Why real estate investment is so popular? One of the reasons is passive income that is easy and keeps coming while you are sleeping.
If you have an extra room or extra house, you have the basic foundation for extra income. Some landlord might have a negative experience from renting out their property. Knowledge is the key. Learning how to be a successful landlord is necessary.
It’s very important to screen the potential tenants before renting out your property. Check their credit score, criminal background, employment status, bank statements, income, and prior renting history. And also verify their references.
If everything looks fine, writing an effective lease or rental agreement is vital. It will protect both the tenant and the landlord. Collecting a reasonable amount of security deposit help guarantee the condition of the property when returning to the landlord.
Marking on move-in / move-out checklist is essential to decide how much deposits should be returned to the tenant. Remember to provide repair or cleaning receipts on those deducted amounts of the security deposit, and return the remaining deposit to your tenant within 21 days of vacating!
A late rent penalty gives tenants motivation to pay on time. In case of failure to pay rent, violating terms within a rental agreement, overstaying a lease, and illegal activity, an eviction can be triggered by a landlord. A landlord must follow their state’s eviction procedure laws and can’t physically remove a tenant from their property.
If you have a good hand on operating your rental business, consult your accountant how to minimize your tax from rental income.
For tax obligation, advance rent is taxable in the year received. A rental less than 15 days is not taxable. For deduction, you need to save receipt of repair and make record of deductable activities. If your modified adjusted gross is $100,000 or less, you can deduct rental loss up to $25,000.