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Top Landlording Business Posts Of 2019

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Happy New Year!

I wish everyone a successful and prosperous 2020.  

My previous post described the top five posts for 2019. That list demonstrated that tenant issues are a major concern.  While tenants can certainly cause us some headaches and distractions, we landlords cannot forget that we are in business.  And to be truly successful we have to work on and develop that business.  Keeping that in mind, I thought I would bring you the top landlording business posts of 2019 to help you better your business.  

Is Your Rent Increase Legal?

Landlords! Use House Rules.

What Does Normal Wear And Tear Mean?

Rental Standards

Security Deposits

As always, thanks to everyone out there for reading.  If there is a particular topic you would like me to write on in 2020, please let me know with a comment or an e-mail.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here.  Contact Kevin here.

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Smarterlandlording’s Top 5 Posts of 2019

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It is hard to believe that another year has come and gone. Hopefully 2019 has treated you well and I hope you are having a great holiday season.  As a sum up for the year, I want to share the top 5 posts of 2019 with you.

Looking back, it has been a tough year for landlords. Rent control is making a comeback and with it all sorts of associated legislation is popping up.  It is no surprise then that the number one post for 2019 asked What Is A No Fault Eviction.

Tenants and the tribulations that comes with them took the next four spots.

The second most read post of 2019 was by folks looking for the proper way to evict a tenant if their properties were held in an LLC. 

Of course not every tenant needs to be evicted, some simply will not go when they say they will.  So the number three post explains what to do when a tenant overstays their lease.  Here is a hint, you better have put some policies in place before they moved in.

Coming in fourth are Tennessee landlords looking to include the proper clauses in their lease.  Smarter landlords know that state laws dictate much of what a landlord can and cannot put in their lease.  

Finally, I do not know what you folks have been doing, but the post My Tenant Called The Cops On Me came in fifth.  Hopefully most who read this post did not end up getting arrested.  

Here’s to a happy and prosperous 2020.  Thanks to everyone out there for reading.  I enjoy bringing this blog to you and hope to do a lot more this coming year.

Are Property Taxes Deductible For A Rental Property?

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A landlord has to pay all kinds of taxes, including taxes for property and on income. Property taxes are one of those unavoidable expenses that come with owning property here in the US. So yes, those taxes have to be paid.

The property taxes you pay are however considered an expense that is deductible from the income a property produces for income tax purposes. A simple example will help illustrate.

Suppose you own a house that generates $1,000 per month in rent. Total income for the year (assuming no vacancy) would thus be $12,000. Suppose further that your insurance cost $500 per year, mortgage interest for a loan on the property totaled $4,000 (principal payments are not considered expenses), maintenance and repairs totaled $1,250, property management was $1,250 and property taxes were $2,000 for total annual expenses of $9,000. Thus, $12,000 less $9,000 is $3,000. This $3,000 is your income (aka cash flow or profit) for the property for the year. This $3,000 is the amount used to calculate your income tax.

As this example demonstrates, you do not calculate your income tax based on the total amount of rental income. Instead you are allowed to deduct qualified expenses from that income, of which property taxes are one.

There are other deductions such as depreciation, car mileage and office expenses that come with owning real estate which I did not touch on for reasons of simplicity. Taxes can be quite complicated, so please understand that I am only a real estate investor and not a CPA. Consult a trusted, professional adviser for more advice.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here.  Contact Kevin here.

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Who Should Not Become A Real Estate Investor

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Its the end of the year, the time to reflect on the past and plan for the future.  The time to dream dreams and make resolutions to achieve those dreams.  One such resolution might be to get into real estate investing. There are many who dream of striking it big in real estate, but there are some who should not become a real estate investor at all.  Who could this be?  Read on to find out.

Someone Who Wants To Get Rich Quick

Being a real estate investor is not a get rich quick process.  Instead, it takes time to build wealth with real estate, especially buy and hold real estate. Sure, some quick bucks can be made flipping houses and if you want to get into real estate investing you should consider doing some flips.  But the real, long term wealth is in buying and holding.  The old saying really is true – don’t wait to buy real estate, buy real estate and wait.

Someone Who Wants To Be Hands Off

Being a real estate investor is not hands off.  In fact, the way to earn the best returns is to be very hands on.  Being hands on will likely mean doing a lot of things yourself, at least at the very beginning while you learn the ropes to keep costs down.  Being a real estate investor is more than just buying property. It is about building a business that will enable you to fulfill your dreams.  Even if you choose to use a management company for your investments, you will have to manage the management.  There is no way around it, being a real estate investor will be a hands on process.

