Investing in Rental Property is a Big Decision

Posted on by Bay Management Group

However, rental property investing is a decision that has the potential to reap some incredible benefits.

That is, as long as the real estate investment you’re making is one based on knowledge, and is not something you’re blindly going into.

Knowing as much as possible ahead of time about the rental property you’re looking into, and your options as an investor is the position you want to be in before shelling out some serious money.

And we at Bay Management Group are here to help you gain the knowledge you need to make the best decision for your rental property portfolio.

We hunted through real-life rental property listings and came upon one that gives us the perfect opportunity to fill you in on what you need to know before investing in a property such as this.

Keep reading to find out why the property we have chosen is, from an investor’s perspective, is a solid rental property investment.

1827 Ingersoll St, Philadelphia, PA

 

Finding The Perfect Rental Property To Invest In

The Area

The house we chose is in the neighborhood of Brewerytown which, according to the Philly Voice, is the best neighborhood in all of Philadelphia. What was once somewhat run-down “North Philly” has transformed into a highly popular area with great eats, beautiful architecture, a rich history, and more.

The roots run deep here in Brewerytown, but it has also become a place of innovation, where new ideas for expansion and improvement of life are blossoming.

Here are a few highlights of the neighborhood where this rental property is located:

Culture

Here you’ve got the Art Museum and the Philadelphia Zoo within walking distance, along with many more Philly arts and culture highlights, thus making Brewerytown a place people want to be living.

Retail

Though there are already some great stores in this area, new ones keep coming. The shopping experience here is getting better and better every day, and it’s not long before this becomes a shopping hot spot.

Food

The options for eats here are a foodie’s dream. Philly favorite Angelino’s serves up top-notch Italian Cuisine, and classic spots such as Blue Jay Restaurant and Butter’s Soul Food are right in the neighborhood.

Transportation

Dubbed “one of the most accessible sections of the city,” Center City is a 15-minute car ride away. You’ve also got SEPTA running all around you, and are just five minutes from I-76.

Zillow estimates that home values in this area will increase nearly 7% over the next year, so this clearly is a neighborhood whose potential is continuously on the rise.

The Property

Philadelphia Investment Property Example

With the popularity of Brewerytown growing consistently, it is a good idea to grab up rental property in this Philadelphia neighborhood while you still can.

This is especially true if the property is like what we found at 1827 Ingersoll Street. This 1,108 square-foot single family home consists of 3 bedrooms, 1 full bathroom, and 1 half bathroom.  

With an asking price of $110,000, there is undoubtedly some money to be made by investing in this property. The purchase price of this home is reasonably low as compared to the amount that you can potentially get for rent.

But, as mentioned above, this is not an investment you want to make unless you have some sound research to back it.

Follow along with the in-depth analysis of 1827 Ingersoll we have put together so that you can see for yourself why this property makes for a sound investment.

Fix Up

One of the first things you want to take a look at when investing in rental property is how much repair the property needs.

The last thing you want is to throw money down on a property you think is ready to turn around to renters, only to find out the place needs some serious upgrades that will cost you a pretty penny.

Instead, before purchasing, do an analysis of what work needs to be done.

For this specific property at 1827 Ingersoll, you would likely be looking at the following upgrades and repairs:

  • New carpeting (estimated at an average of $2.25 per square foot for an economy grade)
  • A fresh coat of paint (estimated at an average of $1.88 per square foot for the interior)
  • Kitchen appliance upgrade (estimated at about $3000 for refrigerator, stove, and range, and dishwasher, plus installation)

These upgrades are based on the pictures shared on Zillow, so you may uncover more when you go to see the property in person.

Here are some other repairs to keep in mind and ask the realtor about when further investigating this house on-site:

  • Does the property need a new roof?
  • Does the property need new siding?
  • What is the condition of the piping? Is it old galvanized piping or is it PVC?
  • How is the HVAC system?
  • Does the property need a new water heater?
  • Any foundation issues or signs of flooding?
  • Do any of the kitchens or bathrooms need to be renovated?

This is certainly not an all-inclusive list, but all of the above are questions you want to get the answers to.

Financing

Before you determine that 1827 Ingersoll is the property you want to invest in, now it’s time to take a look at your financing options.

Conventional

While there are a plethora of choices when it comes to financing an investment property, we are going to focus today on a traditional 30 year fixed rate mortgage.

With this financing choice, you will most likely head to a national lender such as Wells Fargo or Bank of America and apply for a loan for the cost of the property. In the case of 1827 Ingersoll, its purchase price is $110,000 which means after negotiating with the seller you can probably get the property for $100,000.

So, for a property that costs $100,000 (based on your income and credit score), you will be looking at putting down 20% on the loan, or $20,000.

Keep in mind that these numbers assume that no significant items need to be addressed such as a new roof, new plumbing, a new HVAC system, etc. If that type of work is indeed necessary for the Philly property, then a 30-year fixed rate loan is likely not the way to go.

Rent

Given the growing popularity of this area, the size of the property, and the updates that you will be doing to bring this Philly property up in value, a competitive rental price for 1827 Ingersoll is $1,450/month.

Monthly Recurring Costs

IF you are looking to get a mortgage and finance this property it will require a typical 20% down, cash out-of-pocket conventional loan on the property at 1827 Ingersoll, your estimated mortgage payment will be $405.00 a month.

This amount is based on a 30-year fixed rate loan at 4.5% which seems a good possibility for a generally well-qualified applicant with solid credit and income history.

In addition to the monthly mortgage payment, you can expect the following costs every month:

Taxes (estimated for 1827 Ingersoll at $82.83/month)

Insurance (estimated at $45.00/month)

Management fee — 8% of rent (estimated at $116.00/month)

Property management companies handle the parts of your investment property you don’t want to have to think about — from tenant screening to maintenance; evictions to turnover, and everything in between.

Thus, with the financing for your new investment at 1827 Ingersoll, you are looking at a total of an estimated monthly recurring cost of around $648.83.

Ongoing Maintenance and Reserves Costs

In addition to the fixed monthly costs you’ll have at your property, you will have other costs that may come up on a less routine basis but that it is prudent to build reserve funds for these future expenses.

What exactly do we mean by that?

Well, you will want to have or to be building a reserve for the following:

Capital Expenses

This category of expenses includes things such as repairing the roof, putting in a new HVAC system, repaving the driveway, siding, kitchen renovation, water heater and much more.

To be safe, we recommend for this property that you set your capital expenses at 5% or $72.50 per month.

Rental Property Maintenance

No matter how well your tenants take care of your property, there are going to be maintenance issues. Thus, you want to set aside some money for when the time does come.

So we suggest that you set aside 5% or $72.50 per month for this.

Vacancy

In an ideal world, your property at 1827 Ingersoll would never be vacant. Unfortunately, that is not the case, so you want to have a stash of extra money for when vacancies do occur.

Again, 5% or $72.50 per month should be enough for this specific neighborhood.

Tenant Turnover Costs

This reserve is one to be kept for things such as the turnover costs you face each time a tenant leaves your property, and a new one comes in. Items that fall under this category include new paint and lock changes.

This can also be estimated at around $50/month for this property.

Delinquency Costs

We hope we get a good stable tenant that pays on time and every month.  However, the reality of it is that bad things happen and to be safe we should allow some reserve to accrue to help pad the account in case a tenant loses a job or is unable to pay their rent on time.

We would suggest a 5% monthly reserve should be good – so far this property as with the previous estimates something around $72.50 per month would be an excellent place to start.

Thus, for these calculations, we are going to estimate the total ongoing monthly management reserve account expenses to be $350/month.

Consider an LLC for your Rental Property

Putting your rental property in an LLC is a great way to protect your assets. Let’s say one of your tenants sues you, claiming they got poisoning in your property from exposure to lead paint.

