Top 5 Mistakes New Landlords Make, and How to Avoid Them

Posted on by Bay Management Group

mistakes-new-landlords-make-how-avoid-mistakes-ellicott-city-maryland

If you are lucky enough to own rental property in Ellicott City, you know that managing a rental home requires experience, knowledge, and a lot of patience.  In addition, you know that if you do not employ a property management company, self-managing rental homes means running a small business on your own.

Or, maybe you don’t own rental property quite yet and are curious to know which mistakes to avoid as a novice in the rental property business.

Either way, if you are interested in investing in rental property in the Howard County area, and are hoping to learn from the past mistakes of previous newbie property owners, keep reading.

Today we are going to look at the most common mistakes new property owners make in their quest to build a strong rental property portfolio and rake in a positive cash flow throughout the year.

 

Top Mistakes New Ellicott City Landlords Make

Without prior experience in the real estate or rental property industries, it is easy to make plenty of mistakes as a new property owner.  And unfortunately, some of these mistakes can cause more problems than just a bad day.  In fact, some common mistakes new landlords make can cause a loss of money, a legal dispute, and even a collapse of their rental property business before it gets off the ground.

Read on to find out what mistakes you should avoid as a new Ellicott City property owner.

 

1. Not Adequately Screening Potential Tenants

properly-screen-tenants-ellicott-city-maryland-rental-property

For new property owners that have not employed the help of Howard County’s most experienced property management company, Bay Management Group, you may quickly find that one of the biggest mistakes you can make is to rush the tenant screening process.  Sure, your number one goal is to place tenants in your property and start collecting rent right away.  However, not thoroughly screening a tenant may end up costing you much more money in the end.

Here are some of the credentials you should verify before placing a tenant in your investment property:

  • Personal Information. Have potential tenants fill out a rental application that includes all of their personal information.
  • Background Check. Check for prior evictions, criminal history, and terrorist activity.
  • Financial Stability. To ensure your prospective tenant will have the means to pay rent each month, check for past bankruptcies, liens, judgments, credit worthiness, and income.
  • Contact all references listed on the rental application and ask the pertinent questions to make sure your tenant is worthy of placement in your property.

Having a property management company conduct thorough tenant screenings on all potential tenants will help catch bad tenants before they move in and you’re stuck dealing with problems and likely an eviction.

 

2. Underestimating the Cost of Maintenance and Repairs

Everyone that gets into the rental property business is hoping to incur income from it; whether your rental property serves as supplemental income or your primary source of money, you’re looking to make some cash.  After all, that’s why you have invested so much of your time and hard-earned money into a rental home.  However, many new landlords fail to realize until it is too late just how much added expense regular maintenance and repairs on their properties will cost annually.

Spending thousands of dollars each year on maintenance issues big and small, upgrades to make your property more appealing, and repairs that are your responsibility will easily cut into your positive cash flow.  Here are some things to consider to ensure these costs do not cause you too many financial setbacks:

  • Have savings set aside for routine maintenance and repairs
  • Only hire licensed and insured contractors
  • Make sure your tenants know before move-in what their maintenance responsibilities are
  • Provide tenants with a tenant welcome package that includes maintenance tips

 

3. Not Following the Law

follow-law-new-landlord-ellicott-city-maryland-rental-property

Despite being a new landlord, it is your obligation to know all federal, state, and local laws that apply to leasing rental properties.

Here are some of the most important laws you should become familiar with to avoid a legal dispute:

  • Housing Discrimination. You cannot refuse to rent to a tenant based on criteria such as race, color, religion, national origin, sex or gender, disability, or familial status.  This is why although your tenant screening process should be thorough; it should also be legally compliant.
  • Right to Privacy. There are times when you will need to enter your rental property while it is occupied.  However, regardless of whether it is for a maintenance issue, repair, or routine inspection, there are proper notices you must provide and time limits that you must follow before entering your rental property.
  • Improper Use of Security Deposits. Though security deposits are collected from your tenants prior to move-in to cover expenses such as damage or non-payment of rent, there are specific rules and regulations that you need to understand and follow during the collection and use of security deposits.
  • Wrongful Eviction Procedures. Starting the eviction process is never fun, especially if you are new to the rental property business. However, if your tenant needs to be evicted from your Ellicott City rental property, make sure to follow the legal eviction process.

Breaking the law when it comes to renting property is an easy thing to do if you do not educate yourself properly.  This is where having a property management company in place becomes key.  Not only does an experienced property manager keep up to date on the ever-changing rental property laws, the management company itself typically backs you in court if a dispute ever lands before a judge.