Someone Who Wants To Invest and Forget

Real estate investing is not a way to park your money and forget about it.  If you want to do that, you need to find and annuity with a guaranteed return. Real estate investing takes work. Work at finding investments, then managing and maintaining them.  But, because there is work involved, the returns are some of the best you can get.  

Someone Who Does Not Like Working With People

Real estate investing is a people oriented investment.  To be successful with it, one has to work with many different people.  Who are these people? There are property owners, Realtors, tenants, other investors, contractors, bankers, appraisers, accountants and lawyers just to name the ones I could quickly think of.  All of these people are those that you will need to help you make the most of your investment.  You have to be able to work with people as a real estate investor.

Someone Who Cannot Handle Mistakes

Real estate investing involves a lot of moving parts, a lot of different people and has a large learning curve.  Because of these qualities, there are a lot of places to make a mistake and as a real estate investor, you will make mistakes.  If you cannot handle making mistakes, learning from them and moving on the the next investment property, than look for someplace else to invest.

Who then should become a real estate investor?  The answer is those that can and are willing to work towards making their investments be the best that they can be.  If you can learn and adapt (which I think most can) than you can be a successful real estate investor.  So dream big. Start to climb that learning curve and do not wait another year to get into real estate investing.

Readers, who would you add to the list of folks who should not get into real estate investing? Have any thoughts?  Please share with your comments.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here. Contact Kevin here.

Learning About Real Estate

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Real estate investing can make you successful, but it will take a good deal of specific knowledge to get there.  The successful real estate investor has to be knowledgeable about and understand many different items. The list of items is long and includes markets, contracts, taxes, business systems, mechanical systems and most of all, people. The learning never stops and the successful investor never stops learning about real estate.

To learn is why you come to and read this blog.  You come to learn about real estate investing.  You come to understand something that you did not understand before.  You come to find a solution to a problem you have never encountered. You come to learn about a new technique that might make your real estate business run a little more smoothly

Let’s face it, real estate investing is complicated.  To the newbie, it can be overwhelming when trying to understand just how to find and buy that first property or deal with their new tenants. For the more experienced investor, trying to keep all of the moving parts moving in the right direction is a real challenge. It is for these reasons that I write here. It is because real estate can be difficult. I want to share what I know and help others reap the benefits real estate has to offer. I write to help others be successful.  

Would you like to learn more about real estate?  

Would you like to learn why real estate can be such a great investment?

Would you like to learn tips on buying buying that first, second or third property?

Do you want to know where to find that property to buy?  

Do you have questions about financing?

Or, are you perhaps looking for advice on developing your real estate holdings into a business?  A business that will provide you an income and free up your time.

If you are searching for these types of answers, if you are looking for real world, practical real estate knowledge and advice, if you are looking for advice from experience, then please consider purchasing a copy of my book, Advice From Experience To New Real Estate Investors.

I wrote this book to specifically share my knowledge and experience with you. I wrote it because real estate has made me successful and I want you to be as well I want you to learn about real estate from someone who has been there and done it.

Give yourself or someone you know the gift of real estate investing knowledge this holiday season.  Get a jump start on that New Year’s resolution.  Order Advice From Experience To New Real Estate Investors today!

Location – More Than Just Place and Position

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Most are aware of the three most important factors in any real estate deal – location, location, location.  But, many are perhaps not aware of just how many intricacies that location can actually play.  Location means much more to a smarter real estate investor that just place and position.  Knowing these items can really help an investor when choosing where to buy properties.

When thinking about real estate location, most will immediately jump to the large scale positional factors affecting purchase price.  We are all aware that real estate prices are much higher in San Francisco than in Memphis, or in New York City versus Omaha, Nebraska.  Most also understand that the location within those areas can also affect the price.  Real estate fronting on central park will be a bit pricier than something located in Hoboken for example.

National Versus Local

Obviously, place and position, at both a national and local scale, is a major factor affecting the price of real estate.  There are however a number of other items that many may not be aware of which are also affected by location.  These locational items can also affect the numbers on a real estate deal and will therefore affect the price when buying or selling.  These items can be much more subtle and take some very local knowledge of the real estate market.

To highlight my point, there are several examples which exist here in my local market of Memphis, Tennessee.  These examples illustrate the differences between what are termed “sub-markets,” which always exist in the context of the larger real estate market.  How big is a sub-market?  They can range from the fairly large neighborhood or subdivision to the much smaller city block or condo building.  Sub-market size can vary greatly as can the situations found in them.

