The most important person in your financial life — outside of your spouse if you’re married — is your tax advisor. Taxes represent one of the largest expenses you’ll face in your lifetime. And, if you understand the tax law, they are also one of the most straightforward expenses to reduce.
The right tax advisor will work with you to design our real estate business in a way that helps you reach your financial goals while legally (and permanently) reducing or eliminating your taxes. Choose the wrong advisor, and you’ll find yourself paying more taxes and missing out on some great wealth-building opportunities by investing in ways the government incentivizes. What exactly does the right advisor look like? As you evaluate your options, here is a guide with seven questions to consider when hiring a real estate tax CPA.
1. What are their credentials?
It’s easy to call yourself a tax advisor. You want to avoid someone who claims to be a tax advisor simply because they are authorized to prepare federal tax returns. Instead, look for a Certified Public Accountant specializing in tax.
2. What system do they use for tax reduction?
The best advisors don’t just rely on their knowledge and experience; they follow a proven system for permanent tax reduction. A top-notch CPA should be able to show you evidence that they’ve used this system for many clients with real estate investments. Working with someone who consistently replicates results is a far better predictor of your future success than partnering with an advisor who operates without a system.
3. Who is in their network?
A top-notch real estate tax CPA is not an island. They are connected to a strong network of specialists, including real estate attorneys, mortgage brokers, cost segregation specialists, insurance brokers and more. As your financial plans evolve and become more complex, having access to this vast pool of expertise can prove invaluable.
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4. How often will we meet?
To be a true advisor, your CPA should meet with you throughout the year, not just at tax time. You’re looking for someone who will proactively reach out to offer new ideas, get regular updates on your business and check in on your long-term goals. As a rule of thumb, something is wrong if you visit your dentist more often than you speak with your tax advisor.
5. How will they handle an IRS audit?
If you do become audited, you deserve an experienced tax advisor who will go to bat for you and your business. Ask prospective CPAs to share examples of how they’ve handled client audits. If a CPA suggests skipping legitimate tax deductions to avoid an audit, look for a different CPA. You want a CPA who isn’t afraid of the IRS, who will handle all communication with the agency and who is comfortable with the process.
6. What do they think about real estate?
Any good tax advisor loves real estate. It’s one of the best investments you can make to create wealth while permanently reducing taxes. As you listen to the response to this question, also look for signs that the CPA has an entrepreneurial mindset. A CPA who thinks like an entrepreneur can be a game-changer. They will be more innovative when it comes to helping you accomplish your financial goals.
7. Can I check their background?
Before hiring a real estate tax CPA, it’s crucial to conduct a thorough background check. This process should involve checking their credentials, verifying their license, reviewing client testimonials, and even checking for any disciplinary actions or complaints.
THE BOTTOM LINE
Finding the right real estate tax CPA involves more than choosing someone with an impressive resume. It’s about finding a strategic partner who can help you navigate the complex world of real estate taxes, leverage opportunities and ultimately build wealth. By asking these seven questions, you’ll be well on your way to finding a CPA who can take your real estate investment game to the next level.
Provided by Rent Magazine, written by Tom Wheelwright, CPA CEO WeathAbility
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Provide long-term income and boost your home’s value with an income suite or rentable accessory dwelling unit.
Installing an independent housing unit at your property can be a big investment, but if planned well, an income suite (also known as an in-law suite or accessory dwelling unit), can be a terrific way to pay down a mortgage faster, build equity in a home, and increase its resale value. However, there are 10 important things to consider before installing an income suite in your home or property to ensure that you and your tenants have a positive experience.
1. Do you want to be a landlord?
Whether your plan is to have a long-term or short-term rental, being a landlord requires work and effort. Plus, a landlord’s duties often come at short notice or inconvenient times. Tasks can include screening potential tenants, performing regular maintenance work, handling repairs, and dealing with disputes or rental payment problems. Think about whether you are willing to put in the work yourself or if you might prefer to hire a property manager to care for your rental management duties.
2. What are the laws regarding landlords and tenants in your area?
Familiarize yourself with the laws governing residential tenants and landlords in your area. By knowing your rights and those of your tenant and understanding each person’s obligations, you can start the landlord-tenant relationship off on the right foot, avoid missteps, and have a plan in place for dealing with any potential disputes or legal issues.
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3. How will rental income affect your taxes?
