6 Financial Considerations for Baltimore Property Management
The key to receiving a return on your investment property is accurately recording income and expenses.
From reporting incoming rental funds to calculating total expenses, the entire process can quickly become overwhelming for busy investment owners and/or those with multiple rental properties throughout the Baltimore area.
With an understanding of what needs to be tracked and recorded, however, you can ensure you receive the optimal ROI for each property you own.
Income Sources and Expenses to Track
Understanding the net operating income (NOI) equation is important for any property investor. Without a firm grasp of this concept, you’ll find yourself making mistakes and missing out on potential profits.
The formula is simple enough: your net operating income is equal to your gross operating income minus operating expenses. But each of these variables has multiple inputs and expenses tied to it.
Your gross operating income is determined by taking your potential rental income, subtracting vacancy and credit losses, and adding other income.
If you are not currently working with a property management team, your operating expenses in Baltimore may include the following:
- Advertising and marketing. This is the total amount you spend on Internet marketing, paid advertisements, signage throughout Baltimore, listing fees, and more.
- Auto and travel. This refers to how much money you spend on traveling to and from your various properties for routine maintenance and inspections or to show the property to potential tenants.
- Cleaning and maintenance. Whether it’s as simple as having the floors scrubbed and countertops wiped off or as time intensive as laying new flooring and installing new appliances, there are always cleaning and maintenance expenses incurred prior to welcoming a new tenant.
- Legal fees. A lease isn’t anything to cut corners on. A high quality, accurate lease that protects your interests requires the attention of an experienced attorney.
- Utilities and taxes. Unless your tenant pays for all utilities and taxes, you will incur some of these expenses. They should be accounted for.
- Insurance. Rental property insurance is often overlooked by many landlords, but is crucial to protecting yourself and your property.
It’s also worth noting that there are some additional expenses that are not figured into the NOI equation. These include debt service, depreciation, income taxes, tenant improvements, capital expenditures, and more.
Your Easy Button: Baltimore Property Management
Thankfully, as an investor, you don’t have to worry about all the finer details that go into turning a profit on a rental investment. By hiring a local Baltimore property management company, you can focus on the big picture while letting somebody else take care of the particulars.
From screening tenants, facilitating maintenance and repairs, and setting rental rates, to handing contracts and tracking expenses, a property management company can save you lots of time.
Bay Property Management Group
At the Bay Property Management Group, we offer premier property management services in Baltimore.
Whether you have a large portfolio or a single property, we can help you by relieving the burden of tracking expenses and handling tenants. It is always our goal to reduce your expenses and increase your net operating income.
For more information, contact us today. We would be happy to discuss our services in further detail.