Should You Use Your Rental Properties As An Airbnb

You’ve seen the commercials for things like Airbnb or HomeAway and others. It makes it seem to be a good decision to offer your second home or rental property using their service. Maybe, maybe not. Should you offer your property on sites like those?

How does it work?

Basically, the sites allow owners to offer properties that are Should You Use Your Rental Properties As An Airbnbavailable for rent. Owners set up a profile and list their property. They decide whether to accept or decline a guest, often based on the guest profile.

Sites often offer protection for up to varied amounts in case a guest damages the property. Owners and guests can leave reviews of each other. Payment is made through the sites. Sounds great, and when it works it can be.

When it doesn’t…

Well, you as the owner need to make sure you are insured beyond homeowners insurance. Beyond damages to the property, you as the owner may be responsible for the liability of injuries that may occur.

Laws

Then there are local and state laws about short term rentals can trip you up as well. That extra money you make may just be dwarfed by the fines levied for operating a business in a residential area. This is especially true if your neighbors complain about people coming and going or being noisy, etc.

Another local or state law issue: landlord tenant law. Be careful how long you offer rental terms. In many cases if you rent your property out for a month, you need to go through the eviction process to get a renter out of your property. In the meantime, they are living in your property, rent free, and possibly damaging it.

Do your homework

If you do your homework and make sure you aren’t stepping into a mess and look closely at the profiles of prospective renters, offering your property on sites like Airbnb can be a great way to make some extra money and keep your property rented.

3 Ways To Reduce Your Vacancy Rate

You have a great rental property. You made sure to do all the best updates and the property is in a great location. You’re worried, though, about keeping the property rented so you can pay the mortgage and taxes on it. So what are some things you can do to reduce the chance that you have a vacant property.

Carefully screen tenants

3 Ways To Reduce Your Vacancy RateFirst, be careful about the tenants to whom you rent. Screen potential tenants. Do full background and credit checks. These will give you a good indication about their reliability. Interview them carefully. Be sure to ask for past rental references. Be careful, however, not to ask questions that could be construed as discriminatory. Check their references, and match them to the background reports. Find out what kind of tenant they were: did they pay rent timely; did they cause problems; why did they leave.

Well maintained property

Next, be sure to keep the property well maintained and charge a fair rent. Take care of the landscaping. Provide snow removal for driveways and sidewalks. Make sure that preventative maintenance is done on schedule so systems like the HVAC, plumbing and electrical are in tip top shape. Do your homework about fair rents in your area and keep to that range. A Realtor or property management company can help you with that.

Be responsive to tenant needs

Lastly, once you have a good, reliable tenant, be responsive. If they call about a problem or issue respond immediately. Get someone there to fix the problem. If you’re out of the area, hire a property manager or management company to take care of this. A good company will respond 24/7 365 days a year.

Remember that a happy tenant will stay and become a long term tenant. Take care of your tenants and they will help take care of your property. After all, isn’t that what you got into investment real estate for in the first place?

4 Things You Can Claim As Depreciation When You Have A Rental Property

If you’re new at owning a rental property, you may be finding that all of the rules and regulations, laws and so forth are a bit overwhelming. Add on top of that tax requirements, what you can and can’t write off, how and so on, a new landlord can find themselves spending a lot of time on all those ins and outs.

One of them is depreciation and what you can depreciate.

What is depreciation?

4 Things You Can Claim As Depreciation When You Have A Rental PropertyDepreciation sounds daunting, but basically it’s writing off the cost of an item that will be useful to the property for more than one year. How much and how long depends on several things, but basically if the cost is a one year expense, you write it off in its entirety that year, but if it’s a larger improvement that will last, such as a bathroom overhaul or new driveway, then you depreciate the costs over the useful life of the item or items.

That means you divide the total cost by the useful life of the improvement, and write off 1/nth of the cost per year.