Rental income can be a great way to increase your household revenue, but it’s not “free” money. The rent money you earn is subject to income tax. When you file your taxes, you can deduct from your rental income expenses incurred, such as repair costs, operating expenses, and utilities. You should also be aware that capital gains tax may apply if you sell your home, depending on how much rental income you earned while you owned it.
4. What will you be giving up?
Installing an income suite in your home or property may mean giving up more than just extra living space. Having tenants may also mean giving up a portion of your privacy, storage space, and perhaps even some peace and quiet. Consider how having tenants within your property may affect your daily life, and make sure you can live with the inconveniences that may be involved.
5. What are your local ordinances?
Before drawing up plans, research your local zoning laws and building codes. Some municipalities do not allow for certain types of accessory dwelling units, and many have very specific requirements on what constitutes a legal suite.
Your local zoning office can supply you with your jurisdiction’s requirements on things like ceiling height, windows, fire safety, and emergency exits. Make sure you know what you can and can’t do before you apply for building permits.
6. How much will the project cost?
Installing an income suite is a major project that can take a significant amount of time and money. Expect to spend anywhere from $40,000 up to $150,000 or more, depending on the size of the space, whether structural work is needed—such as digging out and underpinning a basement—and whether the suite is a standalone structure or within an existing home.
Resist the temptation to take shortcuts to contain costs. Protect yourself and your future tenants by including the time and money in your budget to do everything legally.
7. How will you access shared utilities?
Many houses have utility access in the basement, which could be a problem if you’re planning on renting the space. If possible, try to place utilities such as the furnace, electrical panel, and water shutoff in a shared space outside of the rental unit so that maintenance tasks and emergency work can happen without having to coordinate access to the unit with the tenant.
8. Will you share an HVAC system?
While most building codes allow for a single furnace to heat an entire house with more than one dwelling unit, you might want to consider installing a separate HVAC system for each unit. Sharing air ducts will likely mean also sharing cooking smells, scents, dust, and noise. Plus, having one thermostat controlling both units may be problematic if you and your tenants have different preferences for temperature.
9. Will you hire an architect or a contractor first?
If contractors in your area tend to book up quickly, you may be tempted to find one before you get an architect to draw up the plans. But hiring an architect first is almost always the wisest course, as the money you spend upfront for an architect can be balanced out by bids from builders that are more accurate and easier to compare.
If you’re not interested in bidding out your project, consider working with a design-build firm. By hiring an architect and contractor at one firm, it may also help smooth the permit and inspection processes.
10. If you were your tenant, what would you want?
Not only do you want your rental unit to be up-to-code and above-board, but you also want it to be comfortable and a pleasure to live in. Long-term tenant
turnover zaps rental profit and adds heaps to your workload, so once you find quality tenants, it’s ideal when they stay a long time.
As you design your income suite, think about how you would use the space if you were living there. For example, if the kitchen area is limited, would you rather an 18-inch stove and 24-inch fridge, or vice versa? If you only had room for either a dishwasher or a laundry machine, which would you choose?
Article provided by Bob Villa. Written by Jahleen Turnbull-Sousa.
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In 2004, I was living in NYC when I decided to start a new career. To identify potential business opportunities, I thought about some of the more frustrating experiences I’d had. I quickly narrowed the list to buying investment properties.
The problem was that all real estate agents could do was send me MLS data sheets for the properties I selected; no analytics, processes, or services. I had to do everything myself. This was time-consuming, and I made frustrating mistakes that cost me time and money to correct later.
So, there was a business opportunity. Now, I need to know where to create this business (not New York or New Jersey).
How I Did My Analysis
I started researching how retail store chains select locations for new stores. Based on my research, I determined the sequence of events necessary for success, as shown in the chart.
My first decision was location. Based on my research, I selected Las Vegas.
The next step was to determine the right tenant pool segment to target. This step is crucial because the only way to have a reliable income is if reliable tenants continuously occupy the property. A reliable tenant stays for many years, always pays the rent on schedule, and takes good care of the property.
Based on my experience with rental properties and what I learned from others, reliable tenants are the exception, not the norm. Because my clients and I plan to hold these properties for many years, we will need multiple reliable tenants throughout the hold time. The best way to increase the chances of always having a reliable tenant is to purchase properties that attract people from a segment with a high concentration of reliable people.
Therefore, my task was to find a tenant segment with a high concentration of reliable tenants.
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As an engineer, I used the standard approach of analyzing data. I tried various (paid and free) data sets and wrote a lot of software, but (I would be embarrassed to tell you how long I persisted) I finally decided that classic data analysis would not work. The fundamental problem is that humans do not behave algorithmically. So, I ditched this approach.
