Purchasing a feasible investment property is just one of the many things you will have to do when it comes to real estate investment. However, the real job lies in the management part. If you choose to do so by yourself, you need to have comprehensive knowledge of what to consider to get the most out of your investment.
1. Maintenance is Crucial
If you own residential property, for instance, proper maintenance involves keeping up with the required legal regulations and health laws. You need to keep your clients not only happy but comfortable enough to share their experience with potential new customers. Maintenance can also involve employing the services of a secondary inspector to give a second opinion on the suitability of your property to client’s needs.
2. Differentiate Improvement Against Repairs
While maintenance is necessary, there are different types of it-categorized mainly as either improvement or repairs. The former involves an additional feature added to the property to improve its appeal or income generating potential whereas the latter consists in restoring a property to its original condition. Both types of maintenance affect your tax liabilities but in different ways. You need to be cognizant of each.
3. Know the Extent of Your Tax Liability
You are an investor, and you own an income generating property. The law requires you to pay taxes. While you might already be familiar with this, you might not know certain loopholes to limit the amount you pay in taxes. For instance, Capital Gains Tax (CGT), the most dreaded tax liability can be avoided if you are disposing of property considered to be your main residence. This is just an example, the situation varies, and different rules apply.
4. Understand the Intention of Your Property
Most investment properties are understood as income earners in the long-term. However, if you have property, you intend to resale in the short-run, the liability involved differ. Such property or properties are treated as a trading stock and the proceeds you get from it are subject to capital gains tax. Knowledge of this difference helps you avoid common property tax pitfalls.
5. Time Your Disposal
If you want to dispose of your property, know when to do it so as to reduce your tax liabilities. Depending on the legal stipulations of your domicile, the date of accrual may or may not be considered on the day of the sales agreement. If it the deal between you and the prospective property buyer takes place over two years or financial periods, the accrual date may be carried over from the previous year during tax calculations.
Re-investing is one of the fundamental and essential principles to adopt in short term property management. Use proceeds from the previous year to continually improve your property. This widens your clientele base especially if you have a luxury property that many pay to enjoy.
7. Have a Reliable Property Manager
Managing investment property as part of real estate is a diverse field of its own. Chances are high that you might not know everything there is about the industry. In as much as you want to control everything about your property, you need an expert’s guide-a professional with experience. Hiring a property manager may not be cheap but it will save you a lot of money in the long run.
8. Build a Network and Market Yourself
Like any other business, building a good relationship with your customer or client provides a stable platform upon which your real estate investments will thrive. If you have a good network of clients, you nurture integrity in a way that attracts other clients through referrals from your current clients.
Property management is a demanding job which requires not only comprehensive knowledge and discipline but also external assistance. You need to know everything about your property and all the legal implications involved in owning it. Discipline enables you to adopt a consistent and reliable business culture that guarantees financial gains in the long run. Despite having all these attributes, you still need to have a second opinion on your real estate property to improve your odds of success.