If you have formed an LLC that you have placed your property in, the tenant can only sue you in an attempt to take the assets in the LLC.

If, however, you did not form an LLC, and the property is in your personal name, then your tenant can sue you to try and take any of your assets, including taking money that is in your bank account, garnishing your wages, and more.

Forming an LLC in the state of Pennsylvania is a relatively easy and inexpensive process. Just fill out the appropriate LLC paperwork, and pay $125/year for your LLC.

Totals

Now that we’ve gone into the details and analyzed the costs involved in purchasing 1827 Ingersoll, let’s recap.

Purchasing Price: $100,000

20% down (if going route of conventional 30-year fixed rate loan): $20,000

Estimated Mortgage Payment: $405.00

Taxes: $82.83

Insurance: $45

Management Fee: $116

Reserve for Capital Expenses: $72.50

Reserve for Maintenance: $72.50

Reserve for Vacancy: $72.50

Reserve for Delinquencies: $72.50

Reserve for Turnover Costs:  $60

TOTAL MONTHLY EXPENSES, DEBT SERVICE, AND RESERVES: $998.83

If your net rent is $1,450 a month, and your expenses are $998.83 a month, that means:

Estimated Net Operating Income: $451.17

So here are some popular terms to discuss when discussing this deal and just HOW good a deal it might be based on our estimated numbers.

Cash on Cash Return

The numbers you need to know do not stop at your estimated net operating income.

It’s important you take the math further to learn what your cash on cash return would be and how that might compare against both other real estate investments and other investments in general like stock, bond or bank deposits.

In the case of this property at 1827 Ingersoll, your cash on cash return is 27.07%.

What does that mean?

It means that taking into account the cash you actually put into the property ($20,000 down on the loan), you can calculate your return like this:

Estimated Net Operating Income: $451.17/month x 12 months/year = $5,414.04

Take that $5,786.04 in operating income a year (money coming in each year), and divide it by the amount you put down in cash (cash out of your pocket that went into the deal).

$5,414.04 / $20,000 = 27.07% cash on cash return

This shows that you can expect to yield 27.07% on this $20,000 “out of pocket” investment you made to purchase the property.

Cap Rate

This is another number you want to calculate before investing in a rental property — it looks at the investment without financing.  

Cap rate is designed to compare similar investments without taking into account the debt service or mortgage payments required if financing the property.  This would be a good comparison if you had $100,000 available for investment and were comparing the differences between a potential real estate investment and maybe a 20 year corporate bond.

Cap rate essentially lets you know if you are getting a good deal on the property. It does so by comparing what your return on investment is to how much you paid for the property.

Here’s the breakdown for 1827 Ingersoll:

Estimated Net Operating Income without Debt Service:  $856.17/month x 12 months/year = $10,274.04

Take that $10,274.04 in net operating income a year, and divide it by the purchase price of the property ($100,000):

$10,274.04 / $100,000 = 10.27% cap rate

This shows the potential annual interest income you could make compared to the amount of money you paid for the property.

Final Thoughts

As you can see, there is some number crunching involved in purchasing a rental property.

In the case of this specific property at 1827 Ingersoll Street in Philadelphia, we at Bay Management Group deem this rental property a good investment.

(Keep in mind that we do not know the status of things such as the roof, the HVAC system, etc., so the information we provided and the numbers we shared here are based on assuming those things are all in good shape.)

If you are interested in investing in this rental property or other rental properties in the Philly area, be sure to reach out to one of our Philadelphia Property Management specialists.

So if you want to try and mess around with your own Google Sheet putting in some of your own property numbers – here is a link to a copy of the spreadsheet we used for this Case Study.

It is set to “Read Only” – but you can go in and make your copy – under File – Make Copy:  You can get your copy by clicking HERE.

From the tenant placement process to lease agreement drafting; from rent collection to maintenance, we cover it all so that you can focus your attention on building your rental portfolio.     

Professional Property Management Case Study

Posted on by Bay Management Group

Property Management Case Study

Many real estate investors typically start out managing their own investment properties to “save” money.  This was the case with our Philadelphia investors who came to Bay Property Management Group Philadelphia with both management and tenant challenges. This is a Property Management Case Study to help show how in an effort to save money by managing his rental himself; he actually cost himself thousands of dollars and a ton of headaches over a very short period of time.

When Bay Management Group (BMG), a Philadelphia property management company, was initially contacted to review the challenges with this rental property it was clear what needed improvement.  From the revenue side of things, the property was renting 5-10% below fair market rents for the Fairmont area of Philadelphia near the Art Museum.  The owner seemed to be doing an unusual amount of repairs and upgrades for a property renting in this area for $1595 per month.

From a legal perspective, the owner’s documents and due diligence had some serious flaws, specifically some language in the lease that would not allow the landlord to charge a tenant for any damages done to the property.  And, potentially even more serious was the fact that the landlord had placed the tenant in the property without a valid certificate of rental suitability, and in Philadelphia, a landlord can not begin the eviction process without a tenant signed certificate of rental suitability in hand.

So, just after a short conversation and review of all the documents, there were some significant steps to be taken to fix the problems.

The tenants had already started to push the landlord around a bit with frivolous cosmetic repair requests and a few marginally malicious requests where they had complained about a door not shutting correctly where then a few days later the door was completely broken off the hinges.  The landlord correctly interpreted this as an underhanded (and potentially illegal) way for the tenants to show him they were unhappy with how quickly he had fixed their previous repair requests. So after a few months of similar issues where the landlord had complied with all legally pertinent requests, things were beginning to get out of control.  We see this too often with tenants. Once they feel like they can take advantage of a landlord, they keep pushing and pushing. In this situation, they eventually pushed as hard as to quit paying their rent altogether. Thankfully the owner contacted Bay Property Management to help him come up with a solution to this rapidly escalating problem.

BMG stepped in and immediately took the steps necessary to start the tenant eviction process.  The tenant, having probably been through this process before, started to pay rent slowly but was chronically late or behind the full amount that was due.  After consulting with the owner, Bay Management moved forward with filing a judgment to compel them to pay the entire judgment or move out. The tenant, having figured out that they were now dealing with a professional company that was now going to hold them responsible, quickly moved out and BMG was able to clean up the property and find great new qualified tenants at an 8% higher rent rate than the previous rent the owner was getting. This is why screening potential tenants is so critically important. Putting the wrong tenants in the property can cost you months of rent and significant damage to the property. Bay Property Management Group guarantees tenants for 6 months.

In this situation, the landlord got started in the right direction.  He bought a nice property in a good part of town. He worked hard at trying to make his tenants happy.  However, when the tenants decide to try and manipulate that kindness for their own financial benefit, it can become a serious headache for any landlord.  One of the many advantages of a professional Philadelphia property management group like Bay Management is that they can operate as the unbiased actor in this puzzle.  They bring the legal experience, previous tenant relationship experience, and overall best practices to the table that can save landlords thousands of dollars and miles of paperwork.

Saving Money With A Property Management Company

Conservatively, looking back it is clear that our Case Study Landlord saved at least $2000-3000 in both unnecessary repairs and damages to his investment property and potential ongoing legal fees to evict the tenants.  Couple that with at least an extra $1500/year in lost income it is easy to see why handing the property over to a property management company would have been the smart choice. The reason companies like Bay Management Group are able to get slightly higher rents than your average landlord is due to advanced technology and marketing strategies that your everyday homeowner does not have access to.

When you look at the costs of having a professional property management group help manage your properties for you, it always makes sense to look at the hard costs in dollars it takes to bring in a professional.  However, when something goes sideways (and it almost always does at some point) with a tenant, a neighbor, or even with the property itself, we feel that more often than not you will be far better off with a property manager working for you along the way.  We are sure this landlord felt so after his tenant adventures.

