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.

What to Do When It’s Time to Renew Your Bowie Tenant’s Lease

Posted on by Bay Management Group

What to Do to Renew Your Bowie Tenant's Lease

Though there are always exceptions, your typical lease agreement will probably last for one year.

After that, you and your tenants will have the choice to sign a new lease agreement for another lease term.

If you have high quality tenants living in your rental property, and you seek to build a successful rental property business, it is a good idea to consider inviting them to renew their lease with you.

After all, it costs more to acquire new tenants for your property than it does to retain the same ones, and renewing leases with existing tenants helps to lower your tenant turnover rates.

Plus, as a landlord, your goal is to keep your tenants leasing from you as long as possible so that you can continue to collect a consistent rent payment each month.

That said, let’s take a look at what you should do when it comes time to renew your tenant.

 

How to Approach Lease Renewals with Your Tenants in Bowie, MD

1. Ask Yourself If You Want to Offer a Lease Renewal

Keeping your current tenants in your rental property is (almost) always a good thing – that is, if they pay their rent on time, get along with the neighbors, don’t cause you any issues, and care for your property the way you want them to

However, if they cannot pay their rent on time, or always have an excuse for being late, are disruptive to others in nearby properties, constantly contact you or your Bowie property management company with complaints and are difficult to reason with, or have damaged your property in any way, you should cut your losses and look for higher quality tenants.

When it comes time to consider offering your current tenants a lease renewal, think about what kind of tenant they have been over the course of their tenancy, and make your decision accordingly.

 

2. Decide a Lease Term Length

Decide the Length of the Lease Term

Once you have decided you will offer your current tenants a lease renewal come the end of their lease term, you must decide on the new lease term’s length. You have several options:

  • One-Year Lease. Invite your tenants to stay another full lease term with you. This is typically one year (though some landlords allow for longer lease terms to ensure lower tenant turnover rates).
  • Short Term Lease. If you know you want your tenants to renew a lease with you, but are unsure whether you want them to stay for an entire term, consider offering shorter lease terms such as 6 or 8 months.
  • Month-to-Month Lease. You may find out that your tenant is interested in renewing a lease with you, but on a month-to-month basis. This can be a temporary solution to a vacant property, however, keep in mind that either you or your tenants can break month-to-month leases at any time (usually with a 30 days’ notice). This leaves very little time for you to prepare your rental and place new tenants without experiencing a vacancy.

 

Deciding how long you want to extend tenancy to your existing tenants is largely personal. It will also depend on what you plan to do with your property long-term.

However, if you can secure another full lease term with a good tenant, it’s definitely recommended.

 

3. Draft a New Lease Agreement

When you decide that you want to extend a lease renewal to your existing tenants, you need to draft an entirely new lease agreement with the help of your Bowie property management company.

This way you can designate the new lease start and end dates, as well as make any changes to existing lease provisions that you want.

For example, you may consider raising the rent in response to booming market trends.

On the other hand, you may want to offer a discounted rent rate as an added bonus for renewing with you another term.

You will also need to omit things such as security deposit clauses and first and last month’s rent collections, as these provisions do not apply to the next lease term.

Lastly, you may want to make changes to some of the more specific clauses you had initially placed in the original lease agreement.

For instance, maybe you will lift the no-pet policy and let your good-standing tenants get a dog.

Or, perhaps you will allow them to make minor interior changes that are temporary in nature so they feel even more at home in your rental.

Whatever the case may be, now is the time to make any changes you want.

Once the lease is offered to your tenants, and they agree, this new lease agreement will be the official document used in any disputes that may arise.

 

4. Invite Your Tenant to Renew

Invite Your Bowie Tenant to Renew The Lease

If you have decided to offer your existing tenant a chance to renew their lease with you, extend the offer with plenty of time for them to decide.

In fact, it is suggested you offer tenants a lease renewal option 90 days before their current lease is about to expire, complete with a requirement that they respond within 30 days of receiving the offer.

Giving your tenants plenty of time to decide whether they want to renew or not will help them plan a long-term strategy, should they decide to decline your offer.

In addition, should your tenant decline your offer, you will have approximately 60 days to get the tenant screening process underway so your property does not remain vacant for long after they move out.

You may wonder why a great tenant that is satisfied with you and your Bowie property manager might decline the offer to renew a lease with you. Just remember: it is not always personal.

For example, your tenants may not want to renew with you because:

  • They are moving out of state
  • A rental closer to their workplace is available
  • An unexpected life change has occurred such as marriage, divorce, a new baby, losing a job, etc.

In the end, there are many reasons why people move, and it may not always be because they don’t enjoy leasing from you.

5. Review and Sign

Last but not least, after you and your tenants have agreed to the new lease agreement, it is time you and your property manager go over the lease agreement line by line to make sure everyone understands what is expected of them.

Then, all that is left to do is gather a few signatures, and your tenants are on their way to leasing your rental property for another lease term.

 

Lease renewals are an integral part of the rental property business. They help reduce tenant turnover rates, keep vacancies at bay, and best of all, save you time and money.

Plus, if your current tenants are willing to sign on for another lease term, they must be satisfied with the services you are providing them.

If you are looking for a way to boost lease renewals, and give your current tenants even more of a reason to continue to lease from you, contact Bay Management Group today.

We are dedicated to providing both our property owners and tenants superior customer service. In fact, we do everything we can to ensure that your property is well cared for, rent is collected, and your tenants are happy living in your property.

The Top 5 Ways to Collect Rent From Your Bowie Tenants

Posted on by Bay Management Group

Top 5 Ways to Collect Rent From Your Bowie Tenant

Collecting rent from your tenants in Bowie, MD is one of the most important tasks assigned to your property management company.

After all, once rent is collected from your tenants, you get paid.

Today, we are going to look at some of the steps required to collect rent from your tenants, as well as some ways to go about collecting rent.

But first, we will review the more traditional ways of collecting rent, for a quick refresher.