 

4. Not Putting it in Writing

What exactly does putting “it” in writing mean?  Well, in the case of rental properties, “it” means any agreement that you come to with your tenants regarding anything that has to do with your rental property and the leasing of it.

Drafting a written lease agreement, complete with provisions outlining both parties’ duties and responsibilities, is one of the most crucial things a new landlord can do before placing a tenant in their property.  Things such as the rent collecting process, issues regarding maintenance, and even basic provisions about how a tenant can redecorate your rental property must appear in writing, must be agreed to by both parties, and must be signed as a legal contract for the entire lease term.

Additionally, any other agreements you decide upon later in the lease (e.g. the allowance of a pet) should be drafted as an addendum to the existing lease agreement and signed by both parties.

 

5. Charging too Much Rent

dont-charge-high-rent-ellicott-city-maryland-rental-property-min

As a new landlord that has presumably placed a large amount of money into their first investment property, it is natural to want to charge a high rent to make up for any financial setbacks that getting into that first property created.  In fact, even seasoned landlords want to charge a premium rent and make as much positive cash flow as possible.

The difference is, seasoned landlords know how to read the market, follow area trends, and understand what a reasonable rent amount is.  If you are a first time landlord, consider getting advice from real estate professionals knowledgeable in the area your rental property sits.  Better yet, do your own research and see what similar properties are renting for compared to yours and adjust the amount according to any amenities you may be providing tenants.  In the end, it is better to charge a lower, more reasonable rent than have a property sit vacant hoping for higher paying tenants.

 

Other Important Mistakes to Avoid

Though the above 5 mistakes are some of the most common, and detrimental, any new landlord can make when it comes to their first rental property, here are some more things that should never be far from your mind:

  • Make sure communication with tenants is open, available, and professional
  • Always enforce lease terms, especially when it comes to rent collection
  • Do not mishandle abandoned belongings left behind from your first tenants
  • Learn successful marketing strategies if you do not have a property management company to do so
  • Don’t forget to routinely inspect your property
  • Make sure you have homeowners insurance and consider requiring tenants to have renters insurance

In the end, being a new landlord can come with a steep learning curve if you have never had any experience with real estate.  And, while the rental property business is a very lucrative venture if done correctly, there is always a chance you make a damaging mistake as a new landlord that can cost you time, money, and your sanity.

If you are new to the rental property business and are looking for an exceptional Ellicott City property management company, contact Bay Management Group today.  Our experienced and knowledgeable staff can help guide you through the entire leasing process and ensure everything is done professionally, legally, and with the least amount of hassle possible.

Survival Tips for First-Time Landlords: Avoiding Trouble at All Costs

Posted on by Bay Management Group

Tips on How To Survive Managing Your First Rental Property

First-time landlords in Montgomery County make up a unique group of people. Some are homeowners looking to upsize or downsize and thus want to lease their home; some are investors seeking ways to fund their retirement or quit their corporate jobs; while others are accidental landlords, who for one reason or another, must turn their primary home into a rental property.

Whatever category you fall into as a first-time landlord, know that there will be some struggles in the beginning while you find your bearings.

But hey, you have to start somewhere right?

If you are a first-time landlord, understanding that there is more to managing a rental property than signing a lease agreement and collecting monthly rent checks is important. Unfortunately, many new landlords do not understand this concept and find themselves overwhelmed from the get-go.

That’s why today we are sharing some of our best survival tips to help you navigate the rental property world a little more easily.

 

How to Survive Your First Rental Property

1. Have a Realistic Timeline

Getting into the rental property business, regardless of your situation, is the same for everyone when it comes to one thing: the goal. The goal is always to generate positive cash flow.

The problem is that many first-time landlords think that they will immediately generate enough cash flow in the beginning to pad their vacation funds, pay off their mortgages, quit their jobs, and live the rest of their lives as though retired.

However, this is far from the truth for most landlords, even those who have been in the business for some time. Turning a rental property profit is a marathon, not a sprint. Just like everything, it takes planning, as well as time to build success and enough money to reach your goal. That is not to say it can’t be done—just take it slow, have a plan, and know that there will be some setbacks along the way.

