Investing in properties and renting them to tenants is a source of income for many people. Throughout the years, investments in rental properties has allowed professionals to take their life easy. Guaranteed returns from a rental property enable the landlords to let go of their worries of the future and have an early retirement.
Having a rental property that is providing regular income means that your life is not totally dependent upon your salary. The income from the rental property makes sure you can afford a day or two off work. But landlords who have invested in a number of rental condos and properties in Edmonton have to go through a lot of work to keep their rental business on track and running smoothly.
Challenges Faced by Landlords
Property ownership does enable people to live a financially free life but it should not be confused with freedom from responsibilities. Being a landlord, you must take care of the property and the tenants. This ensures that your rental property keeps earning for you. There are many obstacles and challenges a landlord has to face in order to keep their rental property functioning and productive.
Anyone who is investing in a rental property doesn’t always buy it because there is a lot of money to spare. Rich people do that and not everyone is rich. Most of the people, who are venturing into real estate investment for the first time, are not able to pay the whole amount of the price in cash at once.
This a challenge faced by almost every first time home buyer. This means that they have to get a mortgage loan from the bank. Paying 20% of the amount as down payment and paying regular mortgage installments is a responsibility for the landlord. So, before you go forward and buy a rental property, make sure you have the security of finances for your rental property. Failing to pay mortgage can have you losing your property. To make sure your property remains yours, you must try to have no vacancy at your rental property. Especially if you are looking for rental condos in Edmonton as they are relatively costlier than other properties. In that case, you must make sure that the property has tenancies and the income can cover the mortgage and property management expenses.
2) Property Management
When trying to invest in real estate, it’s not enough to just buy a property and put it up for rent. It doesn’t even work that way. You wouldn’t even get tenants if your property isn’t managed well. Management of a rental property is the heaviest responsibility that a landlord has to bear. A well-managed property, which has been maintained and has proper living conditions, sees more tenant applications than a property which has not been properly managed or maintained.
If you’re a landlord with a tenant in a rental property, you should be ready for calls in the middle of the night. It could be a plumbing problem or broken heating systems. Adding more properties to this business adds up the responsibilities as you have to separately manage every property and take care of maintenance issues like plumbing and insulation.
3) Getting Tenants and Dealing with Them
Tenants are what influence the management and maintenance of the property. Getting a good tenant who keeps your property as their own is very important. A tenant that causes more damage to the property than weather and normal wear and tear is going to cost you more money on maintenance than what you earn on the rent.
There is a close relationship between a good tenant and the landowner’s peace of mind. A tenant that has constant complaints and demands is a headache. You should screen tenants with great caution and know about their past tenancies. This will help you have references of previous landlords and you can know if the tenant can be a troublemaker.
4) High Vacancy
Tenants are your only source of regular income in the rental property business. If your property doesn’t get tenant applications, you will end up losing your property to the bank. High vacancy in your rental property can cause you to lose money. A vacant rental property is no better than a car bought with a loan and has no fuel in it. It is just sitting there costing you money for no reason. This is the most common challenge faced by landlords and owners of rental condos in Edmonton. Getting regular tenants is important for your property to generate constant profits for your investment. If you are having a shortage of tenant applications, you must try getting more. Hiring a professional rental property manager can remove the hassles as they will advertise your property accordingly and get you all the possible tenancies.
5) Tax Planning
Investing in a rental property does create a new source of income, but it also adds to the taxes you have to pay and the tax returns you have to file become more complicated. If you have bought your property on a mortgage from the bank, the taxes on the interest you pay on the mortgage can be deducted along with the expenses you’ve made on your property. But the amount of rent that you earn from the property is not subject to deduction. As a solution to this, many landlords opt for a heavy size of the mortgage on their property. The more they pay on the mortgage and expenses on the rental property, the lesser taxes they have to pay. One property is not that hard to keep track of but a number of properties make it more complex to track and calculate the taxes. To manage several properties and the tax returns on them, you can use the help of a property management company in Edmonton.
A property management company can help you reduce the struggle of managing a rental property and finding tenants for it as well. If you’re a homeowner who is facing challenges in managing a property and its taxations or if you’re having trouble finding and screening tenants, contact us. We can help by managing your rental condos and properties in Edmonton and make sure you get the expected profits out of your rental property.