If you would like more details about this Property Management Case Study or would like to talk to any of our professional property managers, please reach out to us by either calling the office directly at 267-244-7215 or emailing our office manager at DAnderson@BMGPhilly.com

Baltimore Neighborhoods – Some of the Highest Rated

Posted on by Bay Management Group
Picture of Baltimore Skyline
Baltimore, Maryland, USA downtown cityscape at dusk.

Federal Hill, is a beautiful historic neighborhood, overlooking the South Baltimore harbor that ranks high in the best places to live in the city (3rd). Federal Hill itself forms a community park and outer edge of the neighborhood.  The historic Federal Hill takes its name from the celebrated ending of the parade after the Constitution of the United States was signed and monuments still mark the hill and the park and tell the story of its many places in our nation’s history.

Amenities of the Federal Hill neighborhood are:
A historic Cross Street Market built in the 19th century currently serves as a social and commercial hub of the area with restaurants, and pop-up shops in a fun atmosphere.
The neighborhood is also donned with various taverns and bars and serves as a popular location for music lovers; Federal Hill also hosts multiple street fairs each year.
Shakespeare on the Hill summer performances
American Visionary Art Museum
Maryland Science Center
The Baltimore city Light Rail runs through this neighborhood, making transportation a snap.

With a population of this neighborhood about the size of a country town at 7,800, it’s no wonder it pulls in an A+ rating. This city also falls in 6th for millennials in Baltimore, making it hip, tech-savvy and up-and-coming if this is something you are looking.

This neighborhood is one of the few in which its dwellers have left reviews. The Baltimore community calling this neighborhood home cites the friendly people, good businesses, convenience and a hot bar scene as just some of the reasons they love living here.
A+ for Nightlife
B+ for Housing
A- for Raising a Family
B+ for Diversity

Check out Bay Management’s hottest rentals in this neighborhood.

3 BR townhome in Federal Hill – https://bit.ly/2mlDGCs
Restored 3 BR townhome in Historic Federal Hill – https://bit.ly/2NW3T7o

Another solid A rated neighborhood, good for Families and Nightlife is Locust Point. Locust Point has a beautiful downtown and river views. With a population of just over 3,000 and a median income of over  $119,000, this neighborhood will feel urban but be sitting right on the bay also a little nautical. This neighborhood ranks #2 on Baltimore’s best places to purchase a home and we can understand why with 70% of people in this neighborhood owning their own home and the value of a home hovering right around $280,000.

One of our favorite Amenities is the strong sense of community – but the neighborhood wouldn’t be complete without the famous Fort McHenry ( birthplace of our National Anthem), the home of the popular workout gear – Under Armour, or the former Proctor & Gamble Soap Factory. Locust Point also served as a port of entry for Baltimore’s Polish-American, Irish-American, and Italian-American immigrants.  The neighborhood is described as vibrant and industrial and hosts some of the cities oldest row houses as well as its newest high-tech offices.

It is also at the heart of the Charm City Circulator Banner making connecting to another party of the city easy. It is a neighborhood anyone would want to be a part. A graduate  school student left a 5-star review on this neighborhood stating that it is “one of the safest neighborhoods” in Baltimore, with most crimes focused around burglary or theft, “parking is easy, people are friendly, and it is within walking  distance of grocery stores, restaurants, bars, and gyms.”

A+ for Nightlife
A-  for Housing
A- for Raising a Family
B- for Diversity

Check out Bay Management’s hottest rentals in this neighborhood.

Gorgeous 2 BR/w Den – https://bit.ly/2LkITZk


While Mt. Vernon may not have made the list of best places to live in the city of Baltimore,  they do hit #3 on best neighborhoods for millennials in Baltimore, so we thought this up-and-coming neighborhood deserved a shoutout.  After all, it does include the entire UM Medical Center Midtown campus, the Washington Monument and the neighborhood itself has been deemed a National Historic Landmark District as it was once home to the cities wealthiest and most fashionable families.

The population in this neighborhood now surpasses the 7,500 mark, and nearly all occupants in this historic neighborhood are renters – likely because many of them are university students as the area plays host to the following University Institutions and cultural centers:
The Peabody Conservatory of Johns Hopkins University
Walters Art Museum
University of Baltimore
Maryland Historical Society
Contemporary Museum
Maryland Institute College of Art
Joseph Meyerhoff Symphony Hall
Baltimore School for the Arts
Lyric Opera House
Center Stage
Enoch Pratt Free Library
Spotlighters Theater
Eubie Blake National Jazz Institute

Mt Vernon is also known as the gay area of Baltimore and caters to that specific population with gay bars, businesses and health care centers. So if this is something you are not comfortable with, you may want to keep that in mind.

The median home value in Mt. Vernon is $249, 108 and while the majority of crimes are theft, there are almost 4,000 a year – which number is oddly high when compared with the number of people living in the neighborhood. While most people give the area top rankings, the few lower rankings the community has are due to the age of the buildings and the maintenance required for upkeep.

The residents also cite the variety of food and professional opportunities as there is a diverse population that allows for a greater spread of authentic ideas.

A+ for Nightlife
D+ for Housing
B- for Raising a Family
A for Diversity


Check out Bay Management’s hottest rentals in this neighborhood.
Renovated Studio – https://bit.ly/2uBLfsA
2 Bed, 2 Bath Luxury Apartment – https://bit.ly/2NmUbKc
Multi-Story 2 Bed, 2 Bath  in Renovated Mt. Vernon Bldg – https://bit.ly/2NVftj9

For even more rentals in your Baltimore neighborhood visit:

https://baymgmtgroup.appfolio.com/listings#

 

 

12 Questions to ask your Property Management Company Before you Hire Them

Posted on by Bay Management Group

When choosing a potential Property Management company to help you out with your investment properties, there are a few things you should always consider?

For Rent
Small house with rental label

Here are 12 questions you should probably ask any company before you make a decision.

  1. The first thing you will want to find out is how long the company has been in business. If the company is just starting out, they will most likely experience some hiccups. However, they may also be very motivated to get the job done correctly.  Making sure the property management company has several years of experience is almost always a good box to have checked.
  2. Another thing you should find out is how many properties are they currently managing and what is their staff allocations to those properties.  You always want to look for a balance of a professional organization that hires and staffs appropriately for the number of units they have under management. We believe having at least 500 units under management is a good sign the current management company you are interviewing has a good base.
  3. What type of software are they using? You want to make sure they have a software that you can log into anytime to check your statements. Many older companies that have not kept up with the technological advancements do not have a cloud based software system for their clients. We would advise going with a company that has this type of technology. Appfolio is one of the latest softwares that property management companies are switching over to.
  4. What types of warranties do they provide their clients when renting their property? For instance Bay Management Group provides a 6 month tenant warranty when they place a tenant in one of their units. This can help put the homeowner or investor at ease. If a property management company is going to warranty their tenant for 6 months or longer they are most likely going to be doing a great job screening the tenant before they move them in into the property.
  5. Are you allowed to use your own contractors? Some property management companies allow you to use your own contractors, while others will only allow you to pick from their pool of vendors. We do not believe there is a right or wrong way, however you will want to ask this question because if you are someone who has a lot of good relationships with vendors, you will want to know this before you enter into an agreement with a property management company.
  6. What is the monthly fee? Are there add-ons or extra charges for specific services? You will want to read the property management agreement very carefully because most property management companies will have a lot of EXTRA fees tacked into their contract. Extra fees like filing your 1099 forms at the end of the year, inspecting the property on a somewhat frequent basis, an extra few dollars for sending your money electronically each month, vendor markups, renewal charges on lease renewals, etc..
  7. Who is on the lease? Is the management company on the contract with the tenant or the owner? This is good to know in case issues arise and legal action is needed. You will want to make sure the lease is reviewed so you understand where you liability falls.
  8. How are after-hours emergency handled?  Does the management company take care of all damage, repairs, and complaints and how do they get your approval for certain types of repairs?
  9. What is their policy for move-outs and how much notice is required? Are they able to show the property to the next tenant before the old tenant moves out? How far in advance do they start marketing for the upcoming vacancy?
  10. What is the renewal policy? Is it done automatically and are there extra charges for the owner or tenant if a new lease is requested?
  11. What is the eviction process? How long does it take, what additional fees are assessed, if any?  Do they have experience with evictions? Have them walk you through the entire eviction process and make sure you are not going to be charged any additional fees.
  12. Does the management company do regular inspections on your property for damage and wear and tear? Are there charges added when the tenant is responsible? How do they assist with repairs? Is there a monetary limit they will pay for or does it all come from you as the property owner?