Requirements

You can only do this with property that wears out, decays, gets used up, or becomes obsolete over time. For instance, the land the building is on isn’t an item you can depreciate, but he building is. According to the IRS, you can depreciate a rental property if it meets all of these requirements:

1) you own the property;

2) you use the property in your business or as income-producing activity;

3) the property has a determinable useful life (i.e. it will wear out, etc.); and

4) the property is expected to last more than one year.

So what can be depreciated?

The structures on the land, house, garage, sheds, swimming pools, parking lots, tennis courts, and other facilities for your tenants. These can all add up to a substantial deduction from the income of the property for tax purposes.

Other items are things inside the home: stoves, refrigerators, furniture, carpets/flooring and furniture (if you provide a furnished space). Other things that you use in connection with the rental property, like computers, lawn mower, or automobile you use to conduct your rental activity.

If you aren’t sure, contact a tax professional for guidance.

Are Millennials Buying Homes In Denver?

There has been a lot written about millennials and home buying. The general consensus is that they are not big on home buying like the generations before them were and are. Denver millennials are no different. Here’s why.

Cool areas of Denver

Are Millennials Buying Homes In Denver? There has been a lot written about millennials and home buying. The general consensus is that they are not big on home buying like the generations before them were and are. First, millennials have so many cool areas of Denver to choose from to live, so why be tied to a home they have to sell to move to another? Areas like Washington Park are a cool choice for a younger generation. Wash Park, as it is called has amazing spaces for jogging, walking and biking, and also a center for community involvement and socializing.

Washington Park has two lakes and the “Lily Pond” and carriage-ways that meander through the park, a 2.6-mile jogging path, 2 peaceful flower gardens, soccer fields, 2 playgrounds, 1 basketball and roller blade court, 1 horseshoe court, 10 tennis courts and a lawn bowling green.

Convenience

Millennials as a rule just don’t want to be tied down by something as permanent as a home and mortgage. Some avoid it out of fear of financial disasters, but most avoid it out of convenience. When you rent, the most you could be tied to a property is a year or two. If you need to move you don’t ruin your finances by defaulting on a mortgage. Instead they can ask a landlord to let them out of a lease.

Many apartment complexes offer apartments that have amenities that if they were buying in a home would make that home out of their price range. Things like well appointed apartments, pools, fitness complexes, fire pits, and more.

Money

That leads to the last reason why millennials are more apt to rent over buying in Denver: less money. High amounts of college debt and difficulty in finding higher paying jobs makes it difficult to qualify for a mortgage. Don’t give up as a seller, though. The number of millennials now buying are rising.

The Money You Spend On Your Rental Property Is Not Personal Anymore

You decided to use your home as a rental property. Great! Time to shift your financial thought process about that property from being a home where expenses are just that, expenses, to one where those expenses aren’t personal any longer. What do we mean by that? Read on to find out.

First, your rental property is a separate “business.”

The Money You Spend On Your Rental Property Is Not Personal AnymoreThat means that the income from that property, the rent paid to you, is considered income for tax purposes. Now before you worry about that, remember that where there is income, there are deductions.

Think about it. You have deductions for your personal expenses. Things like health care and medical expenses, real estate property taxes, mortgage interest, childcare and so on. Your rental property is no different.

You will need to keep track of things like improvements made to the property, utilities paid, real estate taxes and mortgage interest paid and property management fees. The IRS has guidelines and your accountant can be a big help in what is and isn’t deductible.

Long term benefits

Next, the money you spend on your rental property will give the property, and you, long term benefits. This is because like when it is a home, improving and keeping your property in good repair will increase the value of the property.

So as with your home, keep valuation in mind when making upgrades to the property. Also keep that in mind when screening tenants. One tenant that trashes your property can decrease the value considerably while one that cares for it like it was their own will help you maintain and increase the value.

It’s a business

Remember, having a rental property means it’s no longer about you. Think of it as your home and the emotional attachment will cloud your financial judgment. Think of it as a business and you will benefit now and in the future.