If you own an investment property or plan to in the future, you’re probably wondering how best to manage your secondary property. You likely want to ensure it’s well maintained, keep track of all the necessary paperwork and tax obligations, and ensure that it doesn’t become a source of stress or cost you too much money. However, managing a piece of real estate can be tricky. Many details and considerations must be considered when managing your secondary property. Whether you own just one rental home or several properties as part of a larger real estate portfolio, here are a few things you should know before you manage your secondary property.
Know your rights and responsibilities as a landlord
Before you do anything else, you should get to know your rights and responsibilities as a landlord. You don’t want to break any laws inadvertently, and you don’t want to leave yourself open to legal action. Luckily, there are many reputable sources you can turn to for advice. First, read up on landlord laws in your state and province to get a good idea of your rights and what you need to be aware of when managing your secondary property. Knowing your tenants’ rights will also help you better manage the property.
Be aware of the Tax implications
Owning and managing a rental property comes with a few tax implications. One of the most important things to be aware of is that you may be required to pay self-employment taxes on the rental income instead of the standard income tax. Since rental properties can be quite profitable, you’ll want to ensure you stay on top of your taxes. For example, ensure you know if you’re eligible for a stamp duty second home refund. In addition, you can hire an accountant to help you figure out your taxes and ensure you comply.
Be diligent with your research and find reliable professionals
When you’re managing your secondary property, you’ll likely have to engage the services of a few professionals. You might need an accountant, a lawyer, and a property manager, among others. These professionals can help you navigate your rental property’s legal and financial aspects, but you’ll want to be careful about whom you choose to work with. The last thing you want is to deal with an accountant who makes a mistake on your taxes or a property manager who doesn’t adequately screen tenants. While you can’t always pick and choose who you work with, you can be discerning when selecting professionals to help manage your secondary property. It can also help you decide what equipment to invest in. In addition, you can refer to online reviews and see who other investors recommend.
One of the most common challenges of managing your secondary property is keeping track of all the paperwork. You’ll want to ensure you have a system for keeping track of all your rental income, expenses, and documents. Technology makes keeping track of everything much more straightforward. You can sign up for software that helps you manage rental properties, pay bills online, keep track of your numbers, and stay organized. If you sign up for software as a small business, you can also take advantage of tax deductions and credits you may not have known about.
You’re essentially running a small business when you own a rental property. You’ll need to manage your rental property like any other business. Doing so can be tricky, but it’s also a great way to earn passive income and create additional financial security for yourself. Before you begin managing your rental property, you have to understand what that means. You need to know your responsibilities and your options for your property. But once you keep all these tips in mind, you’ll be well on your way to having a successful second property.