There may be other questions you can think of to ask when you are interviewing potential property management companies – go ahead and ask them, and it never hurts to know more about the company that will potentially partner with you in this endeavor.

 

Bay Management Group’s Top Property Management Tips of 2017

Posted on by Bay Management Group

Top Property Management Tips for 2017

Becoming a successful landlord takes time, money, and patience. But most of all, it takes knowledge and experience to build a successful Maryland rental property business.

Here at Bay Management Group, we have what it takes to make it in the rental property industry – years of experience and a knowledgeable staff, complete with Maryland property managers that excel at providing superior customer service, garnering clients the highest rent rates possible, and making sure that tenants never go without what they need.

But something we also strive to do here at Bay Management Group is educate fellow rental property professionals.

Whether you employ us to manage your rental properties, are considering hiring a property management company to aid you in your efforts to become the most successful landlord possible, or are simply looking for tips and tricks to making it in the rental property business, we have you covered.

As the year comes to an end, and we all take a step back and evaluate our progress, we would like to remind you of some of the most important things you can take with you into 2018.

Keep reading to find out what our most favored tips and tricks from 2017 are for making it in the competitive rental property world, and find inspiration to make this upcoming year even better.

 

Our Top Property Management Tips in 2017

1. Know When to Raise Rent Rates

Property Management Tips Know When Raise Rent

We started the year off with a bang by focusing on the things you could do right away to make 2017 your most profitable year yet.

Knowing when to raise rent rates is a tricky thing that sometimes needs a property manager’s insight. However, with some help from the pros, the oftentimes difficult process of raising rent is made much easier.

 

2. Make Sure Your Pet Policies Are Legal

Something we recommend to all property owners is placing a distinct pet policy in their lease agreements.

After all, whether you want to allow tenants to have pets or not is a personal choice.

However, what is not a personal choice is whether to allow your tenants to have service animals in your rental. Knowing common landlord-tenant laws is key to avoiding legal trouble.

 

3. Stay On Top of Income Boosting Opportunities for Your Rental Property

Something income property owners never tire of is tips and tricks for boosting their rental income.

After all, that’s why you get into the business, right?

We at Bay Management Group always jump at the chance to share new tips on how to garner more income from your rentals. From lowering vacancy rates to tracking expenses and collecting every late fee that crosses your path, we are here to guide you along your path to success.

 

4. Set Goals as an Income Property Owner

Set Goals as a Maryland Property Manager

It would only seem appropriate that we remind you of the importance of setting goals each New Year.

It is not enough to set short and long-term goals just once during your career as a property owner. In fact, consistently re-evaluating your goals is going to bring you more success than you’ll find in setting goals at the beginning, and later forgetting them.

Take the time to re-assess your goals from 2017. See what you have accomplished in one year, and then find ways you can improve. This is the only way you will continue to grow and succeed as a landlord.

 

5. Keep Your Rental Secure

Rental property security will always be an important topic.

After all, your investment property is what makes you money. If it is damaged in any way, you lose money. Not to mention the nightmare it would be for your tenants to experience something as scary as a break-in.

As a property owner, it is your job to protect yourself, your property, and your tenants. That’s why we love sharing security tips with you, such as securing entryways and installing a security system.

Did we mention the more secure your property is, the more appealing it will be to potential tenants? That’s a great added bonus.

 

6. Opt for Online Rent Collection

It’s no secret that your tenants want convenience.

And, it just so happens that allowing tenants to pay their rent online is one of the most convenient things you can do for them.

Online rent collection saves you time, is a secure way to collect payments, makes bookkeeping easier (whether it’s on our end or yours), and best of all, prevents any disputes when it comes to whether a payment was made.

Take it from us – your tenants are not the only ones that will appreciate this convenient way of collecting rent.

 

7. Go the Extra Mile for Your Tenants

Go Extra Mile For Your Tenants Property Management Tips for 2017

Tenant retention is something even the best property owners contend with sometimes.

There are many reasons why tenants move, and they are not all attributed to a poor lease experience.

That said, recognizing when you have a high quality tenant, and appreciating them for being so great, can go a long way when it comes to lease renewal time. That’s because not all tenants need to move out of your rental after one lease term, though they have the option to do just that.

Encourage tenants to stay by forging solid relationships, renovating your property in ways they might not expect, or even giving them a discount on their monthly rate to show them how much you enjoy being their landlord.

 

8. Avoid Common Landlord Mistakes

If you just got into the rental property business this year, it is likely you learned a lot from your experience.

Let’s take a look at some of the most common mistakes new landlords make and see how you fared in 2017:

  • Not screening tenants thoroughly
  • Underestimating the cost of maintenance and repairs
  • Not being legally compliant
  • Failing to put it in writing, whatever “it” may be
  • Overcharging tenants for rent

 

Did you make any of these mistakes?

If you did, it’s okay. Everyone in the rental property industry learns from past mistakes.

And you have another opportunity to make things better just around the corner with the new year.

 

9. Airtight Lease Agreements Are Essential

Airtight Lease Agreements are Essential Rental Property Management

Drafting a solid lease agreement is one of the most important things you can do for your rental property business.

And, if you don’t use our expertise when it comes to lease drafting, you may find yourself in some hot water time-wise, financially, or even legally if you make some of these common mistakes.

Understanding how to write up a thorough lease agreement is in your best interest.

 

10. A Fresh Coat of Paint Can Go a Long Way

Knowing how often to paint your rental property can be difficult to determine.

This is especially true if you have long-term tenants leasing from you.

However, your tenants – whether old or new – want to enjoy living in the rental you are leasing to them. And, it just so happens that one of the best, and most affordable ways of doing this is to regularly paint the interior of your rental.

Know your paint types, find a neutral color, and plan how often you want to invest in a good ol’ paint job. It will make a world of difference.

 

11. Eco-Friendly Rentals Are In-Demand

We have discovered that more people than ever want eco-friendly rental properties.

In an effort to save money, reduce their carbon footprint, and have newer looking appliances, tenants want everything to be energy efficient in the place they lease.

Luckily for you, we rounded up some great energy efficient updates you can make to your rental property that won’t break the bank.

These updates will not only allow you to do your part for the environment, but they’ll also help boost your rental’s ROI, since eco-friendly places are what tenants are after.

 

12. Stay On Top of the Latest Investing Advice

Stay on Top of the Latest Investing Advice Rental Property Management Tips

Here at Bay Management Group we are not only dedicated to helping you become a successful landlord.

In fact, we want you to become a successful investor as well. That’s why we regularly share information about investing in rental property that you may not already know.

Understanding the process of purchasing a rental property, and the associated fees that come with that process, is important for anyone getting into the rental property business to know.

Don’t get caught going over budget because you didn’t know about the fees that come with buying a rental property.

 

13. Hire a Property Management Company Like Bay Management Group

Self-managing your rental properties can be difficult.

You may not be cut out for after-hour maintenance calls, educating yourself about landlord-tenant laws, or evicting tenants when they fail to pay the rent on time.

But we are.