Next, I decided to mine historical rental data to understand past tenant behaviors. I downloaded about 10 years of MLS rental history data and started over. I tried many things (that failed), and then I plotted monthly rent versus length of stay.
The result was similar to the chart, showing a strong correlation between how long a tenant stays in the property and the amount of rent. This was the starting point I had been searching for.
I investigated the segment of tenants who stayed over five years, converting the low and upper rent range of properties they occupied to approximate gross monthly income using monthly rent/30% = gross monthly wage.
I next interviewed property managers and cruised job boards to determine probable jobs based on gross monthly income. By doing this, I concluded that people earning below a certain wage tended to have lower-skilled jobs, which made them vulnerable to layoffs during economic downturns. Therefore, I raised the lower-income threshold above this wage.
I next looked at the upper-end income range and determined that jobs above a certain wage were primarily administrative. These workers would also be laid off during economic downturns. So, I lowered the upper-income threshold below this wage level.
The result was a narrow wage/rent range that I believed to have secure jobs due to the nature of their work, as shown in the chart.
Each tenant segment has specific housing requirements and is unlikely to rent a property if it does not meet all their requirements. So if you buy a property that matches the housing requirements of a specific tenant segment, most of the applicants will be from that segment.
Creating a Property Profile
To determine the characteristics of properties that would attract my target tenant segment, I used data analytics to determine what and where they rent today. From this, I created what I refer to as a property profile.
A property profile is a physical description of the properties that this segment is currently renting. It has at least four elements:
- Location: The locations where significant percentages of the target segment are renting today.
- Property type: What type of properties are they renting today? Condo, high-rise, multifamily, single-family?
- Rent range: What the segment is willing and able to pay.
- Configuration: Two bedrooms, three-car garage, large backyard, single-story, two stories?
I ran correlations between properties identified by the property profile and actual historical rental data and found a high correlation between the two. After so long, I thought I had what I needed.
And then reality came crashing down.
The issue was that numerous new listings entered the market daily, and the most desirable properties often went under contract within two to three days. This left us only 24 to 36 hours after a property was listed to identify it as a potential option, evaluate it, gather analytical information, and submit an offer.
Doing this process manually for hundreds of properties each day was impossible. So, once again, I turned to data analytics.
Our Data Mining Engine
I’ve worked on data mining engines for investment property selection since 2007. All the algorithms I tried were similar to what Rentometer, Zillow, and Opendoor were using, which was not nearly good enough to make purchase decisions.
Finally, around 2015, I discovered a very different methodology to find good properties. I am still enhancing that software to this day.
Our data mining engine architecture is illustrated here.
After years of improvements, the engine can now find the small number of potential investment properties from among thousands in less than five minutes.
However, data analytics can only go so far because software only deals with data, and we are dealing with humans.
I next put together a team and processes that took the output of the data mining engine and selected properties that matched individual clients’ requirements. These properties are then rigorously evaluated by a team of experts, as illustrated in the chart.
Only if a property matches the client’s requirements and passes evaluation by multiple team members do we send the client a property report containing the analytical information they need to make an informed decision. Due to our software, processes, and team members, we can evaluate numerous properties in a single day and present our clients with actionable information on properties that match their individual profiles within that same day.
Our clients feel our data analytics and processes are effective.
Final Thoughts
Data analytics and processes are the cornerstone of our business. Without data analytics, we could not find the properties needed to meet our client’s specific financial goals. Also, we could not evaluate properties fast enough to make offers before they were gone.
Provided by Bigger Pockets. Written by: Eric Fernwood
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Every new year we all want to focus on some level of change. Maybe it’s to lose weight, read more books, be more active, or grow your business.
Hey, we are right there with most of these people! But over the years we have learned various ways that work well for us and it’s not by creating overzealous and rarely achievable resolutions.
In this episode we are connecting some real-life habits that have helped us in our personal lives which have automatically transferred over to boost our professional focuses as well.
We use common examples for each of the tactics and how they can help landlords achieve organization, strategy, confidence, and growth in their rental property business.
Here is a quick summary of what we discuss:
We talk about intentions and how small actionable steps can help you realistically reach goals you have set for yourself, either personally or professionally.
Then we discuss how decision-making and the choices you make affect the way you achieve those goals. But also, those choices are necessary and if the results don’t work out as planned, you have to adapt and pivot by using those results as a guide on what to or not to do.
