Rental properties have always been a popular method of building wealth and creating an income. The cost of rent has increased significantly since the lockdowns of the pandemic ceased. That increase has motivated many to invest in rental properties of their own. However, before becoming a landlord its critical that individuals explore the pros and cons. Most people new to the rental industry don’t examine both side of the equation. It’s important to understand that operating rental properties is a business and is going to require the services of an accountant if the enterprise is to be profitable.
Being a landlord is a great job for those who are people persons. They interact with an array of interesting people. It’s also a good business for those who are retired. Benefits of a rental business include:
- Nearly passive income
- Long-term investment
- Tax deductible business expenses
- Can be operated in addition to a “day job”
- Can pay for itself on a monthly basis
- Property value increases
- Equity accrual
Operating rental property has some definite disadvantages, the most obvious of which are destructive or constantly complaining tenants. Other considerations include:
- Must be operated as a business
- Maintaining compliance with the law
- Tenant screening
- Time consuming investment
- Yearly upkeep and maintenance
- Tenant safety and security
- Appliance replacement
- Cost of contractors to perform repairs
Perhaps one of the most unpleasant tasks of a landlord is evictions. It can be a difficult, costly and time-consuming process, during which time the structure isn’t earning any income.
An Accountant Can Help
An accountant that specializes in real estate tax accounting is invaluable. He or she can help improve profitability, file accurate tax accountings, and do so at the appropriate time. The accountant can help property owners plan for the future and establish online rent paying. They’re experts at assisting rental property business owners minimize their tax liability, stay updated on pertinent laws, and maximize their business structure.
At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs. We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!