 

How to Collect Rent From your Tenants

How to Collect Rent From Your Bowie Tenant

Here is a look at some of the best ways to collect rent from your tenants:

  1. Online. Allowing tenants to access an online portal to pay their monthly rent is typically considered the best way. It is convenient for your tenant, is secure, and it guarantees that the funds submitted are going to be deposited into your bank account.
  2. Check or Money Order. Though some Bowie property managers prefer not to accept personal checks (unless mailed in), a large majority of tenants still prefer to pay with paper checks. If you do not accept paper checks, money orders are a safe and simple alternative.
  3. Direct Deposit. There may be instances where you want your tenant to transfer their rent from their bank account directly into your bank account. Though not very common, it is definitely secure.
  4. Mail-in Payments. You can always go the more traditional route, and allow your tenants to mail their rent to either you or your property management company. However, the risk of your tenant’s check getting lost in the mail exists, and can cause a delay in your getting paid.
  5. In Person. There is also the option of having your tenants drop their rent off in person at your house (which is always risky) or at your property management company’s office. Again, this requires a personal check, a money order, or cash (which is never recommended).

 

As you can see, there are a number of ways to collect rent from your tenants.

But the question still remains: what are the steps to collecting rent from your tenants?

 

The Rent Collection Process

Rent Collection Process in Bowie, Maryland

The process of collecting rent from your tenants is rather simple if you employ Bowie’s top property management company to do it for you.

Here is a rundown of how your property manager should approach collecting rent from your tenants:

  1. Draft an airtight lease agreement outlining the rent rate, due date, and consequences for paying late
  2. Inform the tenant prior to move-in of the rent collection procedures, including the methods for submitting payment
  3. Collect rent each month through the approved methods
  4. Properly document all rent payments collected each month for tenants, property owners, and the IRS to see
  5. If a rent payment is late, begin the eviction process immediately – serve proper notice, file eviction paperwork, and prepare for legal proceedings if necessary

 

Although the process for collecting rent from your tenants is relatively simple, it is critical to not underestimate its importance.

This is especially true when it comes to dealing with late rent payments.

If, by chance, your tenants fail to pay their rent on time, your property management company should step in and handle the situation right away. You should not let your tenants feel that they can get away with paying their rent late.

After all, this is your rental property business, and you should treat it as such.

 

Additional Rent Collection Methods

Pay Rent Online Via ACH

There are several ways you can collect rent from your tenants during the course of their tenancy.

And, while some ways are recommended, such as collecting payments online, there are additional options that you can provide your tenants, if the situation arises.

 

Local Drop Box

This method is similar to allowing your tenants to drop their rent payments off in person to your property management company. However, this method affords both your property manager and tenant some convenience when it comes to the actual time of day that the payment is dropped off.

Rather than hand in a rent payment in person during regular business hours, having a drop box available makes dropping off rent at any time of the day possible.

Many of your tenants may work during the day and may need to drop rent off after-hours. Allowing them this option of a drop box may reduce late or delayed payments.

 

ACH Payments

ACH stands for Automated Clearing House, and involves the automatic collection of rent payments online.

Using an ACH payment service allows you to collect payments from your tenants electronically either as one-time payments, or as recurring payments by directly debiting your tenant’s savings or checking account.

This method is secure and prevents your tenants from having to use e-checks or credit/debit cards.

In addition, this method can be more cost effective than collecting payments via credit or debit card.

Why is that?

Because accepting credit and debit cards usually involves additional transaction fees in exchange for using the online rent collection service.

Lastly, collecting rent using the ACH payment method is typically faster than any online method, because payment is directly debited from your tenant’s bank account.

Processing this type of transaction is quick and easy.

 

PayNearMe

If your tenant does not have access to a computer, or prefers to pay in person but your property management company does not accept drop-off rent payments or does not have a drop box available, you can always consider offering them a PayNearMe option.

PayNearMe is a way to let your tenants pay their rent in cash to a local 7-Eleven or other business that collaborates with the PayNearMe program.

Using a unique card assigned to them for making rent payments, your tenant simply goes to the local PayNearMe business, pays their rent at the counter, and receives a receipt for payment. In response, you are immediately notified that your tenant has paid their rent in full.

This option is often much easier than getting a money order and delivering it, or mailing a check (complete with envelope, address, and stamp), and is a great solution for those that do not have online payment access.

 

Collecting rent from your tenants is one of the most important things you will do as a property owner.

And, if you enlist the help of Bowie’s best property management company, you will be placing the responsibility of rent collection in your property manager’s hands, which is a big weight off of your back.

If you own rental property and need a reliable property management company to aid you in the collection of rent from your tenants, contact Bay Management Group today.

We can help you with every step of collecting rent – from the drafting of the lease agreement, complete with rent payment details to the eviction process (if need be) – so that you don’t have to worry about any of the stresses involved in collecting money from your tenants.

5 Appliances That Receive The Most Tenant Damage

Posted on by Bay Management Group

Appliances That Receive the Most Tenant Damage in Your Takoma Park Rental

When it comes to the appliances you provide your Takoma Park tenants, you’ve probably included the basics like a dishwasher, refrigerator, microwave, and washer and dryer.

And, if you want to maintain an edge on the competition, chances are you are offering top of the line appliances that are environmentally friendly, modern by design, and of course, cost a pretty penny.

That said, it is extremely disappointing to find out at the end of your tenant’s lease term that those precious appliances you put into your rental property have been damaged.

Investing in appliances for your rental properties can help you command higher rent amounts and better quality tenants.

However, it is good to remember that not everyone is going to care for your appliances as well as you would.

And, since you can’t monitor your tenants 24/7, it can be tough to keep a handle on appliance care.

So, today we are going to take a look at some of the appliances in your Takoma Park rental that typically suffer the most tenant damage, and what you can do to minimize the damage in order to save you money in the long run.

 

Appliances That Take a Beating in Your Takoma Park Rental Property

1. Refrigerator

The refrigerator is probably one of the most used appliances in your Takoma Park investment property. That means that it receives a lot of attention on the daily, both good and bad.

Here are some of the things your tenant does that adds extra wear on your refrigerator:

  • Overfilling the Fridge and Freezer. Packing both the fridge and freezer with too many items leads to poor circulation throughout the entire unit. This makes the cooling fan have to work double time to keep things at the right temperature, meaning a burnout is more likely.
  • Dirty Condenser Coils. The coils at the back of your fridge are rarely, if ever, cleaned by your tenants. In fact, some tenants may not even be able to move the fridge to get back there and clean. However, if left for too long, these coils will have to work extra hard to provide electricity to the unit.
  • Water Filter Misuse. If your fridge produces filtered water, and the filters go unchanged for too long, the mineral buildup can ruin the entire system, and create poor quality water.