Sub-Market Differences

One sub-market difference here in Memphis relates to the provision of appliances.  I would be greatly relieved if I never had to supply another appliance in one of my properties again, but the sub-market I work in just will not permit me to do that.  I simply have to provide appliances if I want to have a quick turnaround with quality tenants.

Other Memphis sub-markets are the complete opposite.  In both higher and lower income sub-markets I know landlords who do not supply appliances and seem to do just fine.  Appliances are just not supplied in some sub-markets so tenants expect not to have them.  Or demand for available properties is so high that landlords have the luxury of not having to provide them.  Think of the repairs expenses that I would not have if I did not have to supply appliances!  But on the other hand, think of the difficulties that come with renting those properties and the tenant issues I might have in those sub-markets.  As one might begin to understand, local sub-market knowledge can really make a difference when choosing where to buy investment properties.

Another factor I have noticed relates to repairs.  In some higher end areas around town, I know landlords that require their tenants pay for repairs.  They simply insert a clause in their lease making tenant responsible for anything less that $100, and the tenants sign off on it!  Amazing.  Sounds like a great idea but it is just not something that I could do in my sub-market.  I would never get my units rented as most other landlords do not do make their tenants pay.

Lastly, there are utilities  One has to consider the name that will be on the utility bill.  Will it be the landlord’s or the tenant’s?  It will differ here in Memphis due to sub-market intricacies.  We require utilities to be placed in a tenant’s name so that they are the responsible party.  In other parts of town, that is near to impossible due to the tenant base.  

Understand Your Sub-Market

Location, location, location are the three most important factors in real estate for good reason.  Both large and small scale positional factors come into play in any real estate transaction.  While the large scale factors can be quite obvious, the small scale ones are more easily missed, but they are no less important.  Understanding the sub-market you are investing in is just as important as understanding the larger, area-wide market conditions.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here.  Contact Kevin here.

Subscribe to Smarterlandlording and receive a Free Report: 21 Tenant Screening Red Flags

Can Landlords Require Their Tenants To Pay For Repairs?

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Can a landlord require a tenant to pay for repairs?

Repairs are a constant in the life of a landlord. Things break and need repairs.  The repairs never, ever stop.  Unfortunately, repairs cost money. Some repairs are bigger ticket items like HVAC equipment, but most repairs are the smaller nickel and dime variety.  Either way it adds up.  Can landlords shift some of these costs to tenants?  Can landlords require their tenants to pay for repairs?  If so, should they?  Read on to learn more.

It Is Done With Commercial Properties

In a word, yes.  Landlords can make require their tenants to pay for repairs, even the ones they did not directly cause.  All that needs to be done is to include certain language in a lease, have the tenant agree to that language and sign the lease.  In fact, requiring tenants to make and pay for repairs is quite common with leases on commercial property.  

A residential lease could theoretically do the same thing (as long as there are no local laws prohibiting it).  Or, as I know a few landlords do, a clause could be inserted into a lease that would make the tenant responsible for any repair under a certain dollar amount.  $100 for example.  Sounds easy right?  Why are more landlords not doing this?  Perhaps because making tenants pay for repairs is not so easy to do and it may in fact cost a landlord more later on.

It Is Perhaps Not That Easy

Making tenants pay for repairs, even minor ones, is just not very common in the residential rental market.  The residential rental market here in most of the US has evolved with the landlord responsible for maintenance.  This fact means tenants have choices in the market.  Because they have to agree to pay for repairs before signing the lease, they can search for properties where they will not be responsible for repairs and then choose to live there.  Of course, if a rental market is particularly tight, their options may be more limited.  On the other hand, placing such a requirement in your lease may limit the number of applicants and restrict your ability to rent a property.

Plus, a landlord must consider the incentives created by such a policy.  Will a tenant do the repairs their lease says they are required to do?  Especially when they have to pay for it?  Maybe, maybe not.  To avoid a backlog of maintenance when a tenant moves out, a landlord with such a repair policy would need to be very proactive with property inspections to ensure that everything is being maintained properly.  

Do The Benefits Outweigh The Costs?

So in sum, yes, a landlord can make a tenant pay for repairs, if they agree to do so in their lease.  While this may sound like a great policy for a landlord to enact, I am not so sure the benefits would outweigh the long term costs.

Do you have a policy in your lease where the tenant pays for repairs?  If so, what is it and how is it working for you?  Please share with a comment.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here.  Contact Kevin here.

