Income Property Investments: A Strategy to Make Them Pay for Themselves

Are you a landlord who robs their piggy bank innocently on your rental property and struggles to have money for repairs or vacancies?

That dreaded phone call from Management One, “Hello, we need money for a repair”, and what runs through your mind is “Ugh, there goes my summer vacation”, and “This rental property is draining me.”

If there is one thing I learned in the last 39 years of managing properties, it’s this: there’s a secret to always having money for repairs and vacancies on your rental property when you need it.

A Rental Property Checking Account: Keeping Rental Income Separate from Personal Finances 

When a person rents out their first property, they typically use a personal checking account. Most think, “Hey, I only have one property; it’s not like I’m Warren Buffet. I don’t need a separate checking account.”

But in actuality, you do.  As we raise your property's rent, additional money goes  into your personal checking account. Guess what happens? It gets innocently spent a little at a time. It just gets eaten up for personal things, like groceries, family vacations, braces for the kids, etc.

This is when you begin to feel like you're always robbing your personal checking account to pay for repairs on your rental property, right? Over time that starts to wear on you, and you begin to wonder why you have the rental property in the first place.

How would I know this? I know because I have lived this for over 30 years - both personally and with thousands of our clients.

Here’s the simple secret to having all the money you need: You set up a separate checking account and name it "Rental Property Checking Account." (If you have multiple properties, you can combine them all in one account). 

To start, I recommend you deposit a minimum of $1,000-$5,000 from your personal savings to your new "rental checking/savings account." If you must start with less, even $100, do it anyway because you must begin immediately. Then, ensure all the rental income is deposited to the Rental Checking Account. All mortgage(s) payments, taxes, insurance, and repairs are then paid out from this account. Your personal checking account is now out of the picture.

Why a Dedicated Rental Property Checking Account Works 

As rents increase slightly almost yearly, extra rent will build this new rental checking account, like compounding interest.

Here’s how it works: When the rent increases by just $50 a month each year for 6 years (which is only a 2.9% rise in rent on average) and it gets deposited into your rental checking account, in 6 years, you will have $12,600. If the rent increases  $100 a month you’ll see $25,200 in your new rental property checking account after 6 years. Because the money is siloed in its own account, you will now have the funds available for those unexpected rental property repairs or maintenance costs.  You haven’t  used it for  daily life or earmarked it for personal purchases.

Independent studies have shown that 80% of residents do not move because you raised their rent moderately. They move because landlords don’t promptly take care of needed repairs, maintain the property, or make improvements. In other words, most landlords do these things when it’s convenient for them rather than their resident.

Also, ask your CPA (or whoever does your income taxes) to show how much  Federal and State taxes your save each year because you own that rental property or properties.  When  you get your tax refund check each year transfer that  saved tax total  from your personal account and into your rental property checking account. .

On average,  landlords save about $2400 a year in their income taxes based on a single-family home rental property. Over 6 years, that’s another $14,400 you’ll have accrued in your new rental property checking account. If you didn’t have that rental property, you would have paid the Feds and State $14,400 more in income taxes over 6 years!

So, you can see by merely managing your cash flow, raising rents moderately, and putting whatever you're saving on income taxes because of that rental property in your rental property checking account, you will have over $25,000 to $40,000 in that account over 6 years.

This makes you love owning rental property because it’s structured and paid for by the resident and the IRS, not YOU.

30 Years of Experience Proves it Works..

I have several properties today that I own free and clear. They are paying me today every single month, and what a great feeling it is. The properties are worth, on average, 7-9 times what I paid for them 15 and 30 years ago. Plus, I still write off my management fees, repairs, taxes, insurance, etc., on my income taxes, offsetting the rental income I get each month.

Using this strategy with a rental property checking account allows you to enjoy the journey while building wealth toward retirement. You will buy more rental properties because it's exciting, and paying for repairs becomes painless. It becomes your very own real life Monopoly game.  You benefit financially and, as some of our current clients have, teach your kids how to make real estate work for them. What a gift that sets them up for success! Your next step is to open up your rental property checking account TODAY and start enjoying owning rental properties. 

Management One Client Shares Their Real-Life Success

Recently, I received a call from my clients, Gene and Betty, whom I started doing business with back in 1977, 42 years ago, in Riverside, California when they bought a home for $35,000.

Now living in Georgia, Gene said he was calling to say “thank you”.  He said we were  reviewing their financials while doing their taxes and  he wanted to let me know "we are now worth over 1.7 million dollars primarily due to you, Ron, on all our investments with you. We are set for life with all our income coming in. We are traveling and enjoying life."

Gene and Betty are great, regular, ordinary people not big investors, who started small and ended up big. Gene said, "All those people who didn't believe in you and your strategy way back then, Ron, are not having the life we have today, and that's sad. I wish more people would have followed your strategy".

In closing, I wish this all for each of you in that you, too, will end up big like Gene and Betty. There is still time to get started; it doesn't matter if you recently purchased a rental property or have owned it for 20 years.

Bonus: Mrs. Solter another client of mine for 38 years shares her story in a short video,  you don’t want to miss this. Click here

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