“Save Money and Money will Save You”, this famous quote is a perfect fit for landlords. The Landlords hold the responsibility to manage and carry out any repairs to the property. Some expense on these lines is inevitable which the landlord must bear. On one hand, landlords get rent every month but on the other hand, they must bear expenses to manage their property and pay taxes. Property repair needs don’t come knocking on your doors and hence landlords must keep aside certain funds anticipating certain situations where they have to spend some amount towards property maintenance and repairs. This is even so important for landlords who holds a property portfolio. So, the question is, is there any way out for landlords to save some money and still maintain the property in good shape? The answer is “Yes”.
Below are a few tips for the Landlords on how they can save some money without compromising their duty towards the tenants and the property.
1. Selection of a Letting Agency: Many landlords choose to hire a letting agency to manage their rental property/properties. They basically outsource property management to a 3rd party. Letting agency provides various services right from advertising the property for rental to arranging property viewing for the potential tenants. They may also own the responsibility of repairing and maintenance of the rental property. For some reason, if landlords cannot manage the property on their own then they should do some research and try to select a letting agency that has lower service charges without compromising on the quality of the service. Landlords don’t have to accept the complete service packages that are offered by the agency and can also pick and choose only certain services that they cannot manage on their own. With this hybrid way of managing a property, landlords can still offload some of their tasks to the 3rd party and can save money by keeping certain selective tasks with them to manage. But if managing the property from a letting agency is the only option then landlords should put in some groundwork to select the right letting agent that offers services at a comparatively cheaper price.
2. Keep your inventory record updated: At the end of the tenancy period, when the tenant leaves the property, it is expected of them to hand over the property back to the landlord in the same good shape in which he/she had received. Landlords may have to do property repairs for any damages and might have to renovate the property before reaching out to a new tenant. However, if the landlord can foresee these problems and maintain a list of all the accessories and inventory in the house then he/she can refer to that list at the end of the tenure period and rightly claim money for any missing inventory or damaged accessories. It is perfectly ethical and legal to deduct money from the money deposited by the tenant to compensate the losses, provided the claim is backed up with sufficient proof. Lack of proof holds no ground for landlords to claim any money for their financial losses. Obviously, presuming that tenant will agree to your claims without any proof would be a blunder and it will put an added burden on their pockets.
3. Selection of Furniture for the rental property: Some landlords like to put furniture in the property and advertise it as a fully furnished house to get more rent. Although it sounds like a good idea but buying expensive furniture just for the sake of publishing the property as fully furnished overkills the purpose. Landlords should look out for any available cheaper options to buy the required furniture in the property by doing some research and comparing rates from different furniture shops. Various charity shops around the country sell used but good to use furniture and they always come at a cheap price. Buying required furniture from the charity shop will only help to invest too much into physical assets but on the other hand, it will help to attract tenants that can offer better rent.
4. Choose Insurance wisely: Properties are always exposed to various risks, such as damage due to weather, theft and fire are few to name. In the event of any mishap to the property, insurance provides a financial cushion. Property insurance comes in various forms, such as fire insurance, boiler insurance, etc. Also, there are many insurance companies in this sector that have proven track records for settling any claims. Landlords should compare the options and cheery pick the right kind of insurance suitable for them. Landlords should keep an eye on the insurance renewal date as this is something that can be overlooked very easily. Property out of insurance coverage is of no use as a landlord cannot use it to claim any reimbursement for any expenses towards property and have to spend money from their pocket to bear all the losses.
5. Consider hiring an Accountant: Property taxes can be taxing on Landlords especially if they are not good at how the property tax system works. It is not possible to understand every nitty-gritty of the tax system, and things can very easily go out of hand. Although it sounds like an overhead by hiring an Accountant to manage your taxes, in the long run, it can turn out to be beneficial. The rent earned every month is considered as income earned and it plays a part in deciding the income tax bracket of the Landlord. There are many tax-allowable deductions available that Landlords can claim but are not necessarily aware of them. The Accounting expert pitch-in here to provide proper guidance and help Landlords to save on taxes. There are many accounting experts like CoreAdviz who are experts in Accounting and Taxation and provide specialized services for Landlords. The amount you pay for such professional service is minimal as compared to the quality service and benefits you get in return.
6. Managing the rental property on your own: This is one of the best options for saving money for landlords. Letting agencies charge heavy fees for managing the property. For every service they offer they charge fees to Landlords. If total property management is done by the letting agency then Landlords cannot choose the service providers as well. Everything is managed by the letting agency. Sometimes it is possible to cut down on costs by hiring some local service providers or if you know personally any of them. But if the whole thing is managed by letting agency, then the landlords don’t have any say in it. They just need to pay the expenses. The landlords who can manage the property maintenance on their own can save a lot more money. This is possible because some things they can fix on their own if they know how to do it. They can choose the service providers like electrician, plumber etc. Through their local contacts. They can check the rate cards of different service providers and choose the best.
7. Try evading void periods: The void period is the time the rental property is empty between two renters. It is a financial loss for the landlord. As they lose on their rental income for the days the rental property is empty. The notice period can vary from one tenancy agreement to another but it generally tends to be of one month. Hence, Landlords should not waste any time advertising their property for rent once they receive leaving notice from an existing tenant. Landlords should make every day count by trying out every possible option in finding a new tenant. Reaching out to people in their contact, connecting with letting agencies, advertising on property websites are few options available at their disposal. The less is the void period, the more is the gain for property Landlords.
8. Take benefits from Mortgage Schemes: This option is not applicable to every Landlord. If you are a Landlord having a property/properties on the mortgage, then paying a property mortgage is inevitable but can possibly get benefit from various mortgage schemes available in the market. From time to time various banks/mortgage companies come up with lucrative mortgage schemes that offer less rate of interest on property mortgages. Switching to such a mortgage scheme can help you save a big amount of money on paying a mortgage.
Every landlord has a unique case but the above points shades light on general ways where landlords can refer to save some money.
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