The conversation then goes into learning to be flexible, being organized and ways to create more time so you can work on your goals.
Maybe you need to hear this, maybe you’re doing ok but can use a refresher, regardless, we are here to walk you through making this new year, develop a new landlord mindset!
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In recent years, emotional support animals (ESAs) have become an increasingly important part of the administrative tasks involved in managing a rental property. As more and more tenants bring ESAs onto the property, landlords need to become more aware of the emotional well-being of residents and the need for a structured and equitable ESA verification process.
This post covers the evolving landscape of ESA verification and explores how pet management software can revolutionize the verification process while ensuring fairness for all residents.
Understanding the Importance of Fairness
When it comes to support animals, fairness isn’t just a moral obligation; it’s a legal requirement. Treating all residents equally (whether they present with support animals or not) is important to ensure that everyone is offered equal opportunity to housing under the law. Federal guidelines provide clear and standardized procedures for ESA verification. Ultimately, these rules serve to benefit both residents and property managers by creating a level playing field and protecting landlords from potential legal disputes.
Fairness also has a tangible impact on resident satisfaction. When residents feel that their ESA requests are handled fairly and consistently, they are more likely to be content with their living situations. This, in turn, leads to a more harmonious community, reduced conflicts with management, and a more productive rental experience for everyone involved.
Respecting HUD Guidelines
The U.S. Department of Housing and Urban Development (HUD) plays a pivotal role in providing guidelines for ESA verification in rental properties. HUD’s guidelines are designed to ensure that individuals with disabilities have equal housing opportunities, including the right to keep an ESA in their homes. Property managers must adhere to these guidelines to both protect themselves from legal issues and promote equality among all residents.
A key aspect of HUD guidelines is recognizing the importance of emotional support animals in providing therapeutic benefits to individuals with disabilities. Property managers should accept reasonable accommodation requests from residents with disabilities and refrain from imposing unnecessary barriers. By understanding and implementing HUD guidelines, property managers can align their practices with federal regulations and maintain an environment of fairness and inclusivity within their rental properties.
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Confidentiality and Privacy
Respecting the privacy and confidentiality of all residents is an important part of the ESA verification process. This respect upholds ethical standards and protects against potential legal issues. Residents have a right to keep their ESA-related information private, and property managers should ensure that their application information and any related documentation are handled discreetly and securely.
During the verification process, any questions related to an individual disability should be avoided as they can infringe upon a resident’s right to privacy.
The Role of Pet Management Software in Ensuring Fairness
More and more property owners have chosen to invest in pet management software to ensure a fair and compliant ESA verification process. The right applications can streamline the entire process, reducing the burden on both residents and property staff. Additionally, many platforms offer several exceptional features right out of the box, such as centralized documentation storage, communication tools, and automation of administrative tasks. By providing property managers with a structured, consistent approach to ESA verification, pet management software minimizes the risk of discrimination and ensures that all residents are treated fairly and equally.
On popular application, OurPetPolicy, is a leading solution in helping property managers ensure fairness in ESA verification.
Bottom Line
The importance of following federal guidelines and ensuring fairness in the ESA verification process cannot be overstated. Ultimately, it’s up to property managers to implement approaches that allow for a more inclusive, transparent, and harmonious living environment for all residents while avoiding unnecessary legal complications.
That’s where ESA verification platforms can help. OurPetPolicy in particular is an ideal solution that allows landlords to confidently manage ESA accommodation requests while upholding the highest standards of fairness and compliance. Additionally, OurPetPolicy’s proprietary technology helps to streamline the verification process while also providing centralized documentation storage, resident communication channels, task automation, and many other useful features.
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You’ve asked yourself this before, and we all have. It’s the age-old question: Is a stack of cash today better than a steady but smaller stream of income?
Investors have struggled with this concept forever, and the BiggerPockets forums show evidence of that. Daily, investors post, wondering if cashing in their equity is the best play or if they should play the long game.
There truly isn’t a wrong answer, though I’ll admit, I am quite biased, especially after years of conversations with chronic flippers who are filled with regret about not having kept some of their projects.
A Look at BRRRR vs. Flipping
BRRRR and flips are really two sides of the same coin—the real estate investing coin. Of course, much of this is market- and property-specific, but the main differences are that with flips, you might spend a little more on higher-end finishes than you would a BRRRR.
