Landlord 101: Is It Worth Becoming a Landlord?

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Perhaps you’ve just decided to rent out your property, or maybe you’re in the midst of discussions about how you can best transition from homeowner to landlord. Either way, here’s a complete guide on how to make the most of your time.

Why Become a Landlord?

Landlord is just a blanket term for someone who rents out property to other people. You can become a landlord simply by renting out a room or floor in your home, and you also count as a landlord if you decide to rent out a property space for commercial use. If you have an extra room or floor in your house that doesn’t see use, or even if you own a property that you don’t live in regularly, you can make some extra income by renting that property out to prospective tenants.

There are people who are in the business of renting properties and take being a landlord as a profession. They purchase properties and houses for the sake of renting it out and making long-term profits. However, not everyone is in this boat. A lot of people just want to have a bit of extra cash by renting out a room or having a roommate to live with. It’s a great way to cover rent costs or to pay off a mortgage.

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Don’t Expect to Get Rich Soon

Landlords can expect to secure a comfortable amount of money, but not enough to get rich unless you own several properties. The cost of buying a home can get ridiculous depending on where you live, and you can expect to rent a property out for several decades before you start making profit. However, if you do plan to have children or you have younger family members, you can pass on the duty to them when they come of age and they’ll continue to collect profits from the properties that you worked hard for.

It’s Hard Work

It’s not as difficult or intensive as some jobs in the world, but being a landlord can put a lot of stress on your body and mind. You’re in charge of a property and tenants will look to you for assistance or help when repairs are needed or disputes with neighbours need to be settled. Expect to get phone calls in the middle of the night complaining about a leaky pipe or lack of hot water. You’ll have to hire repairmen and most likely pay for all the charges. You need to keep an eye on your tenants and make sure that they aren’t ruining your property or misusing it.

Many people refer to being a landlord as “passive” income, but that’s far from the truth. You play a major role in keeping the property maintained and your tenants happy. You need to deal with potential renters, and you also need to keep track of your finances.

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There Are Hidden Costs

Not only do you have to buy and manage your property, but you also need to keep it furnished to attract clients, you need to spend money on listing your property at different locations, and you also need to search for prospective tenants. Insurance also adds to the list of fees involved in being a landlord, and you’ll need to look into landlord insurance for your property. You might need to insure not only the home but also any furniture that you’ve bought for the property.

There are smaller expenses too, such as key fob duplication so that your tenants have a way to get into the property, or cleaning costs once a tenant has vacated your property. You’re also in charge of all the safety checks because you are still the owner of the property, so make sure to consider the cost of hiring professionals to carry out maintenance, and also the cost of safety equipment such as fire extinguishers smoke alarms.

Remember, it’s a Long-Term Investment

Becoming a landlord is a long and gruelling investment. There are dozens of points to consider before you should contact an agency or website to list your property. Be prepared to make almost nothing, or even lose money when you invest into becoming a landlord.

Much like a business, you should expect to be in the negative during the first couple of months or even year that you begin your journey as a landlord. Make sure to keep in touch with any agency you contact to list your property or consider renting it out on your own without external help. It saves you money, but you’ll need to research how to properly advertise and manage all the legal complications that could arise with renting out a property.

Always make sure there are potential clients lined up when your current tenant is close to ending their contract. You need to have a steady stream of income to make renting your property a worthwhile investment. It’s no different to a traditional business—you need tenants to make money, and a business needs customers to make money.

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Dealing with Uncooperative People

A lot of people in the world prefer to work desk jobs because there’s a lack of human interaction involved. Customer service call centres and storefronts are some of the most hostile environments because you have to interact with consumers on a daily basis. People can and will get nasty, and tenants are no different. No matter how positive or polite a tenant is, the slightest hint of negativity could trigger a full-blown argument and you’ll end up feeling horrible, offended, or in the worst case, even injured.

Once the contract is signed, expect the worst from your tenants. Ruined furniture and housing, constant complaints via phone calls, and perhaps even legal threats. In cases like this, consider calling security services or the police to respond to threats. Make sure you hire legal professionals to ensure that your actions aren’t illegal and that you aren’t responsible for whatever charges the tenants are accusing you of. Fight fire with fire, and make sure you put your foot down when it comes to uncooperative tenants.

Becoming a landlord isn’t easy. It’s not a get rich quick scheme, and it’s not the safest of investments. However, with a good track record, you’ll be able to make a comfortable living with the money you make, and it’s a great gift to pass on to a family member.

Why Should Your Business Use Direct Debit Payments?

Why Should Your Business use Direct Debit Payments?

Understanding Direct Debit

To put it simply, direct debit payments are a way of paying for goods or services online from your current account. Money from your account is automatically deducted by the organisation you are buying from based on predetermined instructions from you. To arrange a direct debit scenario, you need to set up and sign a Direct Debit Mandate form with who you are wanting to make the payment to. The details on the form include the amount you will be paying and when it will be made. It can be set in such a way that payments are automatically deducted on a specific date each month, quarterly or yearly.

Often, a direct debit has been confused with a standing order. The primary distinction between the two is that in a Direct Debit, the organisation or individual you are remunerating can change the amount or the date the payment is made. In spite of that, they should advise you of this by giving notice.

While using Direct Debit as a method of making payments, you can be guaranteed that you are safeguarded by the following:-

  • In the event of a mistake or error in payment of your Direct debit, money is immediately returned into your bank account
  • You will receive a notice in advance if by any chance the payment amounts change
  • You have the right to cancel at any point you wish, should it not work in your favour.

