Property Management Blog

Managing property finances can be a difficult task for landlords and real estate investors, especially if you’re not set up with the innovative technology that we use as property managers in Kansas City, MO. We know that you are dealing with a number of fixed and variable expenses, the cost of unexpected repairs, and fluctuating rental incomes from year to year. That’s a lot. You’ll need a tracking system and a good way to document all of your expenses. You’ll want to automate your rent collection and plan for your taxes every year. 

Financial statements and good record-keeping are essential. Budgeting is even more important. 

Keeping track of your budget is vital for long-term success. You have to be able to see where your money is going and when it’s coming in. You need to be able to plan for expenses and forecast where your largest costs will be in the coming months and years. 

Part of renting out an investment property is managing the finances of that property. We are here to offer practical budgeting tips specifically tailored for landlords in Kansas City, MO. At Rent Robin, LLC, we provide accounting statements and financial reporting as part of our property management services for real estate investors and landlords. 

Leverage our experience, our resources, and our technology when it comes to property management accounting. This is our way of showing you how to take control of your property finances and maximize your investment.

Understanding Kansas City Rental Property Finances

Before we get into our best budgeting tips for Kansas City landlords, it's essential to have a solid understanding of property finance and how it’s structured. Whether you are renting out just one property or an entire portfolio of properties, you’ll need to know your income sources and expenses and how they affect your overall profitability. 

Key components of property management finances for you to consider include:

• Rental Income: This is your primary and most obvious source of revenue. Ensure your rental price reflects current market rates and is competitive yet profitable. You’ll need to know what you’re bringing in outside of monthly rent, too. Maybe you’re charging pet fees or amenity fees or a fee for paying rent online. You need a complete look at all the money that’s coming in.

• Operating Expenses: These expenses will be regular costs such as property management fees, utilities, insurance, and taxes. Most of these are fixed costs, so you’ll know how much you expect to spend. These costs need to be accounted for in your budget.

• Variable Expenses: These are large, infrequent expenses related to property improvements or major repairs that you may not have budgeted for. These are your emergency maintenance calls or the extra vacancy you didn’t expect or the turnover costs you incur when moving one tenant out and another tenant in. 

Seek Professional Assistance

It’s important to have a solid understanding and management of your property finances as a rental property owner, but we always recommend that you work with financial and property management professionals. We can help you navigate the complexities of budgeting, taxes, and investments. If you’re not going to work with a property manager in Kansas City, make sure you have an accountant or a CPA overseeing your finances, particularly at tax time. 

Professional expertise can protect you from expensive mistakes and ensure you are making the best and most informed decisions. Engaging with a property manager, financial advisor, or accountant who specializes in real estate can provide valuable insights and strategies tailored to your specific needs. As professionals, we can help you optimize your budget, identify tax-saving opportunities, and ensure compliance with local laws and regulations. By leveraging our expertise, you can focus more on growing your investment and less on the intricacies of financial management.

Budgeting Tips for Landlords in Kansas City, MO

Outside of benefitting from our hands-on, full-service property management accounting expertise, we can offer you these specific tips when it comes to budgeting for your rental property. 

1. Create a Detailed Budget

The foundation of effective property finance management is a detailed budget. Start by documenting all your expected income and expenses. Here’s a simple breakdown of everything you’ll want to track in some form, whether it’s a spreadsheet, an app, or a more detailed property management software:

• Income such as monthly rent and any additional fees or charges. 

• Expenses such as mortgage payments, local property taxes, property insurance, maintenance and repairs, utilities, ongoing costs such as pest control and landscaping, and any turnover costs that might be incurred after a tenant moves out. Don’t forget your professional costs and fees. This may be property management, real estate commissions, insurance agent commissions, legal fees, etc. 

A clear understanding of your cash flow will help you make informed decisions about your investment.