Subscribe to Smarterlandlording and receive a Free Report: 21 Tenant Screening Red Flags

Best Books For New (And Experienced) Real Estate Investors

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Have a new or experienced investor on your holiday gift list?  Perhaps you just want to hone your own real estate investing skills a bit.  Well, just in time for the upcoming season and the Black Friday and Cyber Monday deals, I have put together a list of Smarterlandlording’s best books for the new (and experienced) real estate investor.

Smarterlandlording.com’s Advice From Experience To New Real Estate Investors – Honest, thoughtful, real world advice for the new real estate investor.  Experience is the best teacher out there.  Learn from my experience to help you build the best business you can.

Property Management For Dummies – A concise and easy to read guide to property management.  Buying the properties is easy, managing them is the hard part.

Every Landlord’s Tax Deduction Guide – It is not what you make, but what you keep.  Learn how to keep more of what you make.

Real Estate Investments And How To Make Them – A very thorough book on all every formula you need to know.  Learn what numbers matter and how to calculate and track them with this guide.  A book I often refer to again and again.

Multiple Streams

Multiple Streams of Income – Real estate provides a great income stream, but having more than one income stream provides security and builds real wealth.

What books are in your real estate investing library? Which books have really helped you? Please share with a comment below.

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Help The People Who Helped You

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The holidays are here.  It is the time of year when things slow down a bit and we reflect on where we have been and where we are going.  We take note of what we are thankful for and share in the joy of giving.  It is a good time to realize that we have not been alone on our real estate investing journey.  To realize that many have helped us and to contemplate how we can help them.  In that spirit, I have jotted down some ways that you can help the people who helped you.

Give A Little

If you can afford it, a little bit extra to your employees or contractors goes a long way.  Cash is great.  But gift cards to Lowe’s or Amazon are safe and secure and are a nice way to say thanks to those who have helped you.

Break Bread

Take folks out to lunch or have a nice catered meal.  Everyone has to eat.  Nothing spreads good cheer faster than good food.

Be On Time

Do your best to get everyone paid in full and on time.  Sure, everyone thinks you are a great person, but they need to eat as well.  They need what they are owed as soon as they are owed it.  Be on time with your paperwork as well.  For example, some may be looking forward to a large tax refund.  Help them receive it by providing them with the required Form 1099 as soon as you can.

Teach

I have found that many who help me are ignorant when it comes to money and money matters.  As investors, many of us have learned a great deal about the workings of money and we should share that knowledge to help others.  It is surprising to me the amount of money ignorance out there, especially when I talk to those who are new to business or new to the country.

Teach these folks how banking works.  Show them that they can cash a check from you at your bank without paying the exorbitant fees of a check cashing store.  Teach them how to save on their income taxes with legitimate business deductions such as milage and work expenses.  Many simply have no idea these things can be dome.  But once they learn it from you, they will teach others and that will ultimately benefit us all.

Be thankful for what real estate investing has provided you and enjoy the benefits. But also take some time to spread the joy this season.  Enjoy the holidays.

Kevin Perk is the founder and publisher of Smarterlandlording.com.  He is the author of Advice From Experience To New Real Estate Investors.  Subscribe to Smarterlandlording here.  Contact Kevin here.

Subscribe to Smarterlandlording and receive a Free Report: 21 Tenant Screening Red Flags

Almost Time For Form 1099

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2019 is almost over.  The new year will hopefully bring good things but one thing it will surly bring is taxes.  As a real estate investor, you have folks, such as plumbers, lawn crews, carpenters, etc., that do work for you.   If you payed any of these folks more than $600 you have to send both them and the IRS form 1099.

I have discussed IRS form 1099 before here.  The thing to understand about IRS form 1099 however is that you have to use a specially designed form.  This form cannot be downloaded and printed from your own printer.  You have to buy them.  This means you need to purchase those forms now.  And since every other real estate investor will also need these forms, you need to buy them now before supplies run out.  These 1099 forms are specifically for 2019 and trust me, they will go out of stock.  So order now.

You only have until January 31, 2020 to send 1099 forms out to your contractors.  That is just over two months away so the time to think about next year’s taxes is now.

Plus, your contractors may be waiting or depending on their tax refund.  They cannot file to get their refund until they get the 1099 form from you.  So be a friend to you contractors and get them their forms early.

You can order your 1099 forms by clicking this link.  Do it today!

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Please help support Smarterlandlording.com by ordering your 1099 Forms by using this link.  Thanks!