That’s why investing in a high quality Maryland property management company is something you should consider in 2018, if you haven’t already.

We at Bay Management Group are convinced that anyone who wants to become income property owner has the potential to become a highly successful one – with the right knowledge and resources.

If you are looking to take your rental property business to the next level in 2018, contact Bay Management Group today and see how our Maryland rental property managers can help aid you in those efforts. With our combined knowledge and experience, you are sure to make the most of your rental portfolio and have the most profitable year to date.

5 Ways a Property Management Company Saves You Time And Money

Posted on by Bay Management Group

Hiring a Property Management Company Saves You Time and Money

Self-managing your Laurel rental property may sound like a good idea initially.

However, what you may not realize when you get into the rental property business is how much work is involved, and how much money needs to go into properly managing every aspect of your tenant’s stay in your investment property.

Not understanding the true time and money commitment involved with managing rental properties can kill your rental property business before you even get started.

You may feel you are maximizing your profits by taking on everything yourself, and not paying a property management company to do it for you. However, by not outsourcing your property management tasks, you may actually be doing yourself a financial disservice and making things much worse, without even knowing it.

If you want to become a successful property owner, you might want to consider hiring a property management company to help you.

Their experience, professionalism, and expertise can save you loads of time and money, and actually garner you more profit in the end, without you having to work so hard.

 

How Investing in a Property Management Company in Laurel Will Save You Time and Money

1. Reduced Vacancy Rates

Property Management Company Helps Reduce Vacancy Rates

If your rental property has no tenants, you are not collecting any money.

That’s why reducing vacancy rates is something most property owners prioritize.

According to Brenton Hayden, founder and chairman of the board of Renters Warehouse, vacancies are often listed as the number one reason people give in and hire a property management company.

The time and money spent on advertising, tenant screening, placing tenants, and drafting lease agreements is much better spent on an experienced property manager that is familiar with the area your property is in, the market trends, and the demographics likely to lease from you.

Plus, a good property management company can get your property leased within a few days or weeks, as opposed to months, which is a hang-up inexperienced, self-managing property owners often deal with.

 

2. Legal Compliance

Imagine the time it will take you to learn every federal, state, and local landlord-tenant law.

Now, imagine hiring a property manager that already knows every rule and regulation related to leasing rental property.

That’s a lot of saved time.

In addition, by hiring a Laurel property manager that is up to date on all rental property legal compliance, you eliminate the risk of unknowingly breaking a law, and ending up in a landlord-tenant dispute.

Things such as rental property inspections, taxes, fair housing, and anti-discrimination laws are all covered when you employ a property manager to handle your rental property.

Not to mention the complex eviction procedures that self-managing rental property owners find themselves getting involved in from time to time – without a clue as to what to do.

By entrusting a property manager to handle the legal aspect of your rental property, you significantly reduce the chances of getting into a legal dispute that will result in a financial loss.

 

3. Higher Quality Tenants

Get Higher Quality Tenants With a Rental Property Management Company

Your property manager will have the resources to attract only the best tenants for your rental property.

This is because they understand the market, the need for thorough (and legally complaint) background checks and tenant screening processes, and they also know how to advertise available properties to those that are likely to be high paying quality tenants.

As a property owner with little experience marketing your rental, there is a good chance you will advertise on the wrong platforms (at higher costs than your property manager would), and possibly attract the wrong tenant pool.

In fact, you may not even know how to properly screen for tenants according to their ability to pay, which can have dire effects on your bottom line when halfway through a tenancy your tenant stops paying their rent.

Trust a property manager to handle these details for you.

Not only does this free you up to do other things, it relieves you of the pressure to find perfect tenants for your property that can pay the rent rate you “think” you deserve.

(Yes, your property manager can also help you set the right rent rate for your property so you receive the highest ROI possible.)

 

4. Maintenance and Repairs

When it comes to maintenance and repairs, many self-managing property owners feel they can tackle all complaints that will arise during their tenant’s tenancy.

Come to find out, however, many property owners don’t like midnight calls, have no idea how to handle most repairs on their own, and do not have a list of reliable contractors that are licensed and insured to perform timely, affordable, and quality work on their investment property.

All of this adds up to a huge waste of time, and an even bigger waste of money.

However, if you enlist the help of a reputable property management company that has a 24/7 maintenance crew on hand, suddenly all of these time and money problems disappear.

With the right property manager, you no longer have to answer tenant maintenance and repair requests, and you save money thanks to the Rolodex of contractors your property manager has on hand to handle any repair, no matter how serious.

 

5. Rent Collection Enforcement

Rent Collection Enforcement Is Guaranteed When You Hire a Rental Property Management Company

Collecting rent from your tenants is how you make money.

However, what you may not realize is that collecting rent from your tenants can be challenging at times.

Even if you place the highest quality tenants in your property every single time, there is bound to be an issue or two with rent collection during your career as a rental property owner.

With a property manager on hand, you make rent collection easier in the following ways:

  • The lease agreement, drafted by your property manager, will strictly outline everything rent collection related
  • Your property manager will discuss with your new tenants the rent collection process so they thoroughly understand their obligations
  • There will be convenient ways for your tenant to pay their monthly rent
  • Any failure to pay rent on time will be met with swift consequences, again outlined in the lease and explained to your tenants
  • The legal procedure for evicting non-paying tenants is understood by your property manager so there are no illegal proceedings you have to account for
  • Your property manager will likely stand behind you in court if necessary, helping you to recover all costs related to a non-paying tenant

 

In Closing

As you can see, having a knowledgeable property management company by your side to ensure you get paid, no matter what, is helpful in saving you time and money.

With the right property manager on your side, helping you with tasks like tenant placement, lease agreement drafting, rent collection, and maintenance, you will have time to focus on building your portfolio, taking that extra vacation, or focusing on your day job.

If you are looking for a Laurel property management company to help you save time and money in the long run, get in touch with Bay Management Group today.

With years of experience in the rental property industry, we take care of every little detail related to your rental property so you don’t have to. Avoiding one bad eviction process, one lost lawsuit, one major repair request, or one less vacancy, more than makes up for the cost of investing in a property manager.

Top 5 Renovations To Improve Your Income Property’s ROI

Posted on by Bay Management Group

Top Renovations to Improve Your Rental Property's ROI

Part of becoming a successful landlord in Annapolis is making your rental property more valuable through renovations and upgrades.

This will not only help you justify asking for higher monthly rent rates, but allow your property management company to place higher quality tenants in your property.

Adding to that, renovations are known to increase your property’s resale value should you decide to sell your property in the future.

Lastly, performing the right renovations on your rental property will increase your overall return on investment (ROI), so you can profit more, and possibly pay off your mortgage quicker.

Understanding your rental property’s ROI will help you understand how well your property portfolio is working for you. That’s why it is crucial to know which renovations will generate a high ROI.

Knowing this will keep you from dipping into your profits and renovating something that will end up hurting you financially in the long run.

Today we are going to look at what ROI is, how to calculate it for your Annapolis rental property, and the ways in which the most common property renovations can help boost your ROI.

 

What is ROI?

Return on investment (ROI) is a metric used by real estate professionals to estimate the performance of an investment property.

In short, your property’s ROI will reveal how profitable your property is.

ROI is calculated by dividing the net profit of your investment by the amount of money invested thus far. The end result is then expressed as a percentage or ratio of how much return on your original investment you are making as a profit.

 

Calculating Your Annapolis Rental Property’s ROI

How to Calculate Your Annapolis Rental Property's ROI

To calculate your rental property’s ROI, follow these simple steps:

  • Calculate your rental property’s total annual rental income
  • Subtract all expenses (this is considered your annual cash flow)
  • Add any equity you have to build your annual cash flow (this is considered your net income)
  • Divide your net income by your total investment to get the ROI

For instance, let’s say you purchase an Annapolis investment property for $100,000. You charge $800 a month in rent, spend $200 a month on expenses, and have zero equity built up.

