8 Investment Property Documents That Landlords Should Keep

If you are a landlord, or thinking of becoming one, there are certain financial documents that you will need to maintain for your records. These documents generally fall into the areas of rental income, allowable expenses, and capital costs. You should keep detailed records of every dollar of rent that you charge and receive, as well as all documents regarding the lease – including all pertinent dates.

In addition, your allowable expenses need to be recorded and maintained. These include every expense related to managing or leasing your investment properties. Each of these expenses can be deducted from the income you earn from rentals, which will reduce your taxable income. These expenses involve costs such as 1) any documentation of fees provided to leasing agents, attorneys, and accountants; 2) property insurance for both buildings and contents; 3) property loan interest documents; 4) property maintenance and repair records; 5) costs for utilities; 6) rent and service charges; 7) local tax bills, and 8) advertising and other costs associated with leasing the property.

Beside those 8 investment property documents, you should also maintain records of any capital costs for the property – including furniture and appliances you provide. Equipment used in your day to day management can also be included, but only if you keep proper documentation of the dates and costs of each purchase. Your best bet is to have your accountant guide you on what costs can be deducted. Your primary concern should be to document all income and expenses, and be sure to separate your business and personal records.

Of course, should you sell any of your properties and realize a profit from that sale, you will have to pay the proper capital gains tax. Fortunately, some of these costs can even be deducted from your capital gains tax, which is another important reason to maintain the appropriate documentation. As with other financial decisions, seeking the guidance of your accountant is always recommended. He may even have advice as to which time of year is best for selling property, from a tax perspective.

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves are decreasing. This is a known fact. The current price of oil can certainly confirm this statement. Consensus also agrees that we will never see $25.00 oil again. The logical conclusion to our above statement is oil stocks should be a good long term investment. However, the location of the oil companies’ reserves can affect their bottom line and valuation.

Some of the largest reserves in the world are found in Venezuela, Saudi Arabia, Russia and Canada. Political unrest in Venezuela, unstable and unpredictable government in Russia and Osama Bin Laden targeting Saudi Arabia leave Canada, namely the Alberta Oil Sands, as the largest, most reliable oil reserves in the world.

Companies like Exxon Mobil Corp., Royal Dutch/Shell Group and Canadian Natural Resources Ltd. are planning to spend billions during the next 10 years to develop Alberta’s unusual oil deposits as demand for crude rises and output from existing reserves decline. Oil sands output in Alberta may double to 2 million barrels a day by 2013, according to a presentation by Enbridge Inc. earlier this month. Oil sands are deposits of bitumen – heavy oil that must be treated to convert it into crude oil for use in refineries to produce gasoline and diesel fuels. The U.S. Energy Department revised its global oil resource estimates to include the oil sands 174 billion barrels of proven reserves that can be recovered using current technology.

With demand for oil and other commodities from China and India increasing due to their growing economies, strong trading relationships are procuring with Canada – a country with numerous resources, political stability and neutral military views.

Companies with reserves in the Alberta oil sands look like a great investment for the next decade
There are many companies with reserves in the Oil Sands here are some with strong exposure.

Suncor Energy Inc. SU.tse , Western Oil Sands Inc. WTO.tse and the Canadian Oil Sands Trust COS/UN.tse

Property Investment – Help, My Property Won’t Sell

It is commonly said that you make money when you buy, not when you sell. However, often this lesson is not learned until you try to sell a property. I remember the first property I tried to sell. It was a two-bedroom unit in a small complex of eight. A lovely unit… only four years old in an upmarket growing suburb. I was moving to another state in Australia and wanted the property sold, to enable me to buy another home in Queensland.

The property took over 12 months to sell. Three contracts fell over due to finance issues for the purchaser. That was my first experience in selling a property. The emotional roller-coaster was challenging. Initial excitement when the offer was negotiated and accepted, followed by confidence when the contract was signed, followed by disappointment when finance was not approved for the purchaser. The final emotion was frustration when the contract fell over. This happened three times.

Prior to this experience I believed properties took on average three months to sell, depending on the current market conditions. A few years later, we decided to sell one of our properties. This time it took close to two years to sell.

The property was a 2000 square metre property in a beautiful coastal holiday town. The property had zoning that allowed for the development of eight two and three-bedroom townhouses. The property was ideally located on the main road, a couple of hundred metres from the shopping precinct and beach, had two street access and was very close to community amenities such as a child-care centre, school and bus stop.

One month after we purchased the property we were offered $70,000 more than what we had paid for it. We had no intentions of selling the property at the time. Later, on realisation that we did not have the experience, contacts or time to develop the property, we decided to sell it. The first two offers we received were from developers. The offered a 12-month settlement contract. They would pay an upfront amount, with the balance paid in 12 months. This contract suited them. They got to hold the property with little money down. Negotiations could not get the terms of the contract suitable to both parties, and both contracts stalled.

In hindsight we should have accepted the contracts. These were the first two offers we received. We expected more offers to come in that didn’t have a 12-month settlement term. The market turned, developers pulled out of the market, residential construction slowed down and our property took an additional 18 months to sell. Holding a property for an additional 12 months to two years is not good from a cash-flow perspective.

It is important to consider the type of investor you are, before you risk buying a property that is wrong for your investment strategy. Don’t assume you can just sell a property if you need to. When selling, the market is in control. The market determines when it wants to buy, what it wants to buy and for how much. This experience provided one of our biggest lessons in property investing… know what type of investor you are, and be that type of investor only.