2. Set Aside an Emergency Fund

Unexpected repairs and emergencies can hit hard if you're not prepared. It’s wise to set aside part of your rental income each month for an emergency fund. Most property management best practices say that saving 5% to 10% of your rental income each month for an emergency fund will provide the peace of mind you need. This cushion will prevent financial setbacks when the unexpected occurs.

3. Monitor Your Cash Flow Regularly

Rather than waiting for year-end statements, keep a close eye on your cash flow and budgeting throughout the year. Use accounting software or spreadsheets to track your income and expenses in real time, allowing you to spot trends, make adjustments, and identify potential problems early.

4. Factor in Seasonal Changes

Occupancy rates and rental income can fluctuate seasonally, especially in Kansas City. Be prepared for these ebbs and flows by adjusting your budget to account for potential dips in income during slower months. Offering seasonal promotions can also attract tenants during off-peak times. Most tenants, you’ll find, are looking for new homes in the spring and the summer. 

5. Review and Adjust Your Budget

At least once a year, review your budget and actual expenses. Compare your projections to reality and identify any discrepancies. This analysis will help you recalibrate your budget for the upcoming year, ensuring you're always aligned with your financial goals. 

6. Leverage Tax Deductions

Understanding the tax benefits available to rental property owners is a great way to reduce your tax liability. The write-offs available can significantly impact your property finances. Familiarize yourself with tax deductions for repairs, property management fees, and depreciation. Consider working with a tax professional to optimize your financial strategy.

Common Financial Pitfalls

Despite careful planning and budgeting, landlords can still fall victim to various financial missteps that can impact profitability. Here are some common pitfalls to watch out for:

• Underestimating Maintenance Costs

One of the most prevalent mistakes is underestimating the expenses related to property maintenance. Minor repairs can quickly add up, and major issues like plumbing or roofing problems can be financially devastating when they are not anticipated. Conduct regular inspections and set aside a sufficient maintenance budget to handle both routine upkeep and unexpected repairs.

• Not Accounting for Vacancy Periods

Failure to plan for vacancies is another common error when it comes to budgeting and finances. Properties may not always be rented out, and these vacant periods mean no rental income while still incurring ongoing expenses such as mortgage payments, property taxes, and utilities. Landlords should budget for potential vacancies by reserving funds to cover expenses during these periods.

• Ignoring Market Trends

You cannot succeed as a real estate investor without following the market. Our rental market is dynamic, and ignoring market trends can lead to financial losses. Market analysis should be continuous to ensure that rental prices remain competitive and reflect current conditions. Staying informed about local market trends can also help landlords anticipate changes that could affect occupancy rates and rental income. With all the data that’s available today, you should be able to make good decisions based on the analytics and insights that are provided. 

• Over-leveraging

Taking on too much debt relative to rental income can be a big problem for landlords and investors, especially if market conditions become unfavorable. Over-leveraging may offer short-term gains but can lead to long-term financial stress, especially if rental income declines or interest rates rise. It’s advisable to maintain a healthy debt-to-income ratio and avoid the temptation to overextend financially.

• Overlooking Tenant Screening

Good tenants earn more money and bad tenants cost more money. That’s the simple truth to remember. Don’t avoid tenant screening to fill vacancies quickly. Problem tenants might cause property damage or default on rent, leading to legal battles and income loss. Investing time in thorough tenant screening, including credit, background checks, and references, can save both money and headaches in the long run.

By being aware of these common financial pitfalls, you can better navigate the complexities of property finance and safeguard your investments against potential losses.

Managing property finances in Kansas City, MO, requires careful budgeting and an understanding of both income and expenses. 

If you’re looking for professional assistance in managing your property finances, Rent Robin LLC is here to help. With our expertise in Kansas City property management and budgeting strategies, we can guide you in making thoughtful financial decisions that align with your investment goals. Contact us at Rent Robin LLC.

We talk to a number of rental property owners who are hesitant to allow pets into their investment properties. That’s understandable; there are valid concerns to consider around potential property damage and noise. There’s also some extra liability. 