 

The key here is to remind your tenant of the steps they can take to prevent a fridge breakdown.

After all, if the fridge dies on them, you have to fix the appliance. However, they don’t get off scot free – they have to replace all of their spoiled food.

 

2. Dishwasher

Dishwasher Receives Heavy Tenant Use and Damage in Your Takoma Park Rental

Dishwashers are designed to clean dishes, but they are by no means magic.

Unfortunately, many tenants don’t understand, or care, how to properly use a dishwasher.

It is important your tenants understand that they need to rinse off dishes before placing them in the dishwasher.

More importantly, they need to know which type of soap to use in the machine itself.

Sure, dish soap cleans dishes while you are hand washing them, but if you put that soap into the dishwasher, you are in for a lot of trouble that could cost you an entire dishwasher.

When it comes to maintaining the condition of your dishwasher, inform your tenants, prior to move-in, how to use it correctly.

Also, record its initial condition during the move-in inspection.

 

3. Washers and Dryers

Appliances That Take a Beating in Your Takoma Park Rental Property

The washer and dryer are prone to extreme misuse by tenants living in your Takoma Park rental property.

And unfortunately, replacing them is going to cost you a lot if they break down, and the breakage cannot be attributed to tenant negligence.

Here are the most common ways your tenant is likely to abuse your washer and dryer units:

  • Failing to zip up zippers or remove coins, which both scratch the inside of the washer and dryer drums
  • Using too much detergent
  • Using the wrong detergent, such as dish soap
  • Overloading the washing machine with too many clothes
  • Not cleaning the lint trap or dryer vents
  • Never cleaning the buildup of debris from the inside of the washing machine
  • Leaving wet clothes in the washer for prolonged periods of time, which can lead to mold growth

Again, informing your tenants at the time of move-in how to properly use and care for the washer and dryer units will help reduce the damage those appliances typically see.

 

4. Air Conditioning and Heating Units

Air Conditioners and HVAC Units Receive Lots of Tenant Damages in Your Laurel Rental Property

HVAC units have been noted as the most problematic appliance tenants have to deal with in rentals.

And while sometimes problems are out of your tenant’s control, a lot of the damage to HVAC units is due to a lack of maintenance by your tenant.

For example, not replacing the filters that keep your air conditioning unit working properly will cause extra wear on the system, and eventually cause a breakdown.

One thing a lot of property owners do to avoid this, is provide free air filters to their tenants to help remind them to make the changes each month.

 

5. Garbage Disposals

Just as dishwashers are not magic dish cleaners, garbage disposals are not magic food crushers.

Designed for light materials that wash easily down the sink, garbage disposals are often prone to backing up, jamming, or burning out.

Here are some of the most common things your tenant is likely to place in the garbage disposal during their tenancy that they shouldn’t:

  • Bones
  • Vegetable peels
  • Coffee grounds
  • Eggshells
  • Corn husks
  • Grease and oil

 

The biggest piece of advice you can give your tenants when it comes to the garbage disposal is to use the provided sink strainer (that you should have available for use), so that none of these items, or foreign objects such as silverware, get stuck in the disposal and damage it.

 

As you can see, there are several appliances in your Takoma Park rental property that are easily damaged by your tenants.

And, despite them being high-quality tenants that never complain, always pay their rent on time, and don’t break the rules, the truth is, they are likely to be misusing at least one of the appliances listed above.

With Bay Management Group as your trusted property management company in Takoma Park, you can guarantee that proper move-in and move-out inspections will occur before and after every tenancy, to ensure that your tenants didn’t damage your property in any way.

And if they did, we take the correct measures for replacement.

Additionally, we pride ourselves in conducting routine inspections throughout lease terms to ensure nothing needs maintenance or repair.

And if something does, it is handled quickly and efficiently so that a minor repair doesn’t turn into a major repair.

So, contact Bay Management Group now, and see how we can help you protect your Takoma Park rental property appliances from tenant damage.

How to Know If You’re Keeping Your Prince George’s Tenants Safe

Posted on by Bay Management Group

How to Keep Your Prince George's County Tenants Safe

Your Prince George’s County tenants have a legal right to a safe and habitable place of living when leasing from you.

And, it is probably safe to say that you too want to provide a safe and habitable place for your tenants, regardless of whether it’s the law.

But how do you know if your investment property is truly keeping your tenants safe?

Well, you could start by asking your tenants if they are experiencing any issues in the home that they would like fixed.

But what do tenants really know about home safety?

In an effort to ensure your Prince George’s County rental property is safe and secure for your tenants, follow this quick and easy inspection checklist each time you or your property manager make the rounds at your investment property.

This way, you won’t have to wonder whether your rental property is keeping your tenants safe, you will know it is.

 

5 Safety Hazards You Can Prevent in Your Prince George’s County Rental Property

 

1. Carbon Monoxide

Carbon Monoxide Detector Keeps Your Prince George's County Tenants Safe

Carbon monoxide is an odorless, tasteless, and invisible gas that is fatal within minutes to those that inhale it.

In fact, more than 500 people nationwide die each year from carbon monoxide poisoning.

That’s why in Maryland, it is required by law that a carbon monoxide detector be placed in all homes that rely on fossil fuels (e.g. wood, kerosene, gasoline, charcoal, propane, natural gas, or oil).

When inspecting your rental property both prior to a new tenant moving in, and during routine inspections throughout the lease term, pay attention to where the carbon monoxide devices are placed, test them to make sure they are working, and change out the batteries regularly to ensure they are ready to protect your tenants at all times.

And, while you’re at it, do the same for any smoke detectors in your rental property as well.

 

2. Criminal Activity On or Around the Premises

As a successful landlord, it is your duty to make sure your tenant feels secure from both inside and outside threats to their safety.

This is why additional security measures on the exterior of your rental property are highly appealing to prospective tenants.

Here are some things you can check during the inspection of your property that will help ease your mind from the fear that criminal activity is threatening your current tenants:

  • Exterior lighting is in good working order
  • All hedges, bushes, and trees are trimmed back, and are not suitable for hiding in
  • Every door has a solid deadbolt for locking
  • No illegal drug activity or other criminal behavior is happening on or around the property
  • All doors and windows open and close properly – no sticking or looseness
  • Doors are made of solid wood or steel, and shatterproof glass is installed
  • Security bars are in all sliding glass doors
  • Window pins are present to prevent full opening
  • The home security system, complete with alarm and camera, are working properly

 

3. Lights and Electrical Outlets

Keep Lights and Electric Outlets Safe for Your Prince George's County Tenants

The dangers of electrical issues cannot be understated. Not only can they directly harm anyone in your rental property, they can cause a fire that ruins the structure of your property.