Either way, you are forcing equity in your property and addressing deferred maintenance and upgrades in the hopes of profiting at some point. If you plan to flip and are in a B neighborhood, maybe you spring for the stone counters and tile accent wall in the bathroom. If you are going to rent in a B neighborhood, maybe those upgrades are unnecessary. Besides, if you rent the property for 10 years, you can always add those upgrades later if and when you decide to sell.
Yes, sure, the BRRRR, if done properly, will allow you a trickle of funds indefinitely, whereas a flip is once and done. However, at the end of the day, they’re both strategies for quick(er) cash and (hopefully) leverage. You are forcing equity and hoping to leverage that profit.
How to Decide
So, how do you decide to sell or keep the property? Here are some factors to consider.
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The Cash Flow
First, my rule of thumb is that an ideal BRRRR will have you all in at 75% or less of after-repair value (ARV). If you can create at least 25% equity, you should be able to refinance the property and get close to 100% of your money back out.
It doesn’t always mean that you should sell if you have less, but you will likely leave some of your own cash in the deal. I’ve done that many times before and been perfectly happy with the results—but I planned on this as a possibility going in. Some people won’t keep a property if they have to leave any cash in it. That’s not a dealbreaker for me, and unless you have unique circumstances, it shouldn’t be the only criteria you consider either.
If you can BRRRR a property and it will more than pay for itself every month, that’s a good start to deciding if you should keep it. The monthly cash flow that you are willing to accept is totally up to you, but my market is an aggressively appreciating market, and I’m happy to ride that wave if someone else is footing the bill, even if I’m not making much every month.
If you are in a C area, you’ll need decent cash flow to weather the inevitable storms that come from holding those properties. If you are seeing regular, reasonable appreciation and rent increases, it should be less important that you fully cash out or that the property performs like a dream right away. That property will become more efficient over time and can eventually become your cash cow.
If you are in a market that traditionally sees lower appreciation, say the Midwest or parts of the South, selling might be a better option. This is because the velocity of the equity you have could be put to better use in another project (this is the leverage piece I mentioned).
If rents average only 2% increases every year, and appreciation is historically similar, or barely keeping up with inflation, you can and should take that cash and do much better in many other ways than keeping it in a property and renting it out. Just keep in mind that you need to budget for the taxes you’ll pay on that income.
I find it fascinating, and it really speaks to how dynamic real estate investing can be, that there are so many people doing one thing—and doing it really well. However, they have very limited knowledge of other types of investing within real estate, as well as the pros and cons of each.
I’m talking about chronic flippers. I’ve lost count of the number of professional and truly talented flippers who have never kept a single property as a rental.
The Taxes
In addition, I know many people who have been writing checks to the IRS for hundreds of thousands of dollars every year because of how much they’ve “killed it” flipping houses. Fast-forward a few years, and they learn about tax strategy and cost segregation, and suddenly, CoC return when holding a rental doesn’t seem anywhere as important as the tax benefits of those paper losses.
Flipping is extremely active income—both literally and figuratively. If you aren’t buying, renovating, and selling properties, you aren’t making money. You are constantly active, and it can be stressful to let up on the gas. The IRS sees it exactly the same way—as an earned income/wage—and you’ll be taxed as such.
It might seem like I am saying that flipping houses isn’t a good idea, which is absolutely not true. If done correctly, there’s not really a much better way to build immediate capital, especially as you are starting out. Also, there are many properties that make for fantastic flips that would be terrible rentals.
There’s absolutely a time and place for flipping houses. Our team works with lots of flippers, both bringing them deals and buying them as turnkey rentals once they are done.
That being said, I think it’s fair to say that everyone reading this article is on BP because they are looking for FIRE and passive income. Flipping houses is, and can be, a stepping stone on that path, but it’s not the destination.
One of the biggest challenges for newbies is wrapping their heads around the tax benefits of buy-and-hold investing. It can truly be life-changing, and it’s nearly impossible to see or understand until you experience it. If you are strictly flipping homes, you’ll never see those tax benefits and are actually creating a higher tax liability for yourself.
Don’t get me wrong—paying a bunch of taxes because you made a boatload of money is definitely not a bad thing. But isn’t paying little to no taxes and making a bunch of money objectively better?
By considering a BRRRR on flips where it might make sense, you are giving a gift of a tiny bit of freedom to your future self. Do that repeatedly, and those tiny future gifts can change your family tree forever.