 

2. Understand Your Expenses

Be Sure You Understand Your Expenses Before Becoming a First-Time Landlord

Just as survival tip number one explains, turning a profit (unless you are somehow incredibly lucky) is no easy feat in the beginning. There are initial expenses that come with owning a Montgomery County rental property that you should be aware of before investing in your first property. It is important to know as well that some of these expenses are not just initial costs and will follow you the entire time you own rental property. Here are some of your expected expenses:

  • A sizeable down payment for the property
  • Additional financing for the mortgage
  • Repairs and upgrades you need or want to make
  • Property taxes
  • Insurance
  • Attorney, accountant, or property management fees

In the end, budgeting for emergencies and recurring expenses associated with your rental property will help you keep afloat even when you are just starting out.

 

3. Make a Checklist

Make a Checklist As a First-Time Landlord

If you are not going to enlist the help of a property management company (though it is highly recommended) consider making a checklist of the entire leasing process so you don’t miss an essential step. This will include things such as property advertising, tenant screening, property walk-throughs, lease agreement drafting and signing, regular inspections, rent collection policies, and eviction procedures.

And that is just the beginning. It is key that you do not leave out a critical step—some regions have specific landlord-tenant laws that must be followed precisely when it comes to tenant placement.

Getting your local Montgomery County property management team to help is the best way to avoid any trouble. They are knowledgeable about tenant placement and can manage your property throughout the lease term by addressing any major issues, even legal ones, quickly and efficiently.

 

4. Have Open Lines of Communication

Communicating with your tenant is a great way to build a strong landlord-tenant relationship. As a first-timer, you may be blissfully unaware of how many times your tenant will want to communicate with you. From maintenance and repair requests, to complaints about neighbors, and the many reasons why his/her rent will be late that month, there is always the chance your tenant will have a lot to say.

What this means for you is that email, phone, text, and snail mail should all be options for communicating with your tenant unless otherwise specified in the lease agreement. What this also means is that your tenant will (and should) have access to you 24/7 for emergencies.

If you do not want to deal with this hassle, or an angry tenant, a great solution is to hire a property management company to handle all communication with your tenants.

 

5. Be Strict About Rent Payments

It is so easy to fall into the trap of letting a month or two of rent payments fall into the “Late” category. This is especially true if your tenant is genuinely a good person and has a seemingly legitimate excuse. However, in order to avoid this perpetual problem, and the possibility of a non-payment, it is best to set the rules hard and fast at the start of the lease term when it comes to paying rent. Here are some things you should do:

  • Determine acceptable forms of payment
  • Choose a due date and specify grace periods if applicable
  • Designate payment methods (g. mail-in, online portal, walk-in)
  • Calculate a late payment fee
  • Outline late rent policies including eviction procedures

The key here is to make sure your tenant has a firm understanding of your rent policies and the consequences for failing to pay on time. This way if anything should require legal action, you can prove you protected yourself to the best of your ability and that your tenant was fully aware of the lease provisions.

 

6. Know When to Outsource

Know When To Outsource Your Repairs Vs. Doing Them In-House

You rental property will fall victim to some damage while your tenant resides there. This is inevitable. And, while some repairs are easily fixed without the help of a professional contractor, there will be times when hiring an expert is necessary.

Knowing when to outsource repairs to a hired expert will save you time, money, and frustration. Just because you think you can fix something in your rental property does not mean you have the skills to do so efficiently. In addition, if you are constantly fixing your rental property and managing everything else as well, you will end up losing out on precious free time. Sometimes hiring a professional is the smartest choice.

 

7. Hire a Property Management Company

The best survival tip anyone can offer first-time landlords who are new to the rental property business is to enlist the help of a property manager who can take care of all of the above. Be honest, unless you have been studying up on how to be a great landlord, and shadowing someone in the industry for some time, you probably do not have much experience with managing rental properties. And, if your goal is to make money, learning as you go can be one of the biggest ways to fail at achieving a positive cash flow.

If you are in the Montgomery County area and find yourself becoming a first-time landlord, contact Bay Management Group. As Maryland’s leading property management company, Bay Management Group offers property owners a whole host of services that help you avoid any kind of trouble.

From professional property advertisement to eviction processes, and everything in between, Bay Management Group gets it done so you don’t have to. And to top it off, we offer the lowest property management fee in the area. So don’t wait to get the peace of mind you deserve as you embark on this journey as a first-time Montgomery County landlord, get in touch with Bay Management Group today.

What to Consider Before Investing in a Rental Home with an HOA

Posted on by Bay Management Group

Homeowners associations in America don’t have the best reputation.  They have a history of complaints of abuse, mismanagement, and wasted finances, and things don’t seem to be changing. However, there are some benefits to investing in a home that is part of an HOA.

