Tax time can be a stressful time of year, but it can be nice if you receive a refund. For landlords it’s important not to let your refund go to waste. Landlords, especially, should take advantage of the lump sum to invest in certain things that will ensure their income properties continue to bring in value. By taking your refund and investing in your own rental properties, you can make your money work for you in the most profitable way possible. We’ve outlined a few specific areas you can use your refund that will improve your overall earning potential.
Fixing something might be the most common problem a landlord could have to deal with, and having money on hand to make those repairs is nice. The best thing to do is make repairs before they cause damage and become more expensive. You’ll typically spend less money fixing something that is only partially broken or malfunctioning.
If you have renters in a home that needs renovation, they will most certainly appreciate it when you give their rental home the upgrades and expansion it needs. This can be as simple as replacing a wall or major appliance, or it could include the addition of an entirely new room in the home. Renovations will directly increase the value of a home as well, meaning landlords can charge more per month when the house goes on the rental market again.
With the way modern technology advances, new equipment could be purchased nearly every year, although that’s quite unnecessary. However, upgrading the stove, dishwasher, refrigerator, AC unit, water heater, or any number of major household appliances will not only prevent the need for expensive maintenance on an old unit, but it will most likely save energy compared to the outdated tech in the older machine. Not only are upgrades economically smart, but they increase the appeal for potential tenants.
Adding New Technology
Perhaps you own rental properties that are older and can use a technology upgrade. Older homes may not have a programmable thermostat, energy efficient appliances, keyless entry, and other home automation systems. Adding new technology to your rental properties will make them safer, more valuable, and easier to rent.
Extra Loan Payments
If you happen to be lucky enough that your property doesn’t need any upgrades or repairs, you might consider making an additional payment on the mortgage. Landlords who make early payments cut down on interest.
Even with the most comprehensive insurance imaginable, you’ll probably end up having an emergency situation at some point. Perhaps you’ll come across an issue that isn’t covered by insurance, or you’ll go longer than you’d like without a tenant in certain properties. Having a small emergency fund can help landlords drastically protect their finances during the drought periods, and a tax refund is an excellent base fund for such emergencies.
Taking care of the landscaping is paramount to keeping curb appeal high. If you use some of your tax refund to revamp the exterior of your rental properties, you’ll most likely see a sharp increase in interest from potential tenants.
If you are smart enough to reinvest your tax refund in your own property, it really doesn’t matter where you focus the money.