The Bottom Line
Flipping is truly a great way to build capital and start your real estate journey. However, I would encourage you to change the way you look at BRRRR and analysis if you are looking for long-term wealth and FIRE. That BRRRR might not look like a great deal today, but five or 10 years from now, you are very unlikely to regret keeping and depreciating that asset. You can always sell a property in the future if it doesn’t work out, but once you sell it, it’s gone forever. It might seem counterintuitive, but in real estate, you get wealthy by not selling. Be patient, give it some time, and enjoy the passive fruits of your labor in the not-so-distant future.
Article Provided Bigger Pockets and Written By: Corby Goade Investor & Realtor, Boise Turnkey Investments
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Every landlord is intimately familiar with managing the finances of rental properties. While the allure of valuable tax deductions exists, realizing them can be challenging.
Although practical for general financial tracking, generic accounting tools might not highlight property-specific deductions such as depreciation, repair costs, or travel expenses related to property management. As a result, landlords may inadvertently overlook significant savings during tax season.
Enter specialized accounting software —platforms tailored to streamline the financial management process to ensure landlords fully leverage all available tax advantages.
In this article, we’ll examine how traditional accounting tools can fall short and why specialized software is the key to unlocking these critical tax deductions.
While basic accounting software can record transactions and manage finances, when it comes to maximizing tax deductions, standard tools often don’t account for property management’s unique challenges and opportunities.
Specialized accounting software is more than just another digital tool — it’s a strategic partner for landlords in today’s competitive real estate market.
TRACKABILITY
Specialized software offers a comprehensive platform to monitor everything from rent payments to property related expenses.
AUTOMATION
Specialized software offers automation capabilities tailored for many financial tasks in property management, such as monthly rent collection or recurring maintenance costs. Landlords can set parameters, such as due dates for rent, categorize types of expenses, and even set reminders for irregular property-related costs.
CLOUD-BASED ACCESS
The best accounting tools for landlords today are cloud integrated, allowing access to financial overviews from anywhere.
5 WAYS ACCOUNTING SOFTWARE HELPS WITH TAX DEDUCTIONS
For real estate investors looking to maximize their tax benefits, specialized accounting software can be a game-changer. Let’s dive into the five key ways these tools can help you take advantage of valuable deductions.
1) ENHANCED ACCOUNTING PRACTICES
Beyond simply tracking numbers, landlord-centric accounting software offers a suite of tools that brings clarity to the complex financial landscape of property management by providing landlords insights on potential tax deductions.
2) REAL-TIME FINANCIAL OVERVIEW
A landlord’s financial landscape can shift rapidly. Specialized accounting software offers immediate insights into this dynamic environment, eliminating the need for prolonged setups.
3) EFFICIENT TRANSACTION MANAGEMENT
Handling numerous transactions is an integral part of a landlord’s duties. Specialized accounting software streamlines this process, offering intuitive features that minimize manual oversight. As a result, landlords save time and keep potential tax-deductible expenses from slipping through the cracks.
4) INTEGRATED PLATFORM AND SIMPLIFIED TAX PREP
Juggling multiple financial tasks is a daily challenge. With specialized accounting software, landlords can manage everything in one place, simplifying data management and allowing for a less complicated and more efficient tax preparation process.
5) SCALABILITY WITH DETAILED REPORTING SCALABILITY
As a landlord’s portfolio grows, so must their financial tracking system. Specialized accounting software rises to this challenge, ensuring growth doesn’t compromise clarity. With in-depth financial reports and side-by-side comparisons, landlords can gain invaluable insights.
FURTHER INSIGHTS: BEYOND BASIC TAX DEDUCTIONS
The initial benefits of specialized accounting software for landlords are clear. In this section, we’ll venture beyond primary tax deductions to uncover how these tools can become integral to managing a successful rental property business.
TAX CODE UPDATES AND REAL-TIME ADJUSTMENTS
The prospect of an audit can be overwhelming for landlords, especially when dealing with extensive portfolios. This is where specialized accounting software becomes indispensable. Landlords can swiftly and securely archive essential paperwork such as receipts, invoices, or expense reports. Having a well-organized and easily retrievable record system can distinguish between a stress-free experience and a logistical nightmare. Real estate and rental income tax regulations are in a constant state of flux, challenging landlords to stay abreast of these changes. Specialized software aids in aligning with up-to-date tax codes.
Providing timely alerts ensures that landlords remain aware of significant tax amendments, enabling them to adapt their financial strategies accordingly and safeguard their profits.
ADJUSTMENTS AUDIT TRAILS AND PROTECTION
The prospect of an audit can be overwhelming for landlords, especially when dealing with extensive portfolios. This is where specialized accounting software becomes indispensable.