Testing all lights in and around your rental property is a great way to make sure everything is safe and secure for your tenants.

For example, make sure the lights work as intended to prevent injuries resulting from lack of lighting during the night.

In addition, make sure that there is no flicker, spark, or delayed response when turning on any light inside your property.

This may indicate faulty wiring and lends itself to a major fire hazard.

While testing your property’s lighting, it is also a good idea to check out any electrical outlets throughout the property.

You will want to look for things such as broken or missing cover plates, black marks that may indicate scorching, and dangling or frayed wires.

Lastly, don’t forget to inform your tenants not to use too many appliances per outlet, in order to prevent overloading circuits and sparking a fire.

 

4. Mold

Mold is something we discuss a lot here at Bay Management Group because it presents such a serious health hazard to anyone that comes in constant contact with it.

In addition, Maryland law is strict about property owners providing a safe and habitable place of living for all tenants.

In fact, it even requires landlords to manage mold issues if they arise in a rental property after a tenant moves in (so long as it cannot be tied back to tenant negligence).

Checking areas that have the potential to encounter a lot of water is a good place to start when inspecting your property for mold issues. Pipes, wood, carpeting, ceilings and roofs, near windows, and in the insulation of your property are areas that may be susceptible to mold growth.

 

5. Major Appliances

Major Appliances Cause a Hazard For Your Prince George's County Tenants

Though you may not think major appliances in your rental property pose much of a threat to your tenant’s safety, they do if not properly cared for.

Think about this: when was the last time you had your property’s furnace, HVAC system, plumbing and internal electrical systems inspected?

Knowing when to maintenance these items, as well as how to fix any problems, is important to your tenant’s safety and the structure of your property.

Make sure you keep thorough records of when professionals have been by to take a look and change out any parts, just in case your tenant requests to see that your property is being well maintained.

And what about the stove, oven, refrigerator, and washer and dryer units? 

Lint and dust build-up on any of these appliances pose major fire risks. This is especially true in any of the vents and tubes.

And, if your stove happens to run off of gas, it is crucial to test the lines and make sure they turn on and off properly.

If your property has a gas leak, your tenants could be in for a big, dangerous surprise the next time they light something in their home.

 

In the end, maintaining a safe and habitable home for your Prince George’s County tenants is a part of being in the rental property business.

It is your job to make sure that your property is safe and secure from both inside and outside threats, and that any complications are addressed quickly and efficiently, either by you or your property management company.

If you are looking to enlist the help of a Prince George’s County property management company to perform thorough move-in, move-out, and routine inspections on your rental property, contact Bay Management Group today.

We understand that the health and safety of your tenants falls on your shoulders, and can be a big responsibility. We also know that late-night maintenance calls and emergencies are not on your list of ideal things to do as a rental property owner.

So call Bay Management Group today and have us help you keep your tenants safe and secure throughout their entire lease term.

Should You Accept Cash Rent Payments From Your Tenant?

Posted on by Bay Management Group

Should You Accept Cash Rental Payment For Your Prince Georges County?

There are many ways you can collect rent from your Prince George’s County tenants.

And, while you may not place much thought into your accepted forms of payment, the ways in which you collect rent may be more important than you think.

Being able to collect rent on time every month, from every tenant you have, is the key to becoming a successful landlord.

In addition, being able to manage this cash flow coming in each month is going to impact whether you profit from your rental property business or not.

Some forms of payment are difficult to record, and have the tendency to create landlord-tenant disputes. On the other hand, other forms are extremely easy to document, since payments are made electronically.

The problem is, not all tenants are equipped to pay rent online, nor do they necessarily want to.

In fact, many tenants want to pay their rent in person with a personal check, cashier’s check, money order, or even cash.

But should you cater to your tenant’s needs, and accept payment in whatever way best suits them?

Today we are going to look at some of the top ways you can collect rent, and discuss whether they should be on your list of acceptable forms of payment. And of course, cash payment is top on our list to discuss.

 

Top 4 Ways to Collect Rent in Prince George’s County

 

1.     Cash

Accepting cash as a form of payment can be tempting. There is no risk of a bounced check, and you don’t have to wait for payment to clear.

However, this can be one of the riskiest types of payment to accept from Bowie tenants wanting to pay their rent.

Cash does not leave a paper trail like other forms of payments do. This can come to haunt you, should your tenant up and disappear mid-lease.

In addition, cash is easily lost or mishandled.

In fact, it can create a situation where your tenant is adamant they left you the full rent amount in an envelope delivered to you, when that is not really the case.

Then, while fighting it out in court, it will come down to a “he-said-she-said” situation that may not fall in your favor.

After all, there is no proof either way that the full amount was in fact ever in the envelope.

If you are determined to accept cash rent payments despite the above, here some tips to help you avoid problems:

  • Have your tenant deliver the full cash amount in person to you or your property management group each month
  • Make sure the money is counted out loud in front of the tenant, every single time
  • Provide your tenant with a receipt of payment complete with the tenant’s name, property information, date, and amount collected
  • Always sign the receipt, and keep a copy for your own record keeping

The problem with collecting cash from tenants, even if you follow the above-mentioned tips, is that it can be very time-consuming. This is especially true if you have many Bowie rental properties.

In addition, your property management company may not allow tenants to drop off cash rent payments with them.

The good news is, drafting into your lease agreement a “no cash” policy is relatively easy to do, especially if you have your property manager draw up the provision for you.

Just don’t forget to add in the acceptable ways tenants can make payments, so they understand exactly how to pay you each month.

 

2.     Credit Cards

Credit Cards Are a Great Option for Accepting Rent Payment Prince George's County

Closely related to cash when it comes to risk is accepting rent payments via credit card. This is because it is very easy for a tenant to pay their monthly rent to you, and then immediately turn around and make a claim with their credit card company that the charges were fraudulent.

In the event that this happens, you will not have the full rent amount until the situation is remedied. And, there is never a guarantee the decision will fall in your favor.

Though a tenant will not be able to do this month after month, you shouldn’t risk this when it comes to the last payment of the lease term.

