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When it comes to rental management, the strong advice from the experts (particularly for new investor landlords) is to put your valuable asset in the hands of a professional. While some landlords might have the skills to manage their own property, it’s pretty rare, because it requires not just specialized knowledge, but also a lot of time. The Complicated Issue of Compliance Among the (many) things a rental management company will take care of is ensuring that you, as a landlord, do not fall foul of your responsibilities. If something happens and you’re found negligent, it can have huge and lasting ramifications on both your finances and your legal standing. Understanding the comprehensive legal issues that surround renting out a property to a tenant is almost a job in itself, but a reputable property manager will stay abreast of any changes and advise you accordingly. Below are some key aspects to be aware of. Tax Compliance Becoming a landlord means someone will be paying you rent – which is an income stream. Great! That’s the point. But as we all know, the unavoidable thing about income is that it comes hand in glove with paying tax. While you’ll need an accountant to prepare your actual tax return, it’s your rental management company who will generate the required records for them to do so. In order to remain compliant with tax laws and claim the all-important deductibles so you can maximize your profit, it’s imperative that you have accurate and detailed records. These should include profit and loss statements, cash flow, forecasting, and budgets. Legal Compliance The legislation involved in the landlord/tenant relationship is extensive and covers things like safety standards, building codes, fair trading practices, property standards, applicable fees and charges, privacy, evictions, dispute resolution, and a host of other issues. The fine print should always be included in the lease (another reason to use professional rental management) and is governed by federal, state and local law. It’s vital that you know exactly what your responsibilities as a landlord are, including things like privacy and fair housing. Privacy: A tenant’s privacy must be respected - it’s the law. It may be your property, but as a landlord (or your representative), proper notice and legitimate reasons must be given before entering a property – and this includes for maintenance issues. There are also strict regulations around the installation and monitoring of security devices. Fair Housing: The laws around “fair housing” cover a raft of issues to protect tenants against discrimination. In our enlightened times, discrimination has become an extremely broad term encompassing disability, race, color, religion, gender, marital and familial status, and much more. While your rental management team will be highly versed in the need for sensitivity, you should also be alert to any instances of language (in leases, market listings, and communication with tenants) that could be construed as discriminatory. Compliancy: A Job for the Experts Depending on where you purchase an investment property and become a landlord, as well as the above there will be other more localized aspects to be aware of. That’s why choosing a rental management company based in the same area as the property is vital. Their key knowledge of the local region and its unique legislative issues will ensure you always remain compliant. Author Plate Danny Torres is from Torres Turn Key, a property management company in Rochester NY with more than ten years’ experience dealing with both domestic and international investors. Providing a holistic service for the rental management of both commercial and residential properties, the company brings together a host of experience and specialist knowledge to build long-term relationships and create maximum value and benefit for their customers.
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