When you purchase a new rental or commercial property with investment intent, you must allocate a portion of the purchase price to improvements and the remaining amount to land. The reason for this practice is that you cannot depreciate land, only improvements. This makes sense because dirt lasts forever.
Depreciation is the reduction in value of a property over time due to the particular wear and tear on the asset. Residential properties are depreciated over 27.5 years, while commercial properties are depreciated over 39 years.
This reduction in value is a current expense, yet no money comes out of your pocket. Sounds like a pretty awesome deal, right? You get to reduce your reported income by your annual depreciation expense without actually paying for anything!
But what is depreciation really? Do you think the IRS, our favorite government agency, would let you have it that easy? I’ll give you a hint: the answer starts with the letter “N” and ends with “O.”
As a rental property owner, you must have a solid understanding of your liability in regards to maintenance. You can be named as liable for negligence if you failed to keep the environment safe, if you knew of a hazard and didn’t take reasonable actions to prevent injury, or if that hazard caused damage due to your inaction. As such, approach your maintenance liability decisions as though you might present your decisions before a judge if a lawsuit developed.
Another factor to consider is that statutes may overlap or conflict with civil or criminal laws, and so it is always better to be safe than sorry. Even if the problem is caused by your tenant and they are responsible for the “damages”, you should be proactive and take care of the repair, then bill the tenant for their responsibility. This could cost you some money, but in the long run, the risk is not worth a possible lawsuit.
Five Simple Steps to a Rent Ready Home
Many property managers and landlords believe that a quick sweep through the home prepares it for a new resident, but this is not enough as they are missing some crucial steps. Here are five simple steps to ensure that your home is in tip-top shape and ready for a new occupant.
Step One: Re-key the Locks
Yes, you collected the keys from the resident, but did they make spares? All outside locking doors should be rekeyed between each resident. Additionally, rotate the codes on any garage doors, access gates, exterior property gates, and mailboxes.
As a homeowner, you know that preventative maintenance is essential to keeping your property in good condition — and it’s even more important when you own or manage a rental property. Your tenants can’t be expected to stay on top of all the home repair and maintenance tasks, so there are several items you should check off your rental management to-do list before winter sets in (even if your rental is in a warmer part of the country).
Don’t wait until something is broken on your property to fix it. Catching a problem and fixing it when it’s small can save you thousands of dollars down the road. As a landlord or property manager, examine your units regularly for these minor fixes and take care of them before they become a huge expense.
As rental markets heat up during spring and summer cycles, a healthy, green landscape can do wonders for attracting new residents.
A lush front lawn or bed of bursting color doesn’t come overnight or only after a few good rains. Getting the landscape in shape takes time, planning and patience – creating a road map for an attractive landscape is necessary long before the grass starts to turn green.
Snow and other forms of precipitation in the Northeast are expected to rival that of a record-shattering year last year as winter gains momentum in January and February. Other parts of the country will be no doubt affected as winter begins to enter its stretch run.
For a home owner, a heavy snowfall can be particularly damaging and dangerous. November’s blizzard in Western New York that posted snowfalls up to seven feet took its toll on numerous homes and businesses. Collapsed roofs from the heavy weight of the snow were among the nearly $50 million in damages reported.
Frigid, blustery weather that has already put parts of the country in a deep freeze is a reminder that the time is now for home winterization. When the mercury drops below 32 degrees, pipes can freeze and eventually burst, resulting in thousands of dollars in damage.
The Insurance Institute for Business & Home Safety (IIBHS) estimates that a frozen pipe that ruptures can cause more than $5,000 in water damage.
Chasing a landlord to get repairs done at a rental home is probably the biggest, most frustrating issue most tenants experience when renting.
You complain, the landlord assures you it’ll be fixed, no one shows up so you complain again, someone shows up but doesn’t fix the problem and the cycle seems to go on and on.
Now that Thanksgiving is just around the corner, it’s time to take a moment and think about how winter may affect your property maintenance calls.
According to HomeAdvisor, the most frequent home emergency repair in 2012 has been for appliance repairs. These appliance repairs often spike over the holidays and during cold-weather months, when they get heavier usage.