The CRP’s are here, the CRP’s are here!  (Ok, I just had to say it.)  Minnesota waits until January 1 to publish the 2008 Certificate of Rent Paid (CRP) forms.  Here are the details.

If you owned an investment property in Minnesota during 2008, you are required by law to send each tenant a Certificate of Rent Paid.  You can find the form here.  Depending upon the tenant’s income, they may be eligible for a tax deduction for a portion of the rent they paid for 2008. Although you must send your tenant this form, this does not affect any Minnesota taxes you pay or anything else. It is simply for the tenants tax reporting purposes.

Like any other government form, the instructions are rather confusing and lengthy.  I am not attempting to interpret the instructions for you, but here are some of the tips that I have figured out over the years:

• Do not include any damage deposits, late fees, or other non-rent payments in the total amount.  Additionally, I typically only include actual rent paid, not rent billed (or accounts receivable).
• Section 8 or other rent subsidies are not included in the total line on the CRP. Only rent paid by the tenant(s).  In Quickbooks, I mark each subsidy payment in the memo field to make this easier at the end of the year.
• Fill in a copy of the form with your business information and make copies to save yourself time when completing many of them. With almost 30 rental units, you can imagine how much time this saves me!
• Alternatively, the Certificate of Rent Paid form comes in a PDF format, so last year I entered my business info once and then simply changed the property and tenant info and printed them out (I am faster at typing than writing!).
• I just wait for past tenants to call me and request them (again, there is no penalty for not sending these forms or for them being late).
• When calculating the total amount, you must divide the total rent paid by the total number of adults (married couples are considered 1 person) in the unit regardless of how much rent each paid. You should then send a form to each adult.  This may cause some frustration among roommates, but just tell them you are simply following the instructions.
• To save on postage, I send the CRP and monthly statement in the same envelope.
• Lastly, make a copy of all of them for yourself.  I will always get a least 2-3 calls in August (when the tenants turn these in for their taxes) from someone looking for a new copy.

You can purchase software packages or services to do this work for you, but I have always found that they are too expensive. Simply do a couple each night until you have them all finished. Turn the music or TV on and just fill them out!

Ryan O’Neill, from the Minnesota Real Estate Team, is our guest writer today.

Here in the Minneapolis real estate market, agents on our team have seen a number of real estate investors over the years who have purchased condos or lofts as investment properties. Though there is no “one size fits all” approach to buying investment property, I wanted to briefly touch on some of the benefits to you as the buyer with this type of property.

First of all, a loft or a condo generally speaking has a much lower level of maintenance. My wife and I have owned a number of single family homes in Bloomington since 2001. Though I am certainly not displeased with this type of investment property choice on our part, I have had to spend a sizable amount of capital on roofs, siding, and windows over the years. As an investor in today’s market, I certainly do not discourage investors from a single family home. However, if you do buy a single family home, it will definitely save you money long term by buying homes that do not require these sorts of updates.

Secondly, a loft or a condo does not require the normal sort of lawn and snow care maintenance that a single family home does require. Last week I received a call that one of my tenants was moving out of his rental home here in Bloomington. And course we received about a foot of snow since he has left. As the owner of the home, it is my responsibility now to remove the snow myself or hire a company to do so. Again, if this tenant was renting a loft or condo, there would be no such maintenance on my part as the owner.

Obviously, a condo will have a monthly association fee that will affect your monthly cash flow. However, with the current state of the market here in the Twin Cities, even condos and lofts cash flow after the association fees. And there are a ton of them for sale on the MLS.

Lastly, our team is excited to have put together a collection of the various Minneapolis condos for sale. We spent a lot of time putting together this loft and condo guide for all of our investors and owner occupied buyers alike. It is full of pictures of the myriad projects available here in our Minneapolis real estate market.

Incidentally, I wanted to congratulate Scott Ficek for being voted The 2008 Agent of The Year for The Minnesota Real Estate Team! Scott won award through the votes of his peers, our team of 40 real estate agents. Congratulations and thank you for providing such an awesome blog for Minnesota real estate investors!

Happy Real Estate Investing to all of you in 2009!