Keep in mind however, that if you do want to accept credit card payments you can easily set up a PayPal merchant account, or something similar, and accept online payments that way.

This is much more secure, and the paper trail is established for you, though there is still the chance your tenant will dispute the charges.

In addition, payment gateways such as PayPal will charge you a small transaction fee per payment received, which can eat into your positive cash flow.

 

3.     Personal Check

The problem with collecting personal checks from your Bowie tenants is that there is no way to verify that the full rent amount is available in the tenant’s bank account until you try to deposit the check.

This means you will then have to deal with a bounced check, a delay in rent payment, and the challenge of recouping the actual rent from your tenant.

If you do accept personal checks, always make a photocopy of each check received, and document bounced checks to protect yourself, should a dispute over rent payments ensue.

 

4.     Online Payment Portals

Accept Rent Via an Online Portal in Your Prince George's County Rental

Accepting rent via an online payment portal is one of the best things you can do as a successful landlord. Here is why:

  • Tenants have their own secure account online they log into
  • Online accounts clearly indicate how much is due, and when
  • Payments are automatically withdrawn from your tenant’s bank account
  • Tenants typically receive confirmation of payment for their own records
  • Insufficient funds will not allow a payment to be made – something your tenant will have to deal with
  • Online payment portals are secure and connect directly to a tenant’s bank account, rather than a credit card
  • You don’t have to do any extra work
  • Payment records are documented for you

As you can see, there are many benefits to accepting rent payments online.

And, despite what a small percentage of your tenants might say about this method, most people nowadays have become familiar with paying their bills online, and don’t have a problem with doing so.

 

Rent collection is a major part of owning Prince George’s County rental property. After all, collecting rent is how you make money on your investment property.

There are many different options when it comes to deciding how to collect rent from your tenants. And, while each situation is different, there are some general rules to follow, if you want to avoid any kind of dispute later on in your tenant’s lease term.

If we at Bay Management Group can convince you of anything, it would be to avoid accepting cash rent payments at all costs. The risks far outweigh any convenience cash payments provide you or your Bowie tenants.

If you are in the market for an experienced property management company to help you with rent collection procedures for your Bowie rental properties, contact Bay Management Group today. We provide secure ways for your tenants to make their monthly rent payments, clearly outline at the beginning of each lease term what is expected of each tenant, and have a strict late-payment policy in place to protect you from non-paying tenants.

How to Recognize and Handle Landlord Stress

Posted on by Bay Management Group

how-handle-landlord-stress-takoma-park-rental-property

Being a property owner comes with a lot of stress. In addition to managing your rental property, as a property owner you must balance your work with everything else in your life.

This includes family and friend obligations, other work commitments, and free time. Not to mention, property related tasks such as rent collections, routine inspections, maintenance and repair requests, eviction procedures, and so much more.

Talk about a lot of things to handle at once!

If you own rental property in Takoma Park, and feel you may be falling victim to the stress that comes with being a landlord, keep reading to find out how to recognize and handle this issue.

Not only will these tips help you succeed in your rental property business, they will help you manage your work in a way that allows you to maintain a balanced and healthy life.

 

Are You a Stressed Out Landlord?

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Before we discuss how to manage the stress that comes with being a property owner, let’s first take a look at whether you are actually stressed.

What exactly is stress?

Stress is your body’s way of responding to a threat. This threat may be purely physical, or may cloak itself in the form of high demands that life regularly places on you.

In any case, as a way of protecting you, your body will begin to act differently in response to these threats.

However, if you remain stressed for too long, your health may begin to suffer and your body will not be able to protect you anymore.

Here are some of the most common signs you are a stressed out landlord:

  • Headaches
  • Memory issues
  • Aches and pains
  • Frequent colds or flus
  • Anxiety and irritation
  • Moodiness
  • Feeling overwhelmed
  • Eating more or less
  • Disrupted sleep patterns
  • Nervous habits (g. nail biting)

If you feel any of the above-mentioned symptoms on a regular basis, chances are you might be a stressed out landlord.

Unfortunately, denial often also comes with being overly stressed, thus making it difficult to recognize that changes in our behavior or moods are stress-related.

Also unfortunate is that it is sometimes considered a weakness to take a step back from the high demands of life and take a break due to increased stress.

In addition, we all have responsibilities that must be handled, and sometimes stress is not reason enough to forgo these responsibilities.

This is why learning how to manage landlord stress is a good tactic for staying the course without making yourself physically ill, or bailing on obligations.

 

How to Handle the Stress of Being a Takoma Park Property Owner

There are many ways you can handle the stress of being a landlord. And truthfully, what works for you may not work for another, and vice versa.

That said, here are some of the top ways to relieve the stress of being a landlord.

1. Make a To-do List…and Stick to it

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There are a lot of things you need to do when it comes to managing your Takoma Park rental property.

Even if you have an incredible memory, you are bound to forget something at one point or another. In fact, trying to remember everything you need to handle can become a stressor in itself.

One of the best solutions for this type of stress is to keep a to-do list.

With a to-do list, you can easily write down the things you need to take care of, prioritize them accordingly, and mark them off as you complete them, so you know that everything has been taken care of.

2. Handle Repairs Immediately

No property owner wants to jump right in and handle every maintenance and repair request made by their Prince George’s County tenant.

However, the longer you put those requests off, the worse the situation will become.

First of all, ignoring a tenant’s request will only anger them. They pay to lease from you, and expect all maintenance and repairs to be handled promptly by you, or your property management company.

In addition, a repair that you put off may turn into a bigger problem and end up costing you more time and money to fix. That alone can become the source of a great amount of stress.

Luckily, preventing this is easy, so long as you handle issues right away.

 

3. Have an Emergency Fund

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In line with efficiently handling all maintenance and repair requests is the idea that you should have a sizeable emergency fund on hand to handle such emergencies.

Money can be the source of stress in all areas of life. It is no different in the rental property business.

If you have ever encountered a major repair in your rental property, one that you did not have the money to repair right away, think about how that made you feel.

Stressed, right?

Avoid the stress of having to dip into your personal bank account to pay for rental repairs by building up and maintaining an emergency fund to be used specifically for your rental properties.

 

4. Become Educated About the Business of Owning Rental Properties

Sometimes you may become very stressed when a situation with your rental arises that you do not know how to handle legally.

