Maintaining a rental property can be a lot of work, but it’s worth it in the end. By following these tips, you can keep your property running smoothly and avoid any major problems. Regular maintenance and repairs are key, as is developing a good relationship with your tenants. If you’re prepared for anything, you’ll be able to handle any situation that comes up.
1 – AB 1482 Exemptions
AB 1482 is a rental control law. It puts a cap on annual rental cash flow that you can incur. It impacts two important measures of a real estate investment’s success: cash-on-cash return and cap rate.
To calculate:
Cash-on-cash return: (net operating income + depreciation) / cash invested.
Cap rate: net operating income / property value.
In 2017, the state of California’s standard business tax deduction is $4,236 for a full-time property manager. On a $1,000,000 house ($750 per unit) that generates an NOI of $50,000/year, this would mean a tax deduction of $2,118/year. So what do these two deductions have to do with AB 1482? The standard business tax deduction is taken against total income, which includes no longer taxed depreciation. And under AB 1482, this deprecation has now been capped to $1,000 per year.
This means that in the above example, your cap rate calculation will be distorted because you’re still being taxed on the $49,000 of NOI generated by the house, which doesn’t include the full impact of your expenses. AB 1482 has effectively made it more difficult to achieve the 8-10% cap rate returns that are currently achievable in California.
However, there is a silver lining. The state of California provides exemptions to AB 1482 for individuals managing four or fewer properties that are not their primary residence or any property owned by a Section 1031 like-kind exchange. This means that the rental houses you manage for yourself, your friends, or your family members don’t count toward the four property cap.
2 – Landscaping
When it comes to maintaining your rental property, landscaping matters. A well-maintained lawn will make your rental look good, which in turn will make it easier to rent out. It can also help you maintain a good relationship with your tenants, who will be more likely to come to you if there’s a problem with the landscaping. If there’s ever the chance that your tenants could see your garden or yard from their windows, then you want to make sure to keep it looking nice. You should also make sure that no part of your property is a safety hazard. This could include anything from a pile of old firewood to overgrown trees.
3 – Maintenance Tips
The lack of maintenance and repairs is the main reason why properties go into disrepair. Routine inspections can help to catch problems before they become big issues. Make sure to give your tenants plenty of notice when you’re planning to come by for an inspection since they might be in the middle of something you can’t see.
Maintenance tips to consider when trying to maintain your rental property include: making repairs before they become major, using technology for items such as water usage and energy costs, communicating with tenants about repairs, preventative maintenance, and having a maintenance plan in place.
Preventative maintenance is one of the easiest ways to save money when it comes to maintaining your rental property. A good way to prevent problems with plumbing is by using low flush toilets; they use less water but are still highly effective. Replacing old, inefficient lightbulbs with newer ones that use less energy is another way to save money.
4 – Tenant Relations
It’s important to have a good relationship with your tenants, so if they bring up any problems, you want them to feel comfortable doing so. If you’re aware of a problem before your tenant tells you about it, then there’s a much better chance that you can find a solution quickly. Tenants often take it personally when their problems aren’t addressed, so make sure to be prompt about it. When it comes to communicating with your tenants, the main thing is consistency. If there’s some sort of process or procedure in place for repairs or other issues, then you should always follow that process. When possible, communicate in writing; it’s more effective than verbal communication. Make sure to keep records of every interaction with your tenants.
Source https://unsplash.com/photos/PGRlGx_6Ehk
Maintaining a rental property can be a lot of work, but it’s worth it in the end. By following these tips, you can keep your property running smoothly and avoid any major problems. Regular maintenance and repairs are key, as is developing a good relationship with your tenants. If you’re prepared for anything, you’ll be able to handle any situation that comes up.
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