There are a number of reasons why you might consider becoming a landlord in Colorado Springs or anywhere in El Paso County. Maybe you’re downsizing to a smaller property, but still want to maintain your current home for income. Perhaps you’ve found a great deal on an income-producing property and are planning to use the revenue for your retirement. Or you’ve found your dream home with an attached apartment or suite that will help you defray the costs.
Whatever your motivation, here are some critical steps you need to take to minimize hassles and be financially profitable.
Be realistic. Remember that you’ll still be paying the mortgage on your rental property, so you can’t count on the rental income to be pure profit. Be sure to calculate taxes (local and federal), utilities, upkeep, maintenance and insurance as part of your cash outflow. Plus you may have some lag time before you find the right tenants. If you’re relying on the rental income to purchase something in the near future, e.g. a round-the-world-cruise or new car, you may have to wait a while.
Keep scrupulous records. Set up an online system such as Quickbooks or Freshbooks. This will help you keep track of all incoming and outgoing cash flow, as well as create reports that will make your tax preparation much less stressful. It’s also a good idea to maintain a file with all the paper receipts, or scan them into a device.
Consult with a professional. Even if you’ve done your own taxes and accounting for years, you’ll want to meet with an accountant or tax attorney to learn the legal do’s and dont’s and ensure that you are financially suited to handle the task of being a landlord.
Hope for the best, prepare for the worst. You may not be able to find a tenant for months. Rent payments may be consistently late. Your renters may damage the property or hold loud parties. Or you may have dream tenants. Just remember, this is a business proposition, so try not to become emotionally involved.
Understand your tenant’s rights as well as your rights as a landlord. Consulting with an attorney who specializes in property leasing will help prepare you to deal with any situation that may arise. Be sure to put all your expectations (date rent payment is due, additions made to the property, noise level, best time to contact you) in writing as part of your lease agreement.
At Springs Homes we specialize in Colorado Springs Property Management, we work with properties not only in Colorado Springs but anywhere in El Paso County. We not only manage properties but we can also help investors find properties that meet their needs. We are a great solution for those that want to landlords but are weary of the hassle and the liability. Our investors simply leave the hassle to us.
The preceding information is deemed to be reliable, but is not guaranteed. If you are thinking of purchasing rental property in the Colorado Springs area, be sure to consult with your tax professional or tax advisor for specific information pertaining to your financial situation.