estate owners need to be creative and do everything in their power to save money. Saving money will help increase your profits and make being a landlord fun.
Why Owning Real Estate is Great
Owning residential real estate and leasing it out is a great investment for your future. You not only have the potential of asset appreication, but a steady stream of monthly income as well. In addition, there are numerous tax benefits available for property owners.
Maximizing your profits on rental properties is two-fold. First, you must properly set your rent at an acceptable level. Second, you need to minimize costs.
Real Estate Taxes
One way to save money is to reduce your real estate tax bill. Recently, home values have dropped from their 2007 peaks. Your property tax bill is based on the value of your property. You can get an appraisal from a professional for about $200. If you have an appraisal and notice that the value of your property has decreased, contact your local tax authority. Most likely they will adjust your property value downward, which means you will pay less real estate taxes.
Having a cleaning service clean out a home or apartment that has been vacated costs a significant amount of money. You can save $100-$500 each time someone moves out by cleaning the apartment yourself. Buy some paint supplies and paint the interior of your home and save an extra $800-$1,000. Mow your own lawn and you can save $50 or more per month. Putting sweat equity into your rental properties shows your residents that you care. In addition, you can save thousands of dollars each and every year.
Most landlords have come in contact with a vast array of different people. When you network, make your specialties known. If you can paint, clean, or mow yards do that for other landlords in exchange for other services. A circle of landlords that includes an electrician, licensed HVAC technician, and appliance repairman can save thousands of dollars each and every year.
Keep Maintenance Up
If you spend money on routine maintenance, you will save a lot more money in the long run. Simply taking the time to keep your property in good repair could spare you from a several thousand dollar repair bill. Make sure you change air filters in your HVAC systems monthly or at least every other month. Air filters cost less than $2 and can prevent an entire HVAC system from failing prematurely. Keep gutters cleaned out to ensure you don't experience costly roof and gutter damage.
Channel your monthly cost savings to pay down any mortgage or other debt held in conjunction with your real esate holdings. Doing this is like a money-saving one-two punch. You will reduce your overall debt, which reduces the amount of interest you will ultimately pay on your debt. In the end these savings can amount to tens of thousands of dollars.