You probably didn't see it coming, but now you're a landlord.
Whether you inherited a property or bought a second home and decided to rent it out, being an accidental landlord doesn't make you any less of a legitimate landlord. You now have landlord duties and responsibilities on your hands, which you must take seriously.
One of your duties is rental property accounting. Prudent management of the rental income your property generates is key to being a successful landlord.
Here, we're sharing some landlord tips to help you better manage your finances.
1. Set a Competitive Rental Price
Being an accidental landlord, you may not have the expertise to determine the right rental price for a property. You'll naturally consider what other similar properties in the area are going for or even rely on your intuition.
Whichever rental valuation method you use, the rent must be competitive. Price it too low and you won't maximize your income. Price it too high and it could stay vacant for several months.
2. Bring in Quality Tenants
If you have tenants who do not pay their rent on time, your finances will be affected. There will be recurring property expenses whether it's occupied or not.
As such, if you don't want to have a hard time managing your landlord finances, ensure you're renting your property to reliable tenants. Conduct a thorough tenant screening, including checking credit, employment, and rental histories, before accepting a rental application.
When you have tenants who pay rent on time, you'll be in a better position to keep up with your landlord bills. You won't need to dig into your personal finances or borrow to, for example, pay your vendors.
3. Keep Your Finances Separate
Speaking of personal finances, you should never mix business funds with your personal funds.
Your rental property is like a business entity. Open a bank account for it. Tenants will pay their rent into this account, and you'll also settle expenses from there.
Besides not getting your finances mixed up, keeping a separate account for the rental business makes it easier to do bookkeeping. You'll know how much you've earned in rental income, and how much you have spent on property expenses in a certain period.
Plus, come tax time, filing your taxes will be a breeze, and you'll make the most of landlord deductions since you have a record of all the expenses.
4. Utilize Bookkeeping Software
Keeping track of property finances is no landlord's favorite activity, if we're being honest. Thankfully, bookkeeping software can help make the job easier. It can automate recordkeeping and generate reports for you as needed.
There is plenty of bookkeeping software on the market. Do your research and find one that's tailored for landlords.
From Accidental Landlord to Successful Landlord!
You started as an accidental landlord, but there's nothing accidental about rental property management. It's a brutal world if you don't know how to manage your landlord finances.
These tips will give you a head start, but you can go further and hire a property management company. PMI Wichita is here to handle all your landlord duties. We have experienced real estate professionals on staff who'll ensure your property is profitable.
Contact us to learn more about our services.
