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Landlord Tax Planning

Saving-MoneyIf you are a landlord, you are likely interested in landlord tax planning.  There is no better time to prepare for this year’s taxes than January 1 – of two years ago.  If you waited too long, and are now worried about your taxes, there is only a limited number of things you can do.

I plan all year on my taxes.  There are capital improvements to make, replacing items that may be working fine but will help keep a tenant or make it easier to get a new tenant.  Ways to speed up expenses and possibly defer revenue.

Here are some things to ponder to help minimize any tax burden you have.

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Rental Cash Flow February 2016 – March 2016

Rental Cash FlowMy rental cash flow and rent collections for March 2016 went very well.  All but one was collected by 3/5, although I did have more difficulty than in previous months.  One renter still needs to pay an additional $150, which will be paid on 3/18.

When a renter need to make the rent payments in multiple days, make sure you get a sizable chunk at the first of the month.  Do not let a renter pay on the 15th, and more on the 25th.  At some point, you will be evicting, and you will be a month behind.

I had another renter that may be an issue, and some vacancies coming up.  The month  was not as smooth as previous months, here is how the rental cash flow went…

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Rental Cash Flow December 2015- January 2016

packs-163497_1280-PDThe rental cash flow for all of 2015 was the best ever in my history of a landlord.  I had several apartment turns, but minimal vacancy between the turns.  I am hoping that my last (half) year of working at my full time job goes well, and the cash flow continues for many years to come.

I am still working on procuring the next rental, and we have run into some title issues that are being addressed.  I have the property locked in, but it’s not final.  It should produce a solid 15%+ cash on cash return, with room to spare.  It should also add an additional ~$500 a month to my rental cash flow.

I was able to save a record amount in my 401K, IRA, HSA and after tax accounts.  All my tax deferred accounts were maxed out.  I saved enough for me to live on for a few years…

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November – December 2015 Rental Cash Flow

100-PD2015 has been a great year in terms of rental cash flow.  It is the first year I have actually tracked rent increases, vacancy and next year’s potential increases.  I have always tracked income and expenses, but as I get close to retirement, I think it is a great exercise to track these other things.

I also signed a purchase agreement for another building.  I was not looking for another rental, and this one sort of came up.  It is a bit outside my normal purchases, and will add a few extra dollars to the bottom line.  Hopefully, in due time, it will be one of the greatest purchases I have ever made…  I will give a short briefing in this report, and save the rest for a more detailed post in the future.

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July – August 2015 Rental Cash Flow

100-PDHoly crap has it been busy.  And I thought last month was busy.  It was also expensive, and might have even been a bit negative on the cash flow side of things…  There were a few repairs, and continuation of my remodel on a unit that was vacant.  As always, rents came in on-time, but I added a couple of upcoming vacancies that will be coming due.

When life throws you lemons, you make lemonade.  Rentals are not always fun, but I can assure you they are profitable, if you can manage them right.

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Should I Pay Off My Rental Mortgage?

debt-37557_1280-PDIf I pay off my rental mortgage, my cash flow will definitely increase.  It has been a year since I paid off my last mortgage, not literally my last mortgage, but the most recent one I paid off.

My investment account balance has grown back to where I was before I paid the mortgage off, and then some.  So, I am now wondering if I should pay off one additional mortgage.  There are a lot of things to think about before you make a sizable payoff.  What are the other uses of the capital?  How strong will your cash flow be after the payoff?  What are the alternative investments, such as the stock market?

Here is the analysis that I am going through.

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June – July 2015 Rental Cash Flow

100-PDThe past few months have been pretty busy.  The rental cash flow has been as expected.  I have had several turnovers, and some other maintenance issues to take care off.  Luckily, all is well and the rentals have moved forward for another month.

Hopefully you have had a chance to look at some of my other cash flow posts and have been following my retirement countdown.   As I get more detailed in my own retirement dashboard spreadsheet, and add more check points and cross checks, I realize this next year of working is mostly an exercise to put the final nail in the coffin of the cube farm.

So here is how the past month went…

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May – June 2015 Rental Cash Flow

packs-163497_1280-PDGetting your rental cash flow on time is the name of the game.  Mine is almost like a broken record.  Rent is due, rent gets collected.  If you are a landlord, collecting rents on time is what you want.  For a landlord with only one or two properties, getting rents on time should be routine.  Keeping track of 24 properties is a bit more of a challenge.  I have done this for quite some time, and it all has to do with getting great tenants.

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April – May 2015 Rental Cash Flow

packs-163497_1280-PDThe rental cash flow was a solid as ever.  All of the 25 rents were all collected and deposited mostly by the third of the month, again.  It is a rather boring record, but if you have ever been a landlord, you know this is a great achievement.  I did have one rent that arrived on the 5th due to a bill-pay error?, and a $225 partial rent paid for the remaining sum owed on the 8th.  The bill-pay error was more due to forgetfulness, than an error.  These are solid tenants that are moving out to buy a home, so they have plenty of money.

So here are some of the cash flow highlights of the past several weeks…

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