Landlords can swiftly and securely archive essential paperwork such as receipts, invoices, or expense reports. Having a well-organized and easily retrievable record system can distinguish between a stress-free experience and a logistical nightmare.
Looking for the next level of landlord software before handing off to a property manager?
Hemlane is a software that is built to grow with your needs as a landlord.
For a minimal amount, there’s a really good basic package but what we love is the option to upgrade and add 24/7 maintenance management on.
Hemlane offers complete financial support as well. You can link multiple bank accounts for direct deposit rent payments, add automatic late fees, sends reminder notifications to your tenants, and has a detailed profit and loss statement that can includes automatic and manual uploads of income and expenses.
It gets better! If you reach a place where you are ready to hand off management to a property manager, Hemlane has that too under their “Complete” option.
THE BROADER SIGNIFICANCE OF SPECIALIZED SOFTWARE
It’s essential to zoom out and recognize the overarching value such platforms bring to the property management world. When navigating the complex world of property management, landlords need tools attuned to their specific challenges.
The evolution of such software paves the way for landlords to confidently approach their financial management backed by timely insights, automation, and adaptability. With rental portfolios ever expanding and the property management industry becoming more complex, relying on specialized tools is no longer just an option — it’s a necessity.
Article provided by GEMMA SMITH Entrepreneur & Property Manager, Rent Magazine
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First, we would love to thank all of you who submitted questions via email. We received many and selected the ones we knew we could answer in about 5 minutes or so. Please feel free to send us a question to be asked in a future episode! Our emails are in the “LINKS” section below.
This episode includes questions from 5 listeners. One is a two-part question, so we actually are answering 6 questions in total that cover the subjects of:
- Rent discounts for seniors and single moms, are they protected from Fair Housing or can another tenant claim agism/unfair treatment when not receiving a discount too?
- How to properly save cash reserves if you are discounting rents for individuals?
- Operating manuals and criteria, how to handle if there are multiple properties involved?
- Old school landlords who take checks vs ones who use landlord software, is it too late?
- What is the most important thing to focus on in the business as a landlord?
- Tips on working with rental properties together with your spouse? Apparently, we make it look easy! 😅
This was a fun episode with several subject matters to cover!
LINKS
👉 TOGGLE Insurance
Your Landlord Resource has teamed up with Toggle, a division of Farmers Insurance that offers competitive pricing of renters insurance for tenants.
Policies can start as low as $5 a month!
Copy and share our link with your tenants to get them started: http://go.gettoggle.com/SH1E
Download this PDF to present to your tenants with your renters insurance request! Toggle Renters Insurance Flier.pdf
👉 Episode 36: ESA Insights and Pet Rules, an Interview with Logan Miller of Our Pet Policy
👉 Episode 28: The Cash Reserves Blueprint: Protecting & Expanding Your Portfolio
👉 Episode 6: Creating Standard Operating Procedures For Your Business
👉 Episode 4: The Importance of Rental Property Inspections
👉 Hemlane is a software that is built to grow with your needs as a landlord.
For a minimal amount, there’s a really good basic package but what we love is the option to upgrade and add 24/7 maintenance management on.
It gets better! If you reach a place where you are ready to hand off management to a property manager, Hemlane has that too under their “Complete” option.
👉 TurboTenant is a great option for landlords with just a few doors or for those who may be new to using rental property software.
For the most part, TurboTenant’s software is free to use so they are perfect for those on a tight budget.
👉 Fair Housing Institute: Courses to certify you or employees in all Fair Housing laws.
Get 15% OFF all courses! Use code: YLR2023
👉 Purchase our 6-Page Inspection Checklist ($5.00). For properties up to 4 bedroom/4 bath and includes all pertinent areas to be inspected, including the exterior.
To date, this product is the only item we charge for. Help support our site while getting a valuable tool you can use over as many times as you’d like.
👉Help other DIY landlords discover what we have to say… Please leave us a review of our podcast!
On Apple Podcast or ITunes, please scroll to the bottom of our main page (with our logo) and click “Write a Review”.
On Spotify, please click the 5.0⭐ on our the front page of our podcast page.
👉 Join our Private Facebook Group! A space to ask questions and network with other DIY landlords.
👉 Follow us on Instagram, Like us on Facebook
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This week on the podcast we are taking a step back from the educational focus of the Your Landlord Resource podcast and getting a little bit personal.
We have A LOT going on right now, personally, and professionally, so we thought maybe we would share what’s going on!