However, with the right strategies, you can attract responsible pet owners while ensuring your property remains well-maintained and safe. As professional property managers in Kansas City, MO, we have a lot of experience dealing with pets and the tenants who treat them like part of their own family. If you’ve ever had a dog or a cat you love – it’s easy to understand how these tenants prioritize finding a happy and safe home for their furry friends. 

To help with the decision around allowing pets into your property and to attract responsible pet owners who will keep your headaches and your risk to a minimum, we have some tips and strategies that may be a good guide for putting together a pet policy. We’ll also talk about setting some standards and restrictions when you’re screening pets. 

Why Go Pet-Friendly with your Kansas City Rental?

Yes, animals are unpredictable. Even the most pampered pet can go rogue on a random day and attack an unsuspecting neighbor. The healthiest and best-behaved cat can create a mess outside of the litter box that takes a lot of cleaning and repair work to address. Pets are a risk. 

Expanding Your Market

Kansas City is home to a large community of pet lovers. Many of those pet owners are tenants looking for their next home. By making your rental property pet-friendly, you open your doors to a larger pool of potential tenants. Many families and individuals are willing to pay a premium for a place that welcomes their furry companions. You will have fewer vacancies and lower turnover rates. With more than half of the tenant pool owning at least one pet, by not allowing them, you’ll cut out a huge section of potential tenants. That may leave you with a vacant property for longe

Responsible Pet Owners

Not all pet owners are the same. Most of the pet owners we rent have been responsible. They want to create a good home for their animals. By implementing proper screening processes, you can find responsible tenants who treat their pets well and take pride in maintaining their living space.

Offering a Pet-Friendly Rental Property

You want to be welcoming and you want to open up your property to pets, but you want to make sure you’re getting responsible pet owners and pets who are clean, healthy, and well-behaved. We recommend a strong screening process and a clear pet policy. Once you have those things in place, you can make it a priority to advertise your rental home as a pet-friendly property, which will attract good tenants and responsible pet owners.

Pet Screening

Screen your incoming pets almost as carefully as you screen your incoming tenants. A lot of landlords insist on meeting the pet. This is a good way to judge their behavior and whether they’re hyper, bark a lot, etc. If you don’t have an interest in meeting the pet, at least ask for a picture. This way, you can identify the pet when you’re at the property or your vendors are there.

Ask for vet records. You want to know that the tenant takes care of the pet's health and especially is good about keeping up to date with vaccines and precautions such as flea and tick treatments. 

Also, make sure you ask about the pet when you’re conducting rental reference checks on the tenant. Ask former landlords if there were any issues with the animal. This will tell you a lot about the pet’s demeanor and how your prospective tenant takes care of their animal. 

Develop a Clear Pet Policy

Having a well-defined pet policy is essential for establishing expectations and protecting your property. This policy should be included in your lease agreement and make sure it includes the following information and requirements:

• Pet Types Allowed

Specify which types of pets are allowed (e.g., dogs, cats, birds). You might assume that we’re only talking about dogs and cats, but there are plenty of pet owners out there who want to move in with exotic snakes, reptiles, and other animals you might not anticipate. Be specific in the lease and in the pet policy. Are you willing to allow guinea pigs? Ferrets? A large saltwater fish tank? 

• Breed Restrictions

Assuming you’re going to allow dogs, you’ll need to decide whether you want to have any breed restrictions in place. This decision might come down to what your insurance company will allow. Many insurers keep a dangerous breed list, and they will not cover any damage or injury caused by a tenant’s pet Rottweiler, for example. If you’re going to allow dangerous breeds, we recommend that you ask your tenant to carry enough of their own insurance to cover any risk.

