How might the new tax law benefit landlords?
As the new tax law takes effect, now is a good time to consider investing in the real estate market. The new tax code has resulted in several critical changes in the real estate and business realm. For starters, LLCs will now pay drastically lower tax rates, saving landlords that hold property in these entities money. Further, as a reaction to the new laws and other economic factors, housing prices in some regions have dropped. If you are considering purchasing a piece of property in New York or New Jersey the near future, it is critical that you do your research and prepare to be an effective landlord.
Your first step when contemplating buying an investment property will be to get your finances in order. While now is a good time to buy in some areas, you should only purchase real estate if you are able to afford it. Do not over-leverage yourself as this will leave you in a dangerous position should something go wrong with your tenant or the property.
Once you have determined how much you can afford to spend, you will want to carefully select your investment property. A home or apartment priced low to sell may save you money up front, but be sure you are prepared to make the repairs necessary to bring the property to the condition needed to attract a tenant. Always have a thorough inspection and request the opinion of a contractor or other experienced individual when repairs are an issue.
Educate Yourself on Being a Landlord
Once you have purchased and prepared your new piece of real estate for a tenant, you will want to find out all you can about your role as the landlord and how you can protect yourself. Your rental contract will be a crucial component to your effective landlord-tenant relationship. You will want to consult with an attorney to draft a rental agreement that protects you and the property.
One of your most difficult tasks as a new landlord will be selecting your tenant. Your tenant will hopefully live in your home happily for some time to come. A good tenant will make your job as landlord far easier, while a bad tenant can make your investment a nightmare. Consider running background checks on your tenant, contact references, and take other steps to ensure the tenant is right for you.
If a dispute arises between you and your tenant, contact a real estate attorney right away. Your lawyer can help you to resolve the matter so that your investment property continues to generate a positive cash flow for you, leading to long term success.