We are in the process of selling our last single family home rental which will grant us capital to buy the next multifamily. So, we will talk all about that process and the alternatives we have to make a decision on.
In our Sacramento complex, we are pivoting and converting one of our studio apartments from a long-term rental into a mid-term rental. So, we will discuss how that process is going. We will also talk about a potential remodel to a unit that is much needed as well as some other upgrades we are doing to enhance our tenant’s experience.
Your Landlord Resource has been our main focus for the last year so we will tell you about our plans coming up with that little side hustle we got going.
And don’t fret, we have some personal projects coming up that we will bring you in on as well!
Our lives are CRAZY busy with a lot of comings and goings so grab a seat and come hang with us while we fill you in on what makes up our lives!
LINKS
👉 Kwikset Halo Smart Lock: Wi-Fi enabled (no hub required), you can use the Kwikset app to remotely lock and unlock, share guest access, view activity history, and create up to 250 codes. We purchased it with the Halifax Interior/Exterior Passage Doorknob.
👉 Kwikset Re-key Set: This SmartKey system has been a lifesaver at unit turnovers and will continue to be so, even with the Kwikset Keyless entry systems!
👉 Email us your thoughts! Should we create a course about:
➡️ How to place your ideal tenant
➡️ Creating your operations manuals
➡️ Take marketing photos of your unit like a professional
👉 Stacie@yourlandlordresource.com
👉 Kevin@yourlandlordresource.com
👉Help other DIY landlords discover what we have to say… Please leave us a review of our podcast!
On Apple Podcast or ITunes, please scroll to the bottom of our main page (with our logo) and click “Write a Review”.
On Spotify, please click the 5.0⭐ on our the front page of our podcast page.
👉 Join our Private Facebook Group! A space to ask questions and network with other DIY landlords.
👉 Follow us on Instagram, Like us on Facebook
👉 Want the podcast link emailed to you weekly? Subscribe to our FREE newsletter, Landlord Weekly!
▪️Landlord Tips ▪️ Early Access to Our Blogs ▪️ Landlord Specific Articles by Other Industry Pro’s ▪️Podcast Links
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The landscape of fair housing has been continuously evolving. One of the emerging focal points is the protection against discrimination based on the “Source of Income.” While not federally recognized under the Fair Housing Act, this classification has steadily gained traction at state and local levels, expanding the purview of housing rights.
Defining “Source of Income”
In the realm of housing discrimination, the “Source of Income” pertains to the origin of a resident’s lawful earnings or funds. This can include earnings from employment, pensions, or other regular payments, but notably, it frequently involves rental assistance programs or housing subsidies such as Section 8.
Although it’s not yet a federal mandate, many state and local housing laws and ordinances have recognized and added it as a protected category.
Implications for Property Managers and Landlords
For those managing federally assisted housing programs, such as 202, 811, or tax credit properties, it’s often mandatory to consider housing subsidies as a valid source of income. This means refusing a tenant on the grounds of them receiving rental aid can have legal repercussions.
However, if a property doesn’t fall under these categories, it’s paramount to delve into local city or county regulations. A deep understanding of local ordinances is essential to ascertain whether “Source of Income” is protected in your jurisdiction.
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Resident Income Screening in the Context of “Source of Income”
When screening potential residents, many property managers and landlords have set income criteria that applicants must meet. When “Source of Income” is protected, this screening process requires nuanced handling. The focus should primarily be on the tenant-paid portion of the rent. Managers need to:
- Ascertain the amount of rental assistance the applicant receives.
- Determine the gap between the assistance and the market rent of the property.
Upon obtaining these numbers, they can be juxtaposed against the property’s income standards to ascertain eligibility.
The Rise of “Source of Income” as a Protected Class
Recent years have witnessed a surge in advocacy for “Source of Income” protection. Various legislative initiatives have been proposed to elevate its status at the federal level. This momentum is largely attributed to the pressing challenges of housing affordability and accessibility. Incorporating “Source of Income” as a protected category can alleviate these challenges, enabling a broader segment of the population to improve their housing conditions.
In Conclusion
The intricacies of housing laws go beyond federal mandates. For property management professionals, staying updated with state and local ordinances, along with training, is as crucial as understanding federal regulations. The categorization and acceptance of various income sources can profoundly impact resident selection and rental operations, underlining the importance of comprehensive knowledge in this domain.
Thank you to The Fair Housing Institute for providing this informative article! Our readers get 15% off any Fair Housing course by using our special code: YLR2023
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