If you are an Austin landlord, you cannot afford to be lax about your portfolio. After all, rents across the Austin region are now facing a steep decline after years of solid growth.
Demand is falling, and small landlords are poised to pay the price in a shrinking market. Survival means getting more out of what you have.
This means having a strategy for your owner disbursements and that you don't lose track of a single penny. No matter what types of properties you might own, here are the crucial mistakes to avoid when it comes to your disbursements.
1. Not Keeping Detailed Records
This one is absolutely essential. Without a clear record of your disbursements - your rental income, your profit, and your expenses - you will not be able to make informed decisions regarding your portfolio and its growth.
Keep all of your business and personal accounts separate, use an accountant, and make sure every single penny relating to your portfolio is accounted for in real-time. This will help you stay compliant, organized, and successful.
2. Not Collecting Rent in a Timely Manner
While flexibility might be required in certain situations, you should always prioritize the timely collection of rent. Collecting rent on time and at the same time each month will allow you to maintain a predictable and clear cash flow.
It will ensure that managers and contractors are all paid on time, and it will make your recordkeeping so much more straightforward. Setting up an electronic direct debit with your tenants will make your real estate accounting so much easier.
3. Not Planning for Expenses
Real estate bookkeeping is not just about managing revenue. It's also about planning for your inevitable outgoings. Administration, maintenance, and repairs are routine costs of doing business.
You should always ensure that you have sufficient cash buffers in place to cover these costs as and when they arise.
The quicker you can pay for these expenses, the better your tenant relationships will be. Prompt repairs also save money, as you can fix a small problem before it becomes a larger, more expensive one.
4. Not Planning for Tax
As a landlord, you will have tax obligations. This includes filing, reporting, and paying whatever you owe to Uncle Sam. Failure to do so will result in financial and even legal sanctions against you and your portfolio.
Stay on top of the patchwork of Texas tax laws and apply for and receive every deduction that you are eligible before. These relatively uncomplicated actions can save you huge sums of money.
5. Not Getting Professional Assistance
Investing in rental properties requires a lot of financial admin. The penalties for getting it wrong can be substantial and may even threaten your livelihood.
That's why we recommend hiring a local, experienced investment property management service. These can handle your accounting, planning, and reporting on your behalf, allowing you to focus more on the growth of your portfolio.
We Help Austin Landlords with Owner Disbursements
If you realize that you need help managing your owner disbursements, you have come to the right place.
At PMI Heart of Texas, we help Austin landlords like yourself to stay on top of their money and keep their margins lower. Get in touch to find out exactly how we can help you thrive in a complex market.