Proper management of your budgets and finances is essential as a Canadian landlord. With effective financial management, you can ensure that your rental properties are as successful and profitable as possible.
Financial management enables you to track your income and outgoings. You can minimize your expenses and maximize your rental income to achieve long-term financial stability.
In this article, we’ve got some top budgeting and financial management tips to boost your success as a Canadian landlord.
Consult a Property Management Company
Whether you’re a new landlord or you’ve had rental properties for several years, working with a property management company is always a good idea.
Property management experts can make finding and managing tenants simple. They’ll take over tenant screening processes and background checks, and rental invoicing, so you don’t need to do these tasks yourself.
Although a fee is associated with hiring a property management company, you’ll save money in the long run by streamlining tenant screening and finding the best tenants for your properties. Plus, your property manager will undergo all your administrative tasks, so you can spend time growing your business in other areas.
Whether you need help with landlord property management in Scarborough or another area of Toronto, you won’t regret consulting property experts to make your life as a landlord smooth and simple.
Create a Realistic Budget
Financial management can be difficult when you don’t have a clear and realistic budget in mind. Begin by creating a detailed outline of your total budget before breaking it down into various aspects of property management.
Calculate your monthly mortgage payments, property taxes, landlord insurance, maintenance costs, and property management fees. Include any other relevant expenses and account for unexpected repairs and emergencies. You can use Google Sheets or a similar platform to keep track of each of these areas.
Once you’ve determined a realistic budget and identified your associated expenses, you’ll find financial management much easier.
Understand Local and National Tax Obligations
As a landlord renting multiple properties, your tax obligations differ slightly from a single-property homeowner’s. Rental income is taxable income in Canada (and numerous other countries across the globe).
National and local Canadian tax laws dictate how much tax you must pay based on your rental properties’ total income. You’ll need to know these tax laws to fill out your tax return each year correctly.
You can write off some of your expenses, such as mortgage interest, property taxes, landlord insurance, and maintenance costs, as part of your tax deductions. It’s always best to consult a financial advisor or accountant if you’re unsure how to complete your tax return.
Separate Your Personal and Rental Finances
As a landlord, separating your personal finances from the rental income you receive is essential for effective financial management. Ideally, you should have two separate bank accounts, one for your personal finances and the other for your business.
With this distinct separation, you can track your income, expenses, and tax deductions. As a result, you’ll find it much easier accurately fill out your tax return each year.