If you’re thinking of buying a condo for sale in Downtown Boston as a quick and easy way to make money, think again. Being a landlord can be unexpectedly difficult for people who enter into the position blindly. If you can fulfill the following conditions, you are on the right track to succeed as a landlord.
You can be a better landlord when you have some free time to make repairs and interact with potential renters. If you are not extremely busy, it will be easier to meet your tenants’ needs and take care of anything that a rental may require.
If you have a mortgage, you are required to receive permission from your lender before you rent your property. Some Boston condo associations will not allow renting, so you need to make sure you have the required permissions before you start the renting process.
Renting a downtown condo tends to have a long time before the return on your investment is made, so you may be better suited to be a landlord if you do not desperately need profits now. Over a long-term period, you will see profits, but the short-term gains of renting are often minimal.
In order to successfully rent, you need to have a market. If you live in an area that is being improved rapidly and gaining new businesses, there will typically be a high demand for properties to rent. Locations with young professionals or college students often have a large rental market as well.
Landlords need to be able to advertise their property, pay fees, do background checks, and repair the property for renters. If you have enough financial backing to pay for the costs associated with being a landlord, you are more likely to succeed.
Ready to find an investment property? Take the next step and speak with a real estate agent in Downtown Boston. We can show you lofts and condos in Midtown, helping you find the right place to rent out. Call us today and schedule an appointment.
Repair costs are the obvious expenses that you’ll be able to deduct. However, there are other possibilities you might not have thought of:
- Operating expenses – This includes any payments you make for keeping the house up and managing the rental. Some examples are mowing services, advertising, accounting services, insurance, mortgage interest, real estate taxes, and legal services. There are many more possibilities. According to 2015 U.S. Census Bureau data, the average total operational expenses per housing unit amounted to $4,751. Check Publication 527, Residential Rental Property, to make sure you don’t miss anything that you can deduct.
- Travel expenses – If you need to travel to manage your rental property, you can deduct at least a portion of the expenses.
- Depreciation – This is a way to slowly deduct over several years the cost of the property and any improvements you make or furniture you put in it. The tricky part can be determining what is an improvement that gets depreciated over time and what is just a repair that can be fully deducted right away. Generally, though, if you’re replacing something with an identical item or doing something that doesn’t add value to the house, it will be deducted as an expense in that year and not depreciated. Also, landscaping improvements can’t be depreciated because they are added to the cost basis of the land, and land is not depreciable.
Your personal use of your rental property can affect the tax treatment of your rental expenses. They might be limited if you or someone in your family lives there for at least 14 days or 10 percent of the total days you rent it out, whichever is greater.
On the other hand, if you live in a property that you rent out for fewer than 15 days, you don’t report the rental income or expenses.