If you want to avoid things such as housing discrimination and improper eviction procedures, consider educating yourself on the federal, state, and local rental property laws.

Take advantage of the wealth of free resources aimed directly at property managers, and learn from others’ past mistakes.

Educating yourself on how to save time, energy, and money in the rental property business can make you feel more confident as a landlord, and less stressed when a problem pops up.

 

5. Employ a Property Management Company

ease-landlord-stress-hire-property-management-company-maryland

One of the best things anyone with stress can do is to ask for help.

It is okay to admit that you are a stressed out property owner.

In addition, it is okay to ask for help from a professional that is experienced in managing rental properties.

By hiring a Prince George’s County property management team, you will save yourself time and money.

Best of all, you will lessen the stress that is placed on your shoulders when trying to self-manage a rental property, and will be able to attain that work/life balance.

A quality property management company can do the following for you:

  • Advertise your rental immediately upon vacancy
  • Screen potential tenants and weed out problem tenants
  • Draft legally compliant lease agreements that address everything you want
  • Routinely inspect your property to ensure maintenance
  • Handle all maintenance and request calls, no matter the day or time
  • Properly evict a tenant, if necessary
  • Back you in the case of a landlord-tenant dispute that lands in court
  • Provide affordable management fee prices so that you can afford help

If you are in the market for an exceptional property management company to help you manage your Takoma Park rental property, contact Bay Management Group now. Not only can we handle everything listed above, we can take away the stress of being a landlord from you.

In the end, we believe that you should not take on the bulk of the stress that comes with being a property owner; rather, we should.

You should focus on enjoying the benefits of owning Takoma Park property, collecting monthly rent payments, and working your way towards a happy, and healthy life, free from stress.

How to Deal with Late Paying Tenants

Posted on by Bay Management Group

how-deal-late-paying-tenants-prince-georges-county-rental-property-management

One of the biggest challenges property owners in Prince George’s County face is collecting rent from tenants.

Though ideally every tenant will pay rent in full and on time every month, all property owners know that this is not always realistic.  There will be a late paying tenant at one point or another; it just comes with being in the rental property business.

So, how do you deal with late paying tenants?

To learn how to handle non-paying tenants before it becomes an issue for you, keep reading.

We are going to reveal some of the most effective ways to handle tenants that do not pay their rent on time, because the truth is, this is very much a part of being a property owner.  Equipping yourself with ways to take care of late rent payments will ultimately lead to the best outcome for both you and your tenants.

 

Top 5 Ways to Handle Late Paying Prince George’s County Tenants

Late rent payments come with the territory of being a property owner.  And, while some property owners and their property management companies can be quite forgiving when it comes to late paying tenants, you do not want this to become a recurring issue.

Here are some of the best ways to handle late paying tenants, along with a few important considerations, when you are faced with the fact that your rent payment will not be deposited into your bank account on time.

 

1. Set Clear Expectations from the Start

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Before diving into how to handle a late paying tenant, it is important to understand the proactive approach to preventing late payments in the first place.  Although not foolproof, setting clear expectations at the time of move-in is going to be one of the best ways to get your tenants to pay on time every month.

  • Set a clear payment date. In the signed lease agreement, you should have a designated rent payment due date clearly outlined for your tenant to see.  This often fits best in the same section that details how much the monthly rent rate is and what the acceptable forms of payment are.  If your tenant knows very clearly beforehand when rent is due, they may be less likely to miss the payment.
  • Dictate a “late payment” date. If you or your Prince George’s County property management company want to allow a grace period for “late” rent payments, include that in the signed lease agreement as well.  This way, your tenants know exactly how many days past the rent due date they have to pay without penalty.  It is also important to designate on what date a rent payment will be considered “missed.”
  • Set a “missed” payment penalty. Clearly define in the lease agreement what the penalty is for paying the rent after the due date and grace period.
  • Consider sending out reminder notices. Sometimes, life gets in the way and tenants forget to pay their rent; it can happen even to the best of them.  Consider sending out email, text, or phone call reminders to tenants when their rent due date is nearing so that it is on their mind.
  • Implement an online rent collection process. Collecting rent online, especially when automated, helps high quality tenants that are not trying to miss payments stay on track.  It also gives tenants a more convenient way to pay.

By outlining in the lease agreement all details regarding rent collection, you establish with your tenant what you expect from them each month, and when.  That means your tenant should have no excuses for late payments.

Additionally, by taking that extra step, as well as reminding your tenants that their rent is due and offering convenient online payment options, you take the “I forgot” excuse out of their list of reasons why they didn’t pay on time.

 

2. Act Quickly

If by chance, after all of the above-mentioned prevention strategies do not work, and a tenant pays their rent late (that is, past the grace period), act immediately.

You or your property manager should issue a notice of non-payment right away.  This notice will outline for the tenant how many days (generally three) the tenant has to pay the rent in full before you start the eviction process.  It can also include any applicable late charges for paying the rent so far past the due date.

Every state has its own rules and regulations regarding notices of non-payment, so make sure you and your property management company understand the law in your area.  And, don’t forget to document in the tenant’s file that you reached out to them and informed them of their late payment.

 

3. Start the Eviction Process

eviction-process-prince-georges-county-tenants-rental-property

Though this seems harsh, the only way to protect you, your investment property, and your rental property business is to stick to your guns when it comes to rent that is so late it surpasses the grace period and extension-with-penalty period.

This means starting the eviction process right away.

In Maryland, there is no law requiring a notice of non-payment be given to a tenant that has missed a rent payment.  This means that as soon as the payment is considered “missed,” you can file a lawsuit right away to start the eviction process.  That said, your tenant can still stop the eviction process if they pay the rent in full, along with any late penalties and court fees, up until the day of the trial or hearing for their eviction lawsuit.

 

4. Stay Consistent

Staying consistent with all of your Prince George’s County tenants when it comes to late rent payments does a few things:

  • Establishes you as a firm, but fair property owner
  • Avoids the possibility of favoritism or discrimination accusations
  • Streamlines the rent collection process at all points
  • Enables you to strongly defend your actions in court, should you go to trial or face a judge

Consistency is key to maintaining a successful rental property business.  After all, your bottom line depends on rent collection.  If you don’t get your money, you are hurting yourself.