• Limits and Restrictions 

You want to be specific about how many pets are allowed, what their ages might be, and whether you have any restrictions on height and weight. Set a maximum weight limit for pets to prevent damage to the property. You can say that you’ll allow dogs and cats that are under 20 pounds, for example. Or, you can allow adult cats and dogs but not kittens and puppies. You can say one pet per person or three pets in total

Tips for Attracting Responsible Pet Owners

How can you be sure you’re attracting the types of pet owners who will make good tenants? We recommend that you focus on your marketing, and make your pet-friendly features a big part of attracting good residents. 

Advertise Pet-Friendly Features

Highlight features that make your property accommodating for pets. Maybe you’ll provide a fenced yard, which provides a secure outdoor space where pets can roam freely. You might also be able to advertise your durable flooring. Dog and cat owners will prefer hard surface floors like laminate, wood, or tile. These floors are easier to keep clean and maintain than carpet. Plus, the carpet will trap pet odors, dust, and dander. If your rental property is close to dog parks or pet-friendly areas, you want to let prospective tenants know because it encourages pet owners to settle in your property.

Create a Welcoming Environment

A pet-friendly ambiance can make a strong impression on prospective tenants. You can add pet amenities, such as fencing or a place to hose off a dog that may have been playing in the yard. A cat door might be appreciated by a tenant who has an indoor/outdoor feline. 

Market Your Property Effectively

When listing your property, ensure your marketing materials reflect your pet-friendly policies or that you’re at least willing to consider pets. This will attract more prospective residents to you, and increase the number of showings, applications, and lease agreements that come through. When you’re marketing, use social media as well as popular rental listing sites. Use keywords in your marketing such as “pet-friendly” so that you’re reaching the pet owners you’re trying to attract. 

Attracting responsible pet owners to your rental property in Kansas City, MO, requires a thoughtful approach that both welcomes pets and pet owners and also protects your property against the damage that can be done. By screening carefully, developing a clear pet policy, showcasing pet-friendly features, and effectively marketing your property, you can create an inviting environment that appeals to pet lovers. 

We can help you put together a strong pet policy and attract good renters to your property. Contact us at Rent Robin, LLC for all of your Kansas City property management needs. 

This is not an “ IF” question, It is a “ REALITY” Question, because…. You Are Going Into Business Right?

Before making this decision it might be worth spending a little time considering the costs involved if you decide to self manage. There are factors to consider that are not able to be measured by a spreadsheet. We all also know how detrimentally important it is in any Real Estate investing plan to crunch the numbers and know what those numbers represent, but don’t overlook the back stage drama you will also be facing that all Property Managers must deal with day in and day out .

The Dalai Lama was once puzzling on Humankind and wisely spoke to the Universal Truth that is not thought of sometimes when making important decisions ~

“Man, because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

If you think about your goals in investing in Real Estate in the Kansas City area and you factor in hiring a property manager when purchasing your investment property, you could be a much happier and successful Real Estate Investor. Are you purchasing a second career, or do you just want to add Real Estate to your Investment portfolio?

Home means different things to different people. But there are basic and meaningful common goals for both Tenants and Landlords~

Comfort, Security, Safety, Family, Friends, and Celebration.

As odd as it may sound, these are all things that both Tenants and Landlords want from the home they live in, and the home Landlords own and provide for a tenant.

For tenants, whether they are looking for a long term situation, or a transition home; while they adjust to a new city or a new job, they want a place that allows them to feel like they are Home.

Landlords also want their property to be cared for and treated like a Home. They often count on their property as an integral part of a plan for their families, and future.

Rent Robin understands and works everyday day to bring together all of the things that matter to both Tenant’s and Landlord’s, and we are grateful for the opportunity to be a part of Your Road Home

While residents want to rent a nice looking home, they often have no interest, time, or knowledge on how to maintain the property. They may agree to landscape maintenance in the rental contract but it can be difficult for a property manager or owner to enforce. The owner can charge the tenant for maintenance or include landscape maintenance but it is not always practical to increase the rent with the full cost, particularly if the landscaping on the property is extensive.