Instances in which a direct debit can be used

  • It can be used in paying for recurrent bills. Direct debit ensures your critical bills will be paid on time every month.
  • You can use direct debit to make payments for any membership charges or fixed subscriptions. This may include online tools or resources for your employees. Direct Debit is the most secure and simplest approach to make recurring payments for various services you might be subscribed to.
  • Paying off to your other accounts.
  • You can use direct debit payments for one off payments too. While Direct Debit is normally associated to regular payments, it can likewise be used for one off payments.

Benefits accrued from the use of direct debit to businesses

  1. A clear knowledge of regular income and how it is being used helps in predicting its flow and how to sustain.  
  2. It is environmentally friendly as everything is automated promoting a paperless environment.
  3. Direct debit has been a confirmed source of improved client loyalty due to its user friendliness, security measures as well reliability. Subsequently, businesses will realise customer retention and loyalty.
  4. The consent to gather predetermined sums over a fixed period of time results in a decreased need for credit control measures, thus you have greater control over the funds.
  5. It is resource saving, which implies that there is more time to focus on income generating activities rather than serving teller customers.
  6. It is secure as all trade is handled through very secure technology and secured by the direct debit guarantee.

Benefits accrued from the use of direct debit to clients

  1. Through Direct Debit, clients are in a position to save on any charges brought about by missing on a payment as the system is automatic.
  2. It is time saving as it is automated and the client does not need to be present during the transaction.
  3. Clients can break down payments and are safe knowing that payments will be made automatically and in time.
  4. It is a secure and credible method of making payments.

One greater solution for transforming your payment processes is using a cloud based direct debit service that is fully automated and provides better reporting. This integration would free up valuable business time as payments can be scheduled and made with little to no human intervention. Reports can be automatically downloaded that will display key analytics about payments.

Direct Debit is an extremely convenient mode of payment that is becoming increasingly popular, not to mention its efficiency for both people and organisations. The advantages of Direct Debit build-ups are shared among both your business and its clients in what is viewed as a profoundly trusted and secure strategy for making payments. It takes away the pressure that is often associated with paying bills, and having to spend time queuing in banks. It makes it less demanding to pay your bills promptly and on time, and you will know precisely how much cash is settling what every month.

For organisations paying by Direct Debit, lessened workload and reduced paperwork for those directly involved will be a key benefit

How to Keep Your Business Credit Separate from Your Personal Credit

How to Keep Your Business Credit Separate from Your Personal Credit

Did you know that most small business owners who apply for loans are turned down?  Don’t take my word for it, this gem comes from the Federal Reserve Bank of New York.  According to the report, reasons for the high rejection rates include impaired personal or business credit and a mismatch between borrowers and lenders.  The first reason is quite alarming.  It turns out that most people understand personal credit and how to use it. But when it comes to business credit, there is a lot of misunderstanding.

When business owners don’t understand how to build their business credit, they don’t qualify for banks leaves leaving many believe their only option is to get loans from friends and family.  However, this does not help solve the broader issue which is how to keep your business credit separate from personal credit.

Why is separating your personal and business credit necessary?  The first reason is that businesses tend to be heavy users of credit; on average 10 times, more than a consumer. This brings us to the second reason; heavy credit usage can sink your personal credit. Beyond these two reasons, separating personal and business accounts is an imperative for tax purposes.  

So how can you get started?  The first step is to register your business as a separate entity. This could be as a sole proprietor (though not recommended), an LLC, or a corporation. Registering a business is not that difficult these days.  While you can ask an attorney or an accountant to help you, you can also go online and do it yourself.  In most states, you can set up a new company in less than a week.  Just don’t forget to get an Employer Identification Number (EIN) from the IRS when everything is complete.

Now that you have your business registered, you want to set up a bank account for your business. This will be the main bank account you will use for all the funds flowing through your business. The process is simple and some bank might allow you to open a new bank account online.  

One question which usually comes up when a business owner finally sets up their business banking account is how do they pay themselves.  To do so, you will want to write a check to yourself and then deposit that check into your personal account. This will keep your business and personal expenses separate by showing a clear trail of payments from the business.  In addition, this will help when you apply for loans for your business as lenders will want to see your bank statements.  

So, you have a company and a business banking account, but how does this help you separate your business credit and your personal credit?  To do so, you will want to get a credit card for your business and make sure that you always pay on time.  As an FYI, you can also deduct the interest payable from your business credit cards, this will help to reduce your corporate tax load and is just an added benefit of separating your business credit from your personal credit.

Another benefit is that a business credit card will help to move charges from your personal credit accounts.  This will reduce personal credit usage and will make it easier for you and your family to do the things you want to do in the future.  For example, if you have an excellent credit score (say an 800 score) but you have maxed out your credit cards, your score could fall by 100 points or more.  When this happens, you will fall into credit purgatory as most lenders will be scared off when you apply for new credit cards, loans, or lines.

If you don’t have great personal credit and are not sure where to begin, there are several retailers who offer small credit lines for businesses without pulling a credit report.  This includes retailers such as Home Depot, UPS, and Staples to name a few.  If you are not sure whether a retailer you have in mind has such a program, the best option to contact their credit division to learn more about the process.  This can be a big plus for your business

Registering your business, setting up a bank account, and getting a business credit line not only helps you protect your personal credit, but it sets your business on the right path to getting the loans you need to grow.  So, don’t delay, get started today.