 

5. Considerations to Think About

consider-tenant-situation-prior-eviction-prince-georges-county-rental-property

Some property management companies have a zero tolerance policy for late payments, no matter the excuse.  And, while this may be the most effective way to handle the issue of late paying tenants, it is important to remember that each situation is different.

If you are a property owner who believes in assessing a scenario before immediately acting, consider the following when it comes to late paying tenants:

  • Is the tenant new or a long-term, good-standing tenant? If a new tenant is already making late rent payments, you might want to consider acting immediately, as suggested above.  After all, you have no way of knowing whether this is a one-time occurrence or a budding new reality.  However, if you are dealing with a tenant that has been leasing from you for some time, and this tenant has always paid on time, you may want to consider at least giving them a notice of non-payment.
  • What is the financial reasoning behind the late payment? In hearing your tenant’s excuse for a late rent payment, consider the financial reason for it prior to acting.  For example, a surprise car problem is not likely to affect later rent payments, whereas a lost job is.
  • What is the communication like with the tenant? If you are dealing with a tenant that is avoiding you and not paying their rent on time, it is time for you to act on this to prevent further issues.  This may include an aggressive reminder, a notice of non-payment, or even the filing of an eviction lawsuit.  However, if your tenant is openly communicating with you, is willing to work something out, and understands the severity of late rent payments, you may want to back off starting the eviction process right away.

Collecting rent from your tenants can be a difficult thing.  Not every tenant will pay in full and on time, which makes your job as a property owner that much tougher.

 

If you want to forgo the process of rent collection and the stresses that come with late paying tenants, contact Bay Management Group today.

We have streamlined the rent collection processes so that you get your money on time, every time.  And, when a rent payment comes late, Bay Management Group follows the lease agreement and penalizes accordingly, even if that means evicting a current tenant right away.

So contact us today and see how Bay Management Group can not only help you with the entire rent collection process, but everything else property related as well.

5 Tips to Create Income From a Rental Property

Posted on by Bay Management Group

how-create-income-from-rental-propertyAs rent prices continue to grow upwards of 1.0% in Maryland, those in Prince George’s County that are interested in becoming rental property owners, or better yet already are in the rental property business, should take notice.

Many property owners enter the rental market in hopes of creating a passive income to fund their vacations, allow them to quit their corporate jobs, or even pad their retirement accounts.  And, while the ability to create a completely passive income in the rental property business is highly debatable, the truth is that there is a lot of money to make as a rental property owner.

Today we are going to discuss some of the best ways you can create a passive income from your Prince George’s County rental property so that no matter what your financial dreams are, they can become a reality more quickly than not.

 

Turning Your Rental Property into Income

turning-rental-property-into-income

1. Lower Your Vacancy Rates

One of the best long-term methods for creating a consistent income from your rental property is to keep vacancy rates as low as possible.  After all, no tenant means no rent.  And, no rent means you are paying the mortgage out of pocket.

Finding a high quality long-term tenant is going to be your best bet for keeping low vacancy rates.  If you have an experienced property management company working for you, finding good tenants should be a breeze.  In fact, as Maryland’s leading property management company, we at Bay Management Company pride ourselves on our property advertisement, tenant screening, and lease drafting procedures.  Our number one goal is to get your vacant Prince George’s County property leased as quickly as possible with the highest rent payment and highest quality tenants possible.  This way, should you find yourself with a vacant property at any time, the turnaround is minimal and income loss lessened.

Here are some additional tips for keeping your vacancy rates low in your rental property:

 

2. Keep Track of All Rental Property Income and Expenses

keep-track-all-income-all-expenses-rental-propertyThere is no way for you to garner a solid income from a rental property if your bookkeeping skills are left by the wayside.  This is another reason why employing property management in Prince George’s County is so crucial to your financial success as a property owner.

All important documents related to the purchase of your property, expense reports, rent payment receipts, and any trouble you run into with your tenant that must be documented in print, email, or as photographs should be managed in an organized way at all times.  This paperwork should be easily accessible and separated by property if you own more than one rental.

Luckily, our staff at Bay Management Group has expert bookkeeping skills and can do all of this for you.  In addition, we are always transparent about any expenses or profits as they relate to your property and you can rest assured you will receive all of the necessary paperwork come tax time.

In the end, by staying organized you will be able to see where you can save money, where you are doing well, and exactly how to make more money from your income.

 

3. Renovate, Remodel, and Fix When Appropriate

There is much debate as to how much you should renovate your Prince George’s County rental property, especially once tenants are already residing in the property.  However, there are some excellent things you can do to increase the value of your property fairly easily before placing a tenant (which will garner you higher rent amounts and secure more income) or even after a tenant has been placed (used as an incentive to encourage longer stays, less turnaround, and decreased vacancy rates).

Here are some of the greatest ways to improve your property to make it more valuable and worthy of higher rent amounts:

  • Upgrade all plumbing fixtures to match the modern housing designs
  • Increase storage areas – closest, bathrooms, and garages
  • Add architectural design such as baseboards or crown moldings
  • Change windows and doors
  • Wash your property’s exterior
  • Change the floorplan to expand on the property’s structure
  • Re-caulk all pipe fittings
  • Upgrade countertops, kitchen appliances, and entire bathroom

Some of these property improvements will come with a hefty price tag attached to them.  However, by investing in your property to make it more appealing, the overall value will increase significantly and you will more than make up for your initial investment over the course of time in rent payments.

 

4. Do Not Skimp on Late Fees

Even though your tenant has been ideal up until this one time they were late on their rent payment, make sure you charge the late payment fee immediately.  If you allow your tenant to get away with even one late payment, the precedent is set for future late payments and the expectation that there will be no consequence for doing so.  This cycle is something that all property owners want to avoid.

One of the best ways to implement this zero late payment tolerance strategy into your rental property business is to have your Prince George’s County property management company include a very detailed late payment provision in the official lease agreement signed by both parties.  In addition, this policy should be clearly explained to the tenant upon move-in so that everyone has a full understanding that the responsibility of paying on time is a serious matter.

Bay Management Group excels at the rent collect process when it comes to the properties we manage.  We have no problem enforcing late payments or starting the eviction process immediately should the grace period pass.  These kind of financial problems can be a headache for property owners.  No one wants to enforce late fees or worse, start evicting tenants, especially if they have never caused problems before.  But, if you want to ensure your income is steady, you have to do it or employ a property manager to do it for you.

