Thinking about becoming a landlord?
While a career in Maryland property management can provide you with a great stream of somewhat passive income, you should realize that it will also require some hard work.
Therefore, it’s important to do your research on what being a landlord actually entails (which is much more than just sitting back and watching the money pile up!).
Consider these 5 important things before you jump into a career as a landlord:
1. You must follow several legal rules.
Being a landlord isn’t as simple as renting out your property any way you’d like. You must operate in accordance with the law.
Here are a few common legal mistakes made by landlords:
- Failure to Provide a Safe Environment – In several states, landlords are legally required to take reasonable measures to ensure the safety of tenants from criminals and other tenants.
- Refusal to Make Repairs – It is a landlord’s responsibility to provide a habitable rental unit. If this does not happen, the tenant may report the violation to a state building inspector or put their money in escrow.
- Disregard of a Tenant’s Right to Privacy – A landlord cannot enter a tenant’s rental unit without giving a written or verbal notice 24 hours in advance (except for when an emergency occurs).
There are several other legal traps that landlords often fall into. Be sure to perform thorough research when it comes to what is legal and what is not before you rent your property.
2. Budgeting for repairs is a good idea.
Setting aside money for simple maintenance costs isn’t always enough. You need to take an extra step and budget for unexpected repairs as well. If you’re not sure how much to put aside, start with 1% of the total value of your rental property per year. Of course, you may need to adjust this amount to fit your specific needs.
To avoid unexpected repair costs, take a proactive approach by doing whatever you can to prevent problems from arising in the future.
3. Properly screening potential tenants is crucial.
Think about it – would you rather stress out every month over rent payments and the upkeep of your property, or would you like to have peace of mind knowing that you’ll get paid on time and that your property will be well-maintained?
Obviously, the latter is much more appealing. That’s why it’s incredibly important to screen your tenants before you let them move in. By doing so, you can save yourself the headache of dealing with constant issues.
Here are some tips to help you screen a tenant and make a good decision about who will live in your property:
Before you create your rental application, you’ll need to understand that you cannot make a decision about who you choose to be your tenant based on personal bias.
In other words, your application cannot ask your tenants questions about race, gender, or religion.
Now that you know what you shouldn’t include on your application, here are some things you should include:
- Personal References – You’ll want to get the names and contact information of a couple personal references for your prospective tenant. Be sure to ask the references how long they have known the tenant.
- Financial Information – You should make sure your tenant’s income can cover rent plus their living expenses.
- Employment Information – You may want to be wary about renting to a tenant who has an unstable work history. Check to see how long they have been at their current job, and see how often they tend to switch jobs.
- Contact Information for Previous Landlords – Reach out to the prospective tenant’s previous landlords and check to see if they consistently paid rent on time and maintained the property.
- Lifestyle Information – Find out the number of occupants your prospective tenant plans to have living in your property, and ask them whether or not they have pets.
When you get the application back from your tenant, review it thoroughly and be sure to address any concerns you have about their answers.
Get a Full Background Check
While a background check will cost you a bit of cash, it’s well worth it. After all, a bad tenant can cost you much more in the long run.
By running a background check, you can find out whether or not your prospective tenant has been evicted, learn their credit score, and see whether or not he or she has a criminal past. This will help you make an informed decision when you’re choosing who to rent to.
Stick to Your Standards
Don’t let a charismatic prospect charm you into compromising on your standards.
Remember, likability is not indicative of a responsible tenant. Base your decision on the information you have gathered about the prospective tenant – not their personality alone.
4. Expect to work outside of typical business hours.
When you take on a career in property management in Maryland, you can expect your days to be pretty unstructured. After all, problems with your property won’t just arise during normal working hours.
In fact, emergencies can happen at any hour, and you’ve got to be prepared to handle them.
Plus, your schedule can change at any given moment. For example, imagine that you go to your property to inspect a minor issue. When you arrive, your tenant begins talking about other issues that he or she is experiencing with the property. Suddenly, what seemed like a quick, easy job turns into a major ordeal, causing you to spend extra time at your property.
Be prepared for situations like this to arise at any time, and practice good time management skills to the best of your ability.
If you’d like, you can even set your own “office hours” and let tenants know to only call you during those hours unless they are experiencing a major emergency.
5. You’ll work hard and juggle many different jobs.
Being a landlord isn’t like taking an office job where you have one primary responsibility. You’ll need to perform several different tasks regularly, including advertising the property, collecting debts, and making repairs as needed.
Adapting to the many different roles that a landlord must take on is one of the keys to success.
While it may take some time to adjust to, you’ll find that Maryland property management can be very rewarding, and not just from a monetary standpoint. You’ll also enjoy developing positive relationships with tenants and gaining the personal freedom of being your own boss.
Want to be a landlord without the hassles of managing your property? Whether you’re in Montgomery County, Baltimore Country, or somewhere else in Maryland, Bay Property Management Group can help!
As a top-rated Maryland property management company, we’d love to provide you with the assistance you need. Less than 1% of the tenants that we put into a property end up getting evicted, so you can feel confident that we’ll screen your prospective tenants until we find the right one.
Contact us today, and let’s discuss your property management needs.