Whether you’re experiencing hard times or just want to boost that bottom line, reducing your overhead costs can help. Fortunately, it’s easier than you might think. If you're a landlord looking to cut costs, here are five quick and easy ways to do it.
1. Switch utility and insurance providers
You’d be surprised at how much insurance carriers and utility providers vary on rates and fees. In fact, if you’ve had your electric company, homeowners insurer, or other service provider for a while (think more than a year or two), you’re probably overpaying.
Take some time to shop around and make sure you’re still getting the best deal. Check out a variety of electricity options in your area, and get quotes for insurance policies from a number of different companies (an insurance agent can help here). If you cover the bills for Wi-Fi, cable, or other services in your rental units, shop around for those, too.
2. Refinance your mortgage loan
If your rental property is mortgaged, then refinancing should be on your radar. The average rate on a 30-year fixed-rate loan came in at just 2.91% last week, according to Freddie Mac. If your rate is even half a point higher than that, refinancing could mean hundreds saved a month and thousands over the course of the next few years.
Consider talking to a mortgage broker to see what rate you might be able to qualify for through refinancing. (Remember: Refinancing comes with fees, so make sure you’ll own the house long enough to recoup those costs).
3. Leverage any tax credits and deductions you’re eligible for
As a real estate investor, there are quite a few deductions and tax credits you can claim that can reduce your overall tax burden and save you serious cash.
Here are just a few:
- Mortgage interest deduction: Allows you to write off the interest you paid on your loan.
- Mortgage points deduction: If you refinance and pay points to lower your rate.
- Business expense deduction: Allows you to write off business expenses, mileage, and other fees.
- Depreciation deduction: You can use annually as your property starts to depreciate in value.
- Property tax deduction: Allows you write off your annual property tax bill.
- Tax credits: If you've done certain home improvements and have energy-efficient upgrades like solar panels.
4. DIY your maintenance and repairs (when possible)
Definitely leave the electrical work and other serious repairs to a professional, but the minor stuff? Do that yourself.
That includes unclogging toilets/drains, repairing wall holes, repainting, and other minor jobs around the yard and house. It might not seem like a big deal, but considering pros would charge a few hundred dollars for each visit, the savings can really add up over time -- especially if your property is older and more prone to repair.
5. Use free business tools instead of paid services
You should definitely have an accountant, lawyer, and other pros on hand in case a problem arises, but for day-to-day business needs, consider using free tools instead. Wave is a good one for bookkeeping and accounting, TurboTax can help you self-file your returns, and Cozy can help with managing your property and rent payments.
The bottom line
If you’re looking for a way to cut your overhead costs as a landlord, there are plenty of options to explore. Just take a step back and assess your expenses, shop around for new providers, and consider DIYing some of the tasks you’ve been farming out. Your bank account will thank you for it.