Here’s the calculation:

$800 rent – $200 in expenses = $600/month cash flow ($7,200 annually).

With zero equity built in, your ROI becomes $7,200/$100,000 = .072, or 7.2%.

Of course, things become more complex when you have built up equity, and you have financed your rental. Luckily, there are plenty of online ROI calculators to help you with the calculations.

Though there is no exact number to aim for, in general you should hope for an ROI between 6% – 10% (or higher) to truly know your investment is working for you, not against you.

 

Ways to Increase Your Rental Property ROI

If you are looking to boost your rental property’s ROI (and thus your positive cash flow), consider investing in some of the following renovations.

1. New Roof

Increase Your Rental Property's ROI By Putting In a New Roof

In the past, we have discussed the importance of having a basic understanding about your rental property’s roof, including how to assess it for damage and make the appropriate repairs.

This is not only for the safety and convenience of your current tenants, but for aesthetic appeal as well.

One of the first things anyone will notice when they visit your property is the exterior of the property, and that includes the roof.

Curb appeal is one of the best ways to entice potential tenants to lease from you. The better the exterior of your property looks, the higher you can charge when it comes to the monthly rent.

 

2. Landscaping

Speaking of exterior appeal, the way both the front and back yards of your rental property are landscaped will significantly influence how much you can ask for in monthly rent rates.

If you are looking to increase the value of your property’s landscaping, in an effort to boost ROI, consider the following renovations:

  • Add flowers, shrubs, and trees for added visual appeal and shade
  • Install a custom walkway, deck, or porch
  • Consider investing in a pool or hot tub
  • Design an outside kitchen area, complete with BBQ and food prep station
  • Include outside furniture such as lawn chairs and a table set
  • Add exterior lighting so tenants can enjoy the evenings outside

Many prospective tenants place a lot of emphasis on what they want to see in a rental property’s landscaping, whether it be in the front or back yards.

And, since some of these upgrades are relatively inexpensive, most landlords will have no problem adding a few exterior landscaping renovations to their rental property in an effort to get more return on their investment.

 

3. Flooring Upgrades

Improve Your Rental Property's ROI by Updating Flooring

The flooring in your rental property is the one thing your tenants will make the most use out of while leasing from you.

And, while it can be tempting to place the cheapest carpet possible throughout your rental as a way to reduce costs due to natural wear and tear, there are some affordable and much more effective options that will also add to the value of your rental.

Take the time to research what kind of flooring you want to upgrade to – hardwood, tile, higher quality carpet, laminate, concrete, or vinyl – before spending any money.

But remember, no matter which style you go with, a newly upgraded floor throughout your rental is sure to garner you a higher ROI immediately.

New floors are sturdier, better looking, more functional, and more appealing to anyone looking to lease a rental home.

 

4. Additional Square Footage

Adding more space to your Annapolis rental property is one of the best ways to increase the value of your investment.

This is especially true if you own property in a competitive housing market.

Consider adding an additional bedroom, sunroom, basement or attic, or even just opening up an existing room by removing a wall that is taking up space.

Additional square footage can help in a variety of ways. It makes for a larger living space, allows for additional family members or roommates to live with your tenants, and even gives those that work from home a way to enjoy a dedicated workspace.

No matter what you do, expect the value of your property to jump and your rent rates to increase accordingly if you renovate your property to have additional square footage.

 

5. Green Appliances

Improve Your Rental Property's ROI By Installing Eco-Friendly Appliances

With more people looking to do their part when it comes to helping the environment, renovating your rental property to be more eco-friendly is an excellent way to increase the value of your property.

Things such as green appliances are not only appealing to those looking to make a difference in the world (which drives tenant competition up), they also help lower your tenant’s power bills – which is always a bonus amongst those looking to rent.

What’s better, there are plenty of incentives offered by states and cities to help offset the cost of going green in your rental.

This means even more savings for you, happier tenants, and a higher ROI.

 

Renovating your Annapolis income property to increase your return on investment is always a good idea if your budget allows for it. Especially because after the upgrades are successfully finished, you will be able to instantly recover all of the costs you put into them.

If you are in need of a high quality property management in Annapolis company to help you with things like rent rates, good renovation ideas, and placing high quality tenants in your property that will pay what your investment is worth, contact Bay Management Group today.

We can help you determine which renovations will generate a ROI boost, steer you clear of upgrades that do not make financial sense, and make sure you keep your rent at a reasonable and competitive rate.

3 Ways to Help Your Tenants Calculate Renters Insurance Coverage

Posted on by Bay Management Group

How to Help Your Abingdon Tenants Calculate Renters Insurance Coverage

Requiring your tenants to have renters insurance is one of the best ways to protect yourself, your Abingdon rental property, and your tenants.

Unfortunately, many tenants feel that having renters insurance is not necessary.

In fact, a 2016 Insurance Information Institute poll reports that only 41% of renters have renters insurance, compared to 95% of homeowners that have a homeowners insurance policy.

Many tenants say that their belongings are not worth enough to have renters insurance. In addition, they feel that the property should already be insured by the landlord, and that renters insurance is an additional expensive that is too costly.

However, the truth is, tenants largely underestimate the value of their belongings and, thus, the value of having renters insurance.

It’s important to know that your homeowners insurance does not cover the cost of tenants’ belongings or tenant displacement.

And, despite what some people may say, a renters insurance policy is fairly inexpensive.

That’s why requiring your tenants to have a renters insurance policy in place before they move into your rental property is crucial to your success as a rental property owner.

And, it just so happens that there are ways you can help your tenants determine just how much renters insurance they need so that, should the unthinkable happen (think fire, flood, theft, or injury), they are properly covered.

Renters Insurance: A Quick Review

Renters Insurance Covers Furniture and Personal Belongings

Renters insurance is an insurance policy that protects tenants and their personal belongings in the case of an emergency.

It also covers personal liability issues should anyone be injured while on your property, or damage something while on the premises.

Lastly, a good renters insurance policy will cover additional living expenses should your tenant become displaced due to an emergency, or uninhabitable living situation.

According to Liberty Mutual, here are some of the key things renters insurance will cover:

  • Personal property such as furniture, clothing, and electronics
  • Valuable items up to a specified amount
  • Any personal belongings stolen from your car
  • Medical bills related to any injuries that occur on the property
  • Legal costs should anyone sue your tenant
  • Accidental damage done to your property
  • Reimbursement for housing and living costs in the case the property becomes unlivable

 

It is important to remember that some things will not be covered under a traditional renters insurance policy.

That’s why it is recommended your tenants talk to an insurance professional, in addition to speaking with you, before purchasing a policy to ensure they are properly covered.

 

Helping Your Abingdon Tenant Calculate Renters Insurance

Helping your tenants determine how much renters insurance to invest in is as simple as following these three tips.

 

1. Have Your Tenants Calculate the Value of Their Possessions

Have Your Tenants Calculate the Value of Their Possessions

The first thing you are going to want to help your tenants with is the overall value of their personal belongings.

This will include every personal item they own, not just the expensive items like furniture and electronics.

Remember, renters insurance is there to replace personal belongings.

If your tenant estimates they have $5,000 worth of personal items, and lose everything to a fire, only to find out they really had upwards of $10,000 in personal belongings, your tenant is going to be in financial trouble.

That’s because any purchases that exceed the insurance payout amount will fall upon the tenant to cover.

There are several that can help your tenants determine approximately how much all of their personal items are worth.

From there, the key is to insure belongings for more than the cash or depreciated value of the items, so that there will be enough coverage to actually replace everything.

 

2. Recommend Liability Insurance

Liability insurance is not always included in a standard renters insurance policy.