 

5. Increase Revenue Streams

Sometimes being creative as a property owner is just the thing needed to boost annual income.  During the lease drafting process, chances are your property manager is going to delegate certain responsibilities to your tenant such as maintaining the landscaping, cleaning the pool, or caring for the major appliances in the home.

One great way to ensure these tasks are being performed, take some of the load off of your tenant, and make additional income from your rental property, is to offer your tenant these services for an additional monthly cost.  By inflating the price slightly, both you and your tenant can benefit.  As an added bonus, you know everything is being handled according to your standards because you have hired people you trust to maintain your property.

In the end, it is every property owner’s dream to make as much passive income off their rental properties as possible.  And while this may not always be reasonable, it is reasonable to expect that some additional income can be squeezed out by doing simple things such as making improvements or properly screening tenants.

If you are in the Prince George’s County area and own a rental property, call Bay Management Group today.  Not only will we be able to help you manage everything as it relates to your property, we will also be able to help you boost your income using some of the strategies mentioned above.  Your property will always be in good hands if you decide on Bay Management Group.

Should I Buy a Low-Income Rental Property in a Rough Neighborhood?

Posted on by Bay Management Group

prince-georges-county-low-income-rental-property
When people look for a rental property to live in, they might first look for a “nice” neighborhood.

In fact, you’ll probably never come across someone who says, “I want to live in the roughest neighborhood in the area!”

As a result, you might feel that purchasing a rental property in a not-so-nice neighborhood is a waste of money.

Don’t think that way. You’ll always find people who want to live in more affordable housing, and it’ll cost you a fraction of what you’d have to pay upfront for a middle- to high-income property.

Let’s delve a little further into what you need to know when you consider buying a low-income rental property in a “rough” neighborhood.

 

What Prince George’s County Landlords Should Know About Buying Low-income Rental Properties

Place-Based Investing

The differences between the properties you find in a rough neighborhood and those in a nice neighborhood can be pretty vast.

That’s because properties in neighborhoods across the country usually reflect the general income levels of their residents. And when you search for investments specifically based on such criteria, it’s called “place-based investing.”

While higher-income neighborhoods tend to have a single category of “nice” houses, low-income neighborhoods present a range of properties that are inexpensive for numerous reasons.

These range from uninhabitable homes to the upper level of low-income properties that are still inexpensive but can present a number of benefits to savvy investors who know an opportunity when they see one.

 

The Purchase Process

prince-georges-county-md-rental-property-purchaseAcquiring rental properties in low-income neighborhoods in Prince George’s County can be done in a number of ways – including the incredibly cheap foreclosure auction.

Truth be told, regardless of what type of property market – whether booming, busting, or flat lining – there are always advantages to investing in a “rough” neighborhood.

For example, it’s possible to invest in a rental property for very little money that could rent for just a little cheaper than a property you had to pay full price for in a higher-income neighborhood. In that situation, you’d have fewer expenses and get a proportionally better return on your investment.

Think about it like this:

If you buy a house for $40,000 that rents for around $900 a month, you’ll make money quicker than if you paid $100,000 for a house that rents for $1,000 a month.

But, because low-income properties are often so cheap to purchase outright, you should probably make as large a down payment as possible.

Paying off your mortgage on these should take a lot less time than a home in a “nicer” neighborhood, so reduce the time you spend dealing with a mortgage from the start. The larger down payment you make, the sooner you can turn a profit on the property.

Also, while these properties are usually much cheaper than many others, keep in mind that you may have to spend some money rehabilitating them. Any time you acquire a rental property, include the costs of rehabilitation and other expenses in your considerations.

 

Dealing with Tenants

The biggest concern most Prince George’s County property owners have when it comes to low-income neighborhoods is that they attract low-income tenants.

Remember that low-income neighborhoods by definition feature people who aren’t capable of paying high rent, so you’ll always have to keep your rent rates on the low end. If you run into a financial issue and realize you have to raise the rent on your low-income tenants, you may end up with a lot of vacant properties.

However, low-income tenants don’t necessarily have to be more troublesome than middle-income people. You just need to screen every prospective renter properly so you don’t end up with a particularly problematic tenant.

The best way to handle interactions with this wide variety tenants and upkeep on your properties is to hire a rental property management company in Prince George’s County. They’ll handle all of your unwanted landlord duties and make sure your low-income property investments are manageable.

 

Keep an Eye Out for Red Flags

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If you think you might go through with purchasing a low-income rental property, there are still some red flags you should look out for. These deal breakers are pretty simple, and should be known to any rental property investor regardless of what sort of housing he or she considers purchasing.

First off: if the seller can’t provide you with statistics or other hard facts, you should hit the road and never look back. Some of these include:

  • Rental vs. vacancy rates
  • Neighborhood allure
  • Year-to-year year profits
  • Crime rates
  • Average income levels
  • Employment rate

One thing investors need to know how to identify at once is something called a “trap house.” These properties harbor a higher-than-usual amount of the criminal element and can be identified by the frequent in-and-out traffic of people engaging in illegal activities.

Any time a trap house is nearby, there’s a good chance you’ll hear about it again in the future once you have tenants move in – and it won’t be pretty.

If property crime is known to be seriously high compared to other neighborhoods nearby, don’t make an investment there, plain and simple.

Tip: Check out this blog post for more information on preventing crime in your rental properties!

The damage to the property (as well as the potential for damage) also needs to be taken into careful consideration.

If the property is in decline or has been neglected for far too long, it might cost you more trouble than it’s worth in maintenance bills.

You should also avoid buying properties in neighborhoods that include severely damaged homes as a result of fire, flood, or otherwise. And, if there’s anything happening that you could reasonably expect to either destroy the property or force your tenants out within a few years, don’t risk it.

The low-income properties you should focus on are those nearest to schools, shopping centers, and highways.

 

The Bottom Line

Some rental property investors might never take the risk and put their money into low-income housing in rough neighborhoods. And they’re missing out.

Sure, there are poor investments and bad tenants in every bunch – even in middle- to high-income neighborhoods. But if you’re an aggressive investor dedicated to growing your business, you can’t be afraid to get your hands a little dirty.

Plus, there’s always the option of seeking the extra help of rental property managers in Prince George’s County.

The best course of action is to always do your research before making any major investment decision. If you come to a solid conclusion that you’ll turn a profit on a rental property in a rough neighborhood, why not go for it?