That’s why, as a landlord, it is helpful to either require liability coverage up to at least a certain amount, or strongly encourage tenants to add that type of coverage to their policies.

In fact, if you are working with an Abingdon property management company, chances are they are going to suggest you require liability insurance in additional to renters insurance before a tenant can move in.

Liability insurance typically covers things like bodily injury, medical bills, and property damage done by your tenants or guests in your rental property. This additional coverage is usually inexpensive and worth it to add on.

The last thing you want is your tenant to become financially responsible for an injury on your property.

This kind of financial strain may cause them to be unable to pay the monthly rent, and ultimately break the lease agreement early.

This leaves you without a monthly rent collection and with a vacant property that now has to be filled.

 

3. Encourage Documentation

Encourage Documentation of Purchases for Renters Insurance in Harford County

It is important to encourage your tenants to document their personal belongings via receipts and photographs.

This documentation, to be held outside of the rental property in an accessible and secure place, serves as proof that the amount of coverage owed in an insurance claim is legitimate.

Plus, taking the time to document every personal belonging helps your tenants calculate the actual value of their belongings, so the right amount of renters insurance is purchased.

For instance, you cannot claim you have a million dollars in personal belongings, and collect that amount after an emergency, without proof the belongings actually existed.

Insurance fraud is a big problem, and is something that is very carefully monitored.

It would be nice of you to remind your tenants that, in the event of an emergency that results in significant property damage, the insurance company is going to demand to see proof of their belongings before paying out on the policy.

 

Helping your tenants understand the importance of renters insurance should be one of your biggest priorities.

This is not only because it is helpful to your tenants, but because it is helpful to you as well.

Should an emergency, injury, or property damage occur, anything not covered by renters insurance may carry over to your homeowners insurance.

By requiring your Abingdon tenants to have renters insurance, you protect your bottom line and save yourself from higher premiums should something terrible happen to your property or the people inside of it.

If you own rental property in Abingdon or anywhere in Harford County and want help with structuring a lease agreement to require renters insurance, contact Bay Management Group now.

We have years of experience in the rental property industry, and know that renters insurance is necessary when it comes to placing new tenants in your investment property. We can draft lease agreements that require renters insurance, help your tenants determine how much they should be insured for, and help you maintain your bottom line should anything happen to your rental.

5 Avoidable Mistakes Landlords Make with Rental Agreements

Posted on by Bay Management Group

Landlord Mistakes to Avoid in Your Rental Property Lease Agreement

Though having one universal lease agreement satisfying every type of lease term possible would be great, in reality, every lease is different.

And, while using a universal lease form is possible, it is important to note that whether you self-manage your Dundalk rental property, or enlist the help of a property management company, there are going to be specifics that you need to address while drafting your property’s lease agreement.

As a landlord, there are many things to think about while filling a vacant rental.

To name a few, you must consider: advertising the property as available, performing the tenant screening process, conducting move-in inspections, and of course drafting the lease agreement.

Unfortunately, with all of the things you need to tend to, and the desire to rush the process of filling a vacant rental property, some landlords make dire mistakes in their rental agreements that can wreak havoc on their rental property business.

Don’t let these common mistakes plague your rental agreement while trying to quickly place someone in your vacant property.

Instead, learn from these mistakes (that others before you have made), and find out what makes a lease agreement one that protects you, your investment property, and your tenants.

 

Avoid These Mistakes While Drafting Your Lease Agreements

1. Not Properly Identifying the Tenants

Although this may seem obvious, you would be surprised how many landlords fail to address their tenants correctly in their lease agreements.

Remember, a rental agreement is a legal document, and should refer to your tenants by their full legal names.

No nicknames, shortened names, or names other than what are listed on driver’s licenses or identification cards should be allowed in the lease agreement.

In addition, you should have your tenants names located somewhere in the beginning of the document (typically in the first paragraph), as well as at the end of the document where the signature blocks are placed.

If you fail to name your tenants correctly on the lease agreement, you may find it difficult to enforce your lease agreement.

This is especially true if you land in court due to a landlord-tenant dispute.

If your tenants make claims that the people listed are not really them, you are going to have a hard time winning your case.

 

2. Not Researching Rent Rates

Research Rent Rates for Your Dundalk Rental Property

One of the key elements in a lease agreement is the monthly rent rate that your tenants are responsible for paying each month.

Failing to research the market rent rates properly and instead placing a random rent rate in your lease agreement will is something you want to avoid.

This mistake may cause you to over- or underprice your rental property.

If you overprice your rental, your tenant pool will shrink sizably, and any tenants that you have currently residing in your property are not likely to renew if you continue to raise the rate sporadically.

On the other hand, underpricing your rental property will harm your bottom line.

A great way to ensure you name the right rent rate in your lease agreement is to talk to your Dundalk property manager.

They will have insight into things such as current market trends, demographics of the area your property is located in, and the rates that similar properties are going for so you remain competitive.

Lastly, in order to avoid another mistake some landlords make, you should re-evaluate your rent rates every time you place a new tenant in your property to make sure to keep in line with current trends.

 

3. Not Personalizing the Agreement

Universal lease agreement forms don’t come with every lease provision you can think of. That’s why simply filling in the blanks is a bad idea, and is one that your Dundalk property management company will discourage.

Now is the time for you to be specific about the rules as they pertain to your rental property.

Take a look at some of the specific clauses you might want to include in your rental agreement:

  • Whether your tenants can smoke in the property
  • What type of interior alterations (temporary or permanent) tenants can make
  • If your tenants can have pets, and if so, which type, how many, what size, and what the deposits will be
  • Which maintenance responsibilities your tenants will be responsible for

 

All of this lease agreement personalization will ensure your tenants know exactly what is (and isn’t) expected of them while residing in your property. It will also outline the consequences for not following your rules.

However, as important as personalizing your lease agreement is, make sure you follow your state’s rental property laws.

For example, make sure you don’t overcharge on the security deposits and fees.

In addition, don’t ask your tenants to violate their tenant rights, such as forfeiting the notice of entry, so that you can do as you please.

Avoid these mistakes at all costs, as they will land you in some serious legal trouble.

 

4. Not Addressing Late Rent

Address Late Rent in Your Dundalk Rental Property

Earlier we mentioned the importance of setting an appropriate rent rate and placing it in your lease agreement.

That said, it is equally important to mention what will happen should the rent not get paid on time.

Failing to detail the consequences for late or non-payment of rent is a huge mistake.

This not only sets you up for continuous late payments, it makes it very difficult for you to receive compensation in court for non-payment of rent, should your tenant stop paying altogether.

Make sure to include the rent rate, grace period, late fees, and eviction process for non-payment of rent in your lease agreement, so that should you run into an issue with a tenant, you have the legal document backing you up that states both parties agreed to the terms and your tenant owes you money.

Late payment lease provisions are used to inform and motivate your tenants to pay their rent on time.

After all, you rely on their timely payment and often cannot afford to wait for them to pay when it is convenient for them.

In addition, this section not only protects you in the case of non-payment, it protects your tenants from illegal eviction proceedings.

 

5. Not Setting a Lease Term

In your rental agreement, it is crucial you designate a lease start and end date.

This way your tenant knows exactly when they can move in, and when they have to be out of your property, should they choose not to renew their lease with you.

In addition, there are some lease renewal options that some see as mistakes, that you and your Dundalk property manager should carefully consider while drafting a lease agreement:

  • Allowing for automatic lease renewals (how can you be sure you will want your tenants to renew one year from now?)
  • Including a month-to-month renewal option (both parties have the option to break a month-to-month lease with 30 days’ notice, leaving you little time to find new tenants)
  • Not requiring a 60 days’ notice of intent when it comes to renewals (leaving it to the last minute might leave you with no time to fill a vacancy, should your tenants decline your offer)

 

The Importance of an Airtight Lease Agreement in Dundalk

Altogether, none of these options are necessarily dire mistakes. However, they may cause you extra stress that can be avoided with a well thought out and thorough lease agreement.

Having an airtight lease agreement that addresses all of your concerns is important for everyone involved.

After all, the lease agreement is the document that both you and your tenants will refer to when there is an issue.

Therefore, the more thorough it is, the less confusion you and your tenants are bound to encounter.

If you own rental property in the Dundalk region, and want help drafting a comprehensive and legally compliant lease agreement, contact Bay Management Group today.

With years of experience drafting lease agreements for property owners, and extensive knowledge of the landlord-tenant laws, you can rest assured that every provision you want included will be integrated into each rental agreement so they you, your investment property, and your tenants are fully protected.

The Ultimate Safety Checklist for Your Bethesda Rental Property

Posted on by Bay Management Group

Ultimate Safety Checklist For Your Bethesda Rental Property

Tenants expect, and have a legal right to, a safe, secure, and healthy place of living when they lease from you.

This means you have an obligation to keep your tenants safe inside your investment property, secure from outside intrusions, and protected against any health concerns.

Unfortunately, if you don’t take the time to thoroughly inspect your Bethesda rental property regularly, issues tend to creep up and accidents happen.

However, a lot of that is preventable with routine property inspections, and a little bit of knowledge about how to keep your property safe for your tenants.

Enlisting the help of Bethesda property management is one great way to tackle rental property safety.

However, there are things you can do on your own to ensure your tenants feel safe while leasing your property.

 

Rental Property Safety Checklist

In the past, we have discussed extensively how to keep your tenants safe while residing in your rental property.

In fact, we even suggested that using the knowledge, experience, and maintenance crew a high quality property management company provides is the best way to keep your tenants safe, secure, and happy.

That said, empowering yourself with the details can be helpful when it comes to rental property safety.

And, while your property manager is well equipped with information regarding Maryland rules and regulations as they pertain to rental property safety, brushing up on your knowledge using this helpful rental property safety checklist is highly recommended.

 

1. Exterior

Check the Safety Of The Exterior of Your Bethesda Rental Property

The exterior of your rental property is not normally the first place that pops into mind when you think about tenant safety.

However, that doesn’t mean that you should ignore the safety of this part of your rental.

Here are some of the most crucial safety issues you and your property manager should concern yourselves with when it comes to the exterior of your rental:

  • The entire framework of your property should be sound and secure
  • All exterior portions of your property – the roof, foundation, and other exterior surfaces – must keep rodents and pests out at all times
  • Walls should have no visible holes, breaks, or rotting timber that would allow dampness to enter the property during rainy seasons
  • Roofs must have adequate drainage of rainwater to prevent structure wall deterioration
  • Any exterior surfaces made of metal or wood must be painted, weatherproofed, and sealed to prevent deterioration
  • Awnings, stairways, and overhangs must be secure at all times to keep them from falling, and also to protect them from decay and rust
  • Stairs, porches, balconies, and fire escapes must be able to handle their anticipated loads without collapsing
  • Windows, doors, and frames must prevent wind from entering the property, as well as rainwater and rodents, or other pests
  • Any windows used for ventilation and/or emergency escapes must easily open from the inside and be held in place using proper hardware
  • All exterior stairways and exits must be illuminated to discourage intrusion
  • Lighted pathway to the house for your tenants
  • All exterior door locks must be tightly secure and in good repair
  • From April 1 to December 1, it is your duty to provide tight-fitting screens for all doors, windows, or other openings used for ventilation

 

In addition, your Bethesda rental property may undergo inspection by the County Building Engineer.

If that happens, inspectors will require you to fix the following issues if anything is missing or deteriorating:

  • Any exterior features that create an unsafe condition for your tenants
  • Rotting of exterior walls or vertical supports that hold the property together
  • Deterioration of roofs or other horizontal features, such as balconies
  • Issues with exterior chimneys
  • Plaster or masonry that is crumbling, falling off, or otherwise deteriorating
  • Degraded weatherproofing on any exterior walls, roofs, or foundations
  • Any broken windows or doors

 

As you can see, Maryland does a good job of ensuring that your tenants will be safe from both the obvious safety and health issues that threaten the exterior of your rental property, as well as the lesser-known issues landlords may not know to look for during property inspections.

 

2. Interior

Check the Safety of the Interior of Your Rental Property

It can sometimes be easier to spot safety and health issues on the interior of your rental property.

However, it is always a good idea to familiarize yourself with the things the authorities are going to look for during property inspections, to make sure everything is safe and secure.

While there are many places to check on the interior of your rental, today we are going to focus on the plumbing, as there are plenty of rules and regulations concerning the plumbing:

  • Kitchen, bathroom, and toilet floors must be significantly waterproof, for sanitation reasons
  • All interior structures found with rodent or pest infestations must be treated in a way that is not harmful to your tenant’s health
  • There must be a separate room with a toilet and cold running water that affords your tenants privacy
  • Nearby each toilet there must be a sink with hot and cold running water
  • Each property must have at least one room equipped with a bathtub or shower that has hot and cold water running water that affords your tenants privacy
  • All fixtures, vents, drains, and water supply lines must work properly and be free of any leaks or defects
  • Plumbing fixtures must not only work properly, but must avoid inviting rodents or pests in, as well as never emit dangerous or offensive gases and odors
  • Hot water must run from each faucet at a temperature of at least 110 degrees Fahrenheit

 

Although this may seem tedious, it is important to know what is expected in your rental property when it comes to plumbing issues.

3. Smoke Detectors and Carbon Monoxide Alarms

Check the Safety of Your Carbon Monoxide and Smoke Detectors In Your Rental Property

There is sometimes confusion over whether maintenance of smoke detectors and carbon monoxide alarms are the responsibility of the landlord or the tenant.

 

Smoke Detectors

Property owners in Bethesda must install at least one electronic smoke detector in each residential property or unit.

Additionally, properties built before 1976 must include a battery-powered backup.

Every three years, property owners must submit written verification by a licensed electrician or the County Fire Department and Licenses that the smoke detector has been installed as required by law.

This verification will also certify that the detector is in good working order.

 

Carbon Monoxide Alarms

When it comes to carbon monoxide alarms, Maryland takes a hard stance.

To start, all rental properties that have fuel-burning equipment installed must have a working carbon monoxide alarm.

Each alarm must be installed in the common area of the property.

In addition, your tenants must be able to hear the alarm that is installed in the bedroom areas.

It is important to note that the carbon monoxide alarm sound must be easy to distinguish from the smoke detector’s sound.

Lastly, upon installing and testing each carbon monoxide alarm in your rental property, you are required to provide written documentation to at least one adult tenant in your rental instructing them how to maintain and test the alarm.

Have this tenant read and sign the document and keep it for your records.

Tenants leasing from you must do the following:

  • Test and maintain carbon monoxide alarms according to the manufacturer’s instructions
  • Replace batteries when needed
  • Notify you, via written certified mail, of any malfunctions

 

If you receive written notification that the carbon monoxide alarm is malfunctioning, you are then responsible for the repairing or replacing it.

 

Ensuring the safety and health of your Bethesda rental property and, more importantly, your tenants is serious.

It is your legal responsibility to make sure that your investment property is up to code and does not present any safety issues to those leasing from you.

And, one of the best ways to do this is to educate yourself about the state and local laws.

In addition, by regularly inspecting your rental property, you will be able to make sure that any maintenance, safety, or health concerns are addressed quickly, and do not affect your rental property business.

Better yet, by contacting a property management company such as Bay Management Group, you will have access to knowledgeable property managers and a reliable maintenance crew that can help you prevent any major safety issues, and can repair any minor maintenance issues that pop up during your tenant’s lease term.