The best thing to do is, before you invest in a rental property in the Montgomery County region, investigate whether the property is part of an HOA.  After all, as the property owner you are liable for the tenants that reside in your home and pay a monthly rent.  This means any violations of the homeowners association’s rules and regulations by your tenants may fall upon you in the form of hefty fines.

Today we will look at some of the things you should consider before investing in a property monitored by an HOA.  This way, when it comes to deciding whether an HOA is right for your property investment needs you will be better prepared to make a knowledgeable decision.

 

Common HOA Complaints from Income Property Owners

Many Complaints Arise From People Who Are Part of An HOA Homeowners Association

As mentioned earlier, there is no lack of complaints against homeowners associations across the country.  Some of the most common ones include:

  • Wasting of association funds
  • No access to official records
  • Poor communication
  • Hostility towards homeowners or tenants
  • Manipulation of elections
  • Withholding of facility or service use
  • Poor maintenance of common grounds
  • Secret meetings
  • Violation of Fair Debt Collection practices

That being said, not all HOAs are bad.  And, if you take your Montgomery County investment properties seriously and research everything before signing on the dotted line and placing tenants in your home, an HOA may actually help maintain the value of your property and thus your monthly rental rates.

 

HOA Questions To Help Guide You

Here are some of the most important things to consider before purchasing a rental property that resides in an HOA.

What Services Does the HOA Provide?

Each HOA will have its own set of specific services it provides your community, though there are some general things every quality HOA should offer.  These basics include:

  • Administration services
  • Financial services
  • Customer service
  • Communication
  • Maintenance

It is a good idea to get a detailed list of everything the HOA says it is responsible for before buying a property.  You might also consider questioning the HOA’s level of involvement in the community to ensure it is following through on its obligations and staying proactive.

 

What is the HOA’s Financial History Like?

Take a Look at the HOA's Financial History to See How They've Used Money in the Past

Though every HOA differs in terms of daily procedures, homebuyers are entitled to see their potential HOA’s financials to ensure the HOA is not in the red.  You can receive this document via the homebuyer or directly from the HOA.  It will likely include things such as:

  • The balance sheet
  • Yearly revenue from monthly dues
  • Reserve fund balance
  • Notice of pending lawsuits
  • Information regarding recent assessments
  • Percentage of homeowners behind on their dues

Unfortunately, reading complex documents such as an HOA’s financials can prove challenging.  You might need to have someone you trust in the finance industry to help you decode all of the numbers.

 

How Do The Common Grounds Look?

HOAs are responsible for maintaining the common area of the community.  Do not simply focus on the property you are looking to purchase.  Rather, get a look at the community as a whole.  If a neighboring yard looks disheveled, chances are the HOA is not implementing its rules and regulations as strictly as you may like.

Because first impressions are so important, it is crucial the entire community looks well groomed.  No prospective tenant will want to lease from you if the neighboring homes are not up to par on their curb appeal.  Plus, if you are paying what can sometimes be hefty monthly HOA dues, you should be sure the HOA fulfills its part of the deal and maintains the grounds.

 

What is the HOA’s Method of Communication?

Communication and Community Are Key With Homeowners Associations To Ensure Voices Are Heard

A large part of what HOAs do is communicate with the board members and community homeowners.  A reputable homeowner’s association will effectively communicate the community’s needs in a variety of ways to make sure everyone involved in the community is up to date.  This includes phone calls, emails, live chats, and even a website for homeowners to know what is going on in the neighborhood.

 

How Does the HOA Assessment Collection Work?

One of the most disliked things about HOAs is their collection of monthly assessment dues.  Often inflated, many homeowners have no clue how their monthly dues are being used to help the community.

HOA assessment money is important for the stability of the community.  It helps to pay for the common grounds all residents enjoy as well as extra activities put on by the association for the benefit of the residents.  In addition, this money also pads the reserve funds that cover the cost of any major repairs to the community.

It is the responsibility of the HOA to collect assessments from homeowners.  And, if you own a Montgomery County rental property, it is likely you are paying the monthly HOA dues as a benefit to your tenants.  As a homeowner you are entitled to know that the community’s money is being put to good use and is used responsibly.  In fact, there are laws in place protecting residents from shady HOAs that use the assessment money poorly.

You should learn before making a property purchase how the HOA handles its finances and do your best to ensure the HOA is fulfilling its obligations to the community with that money.

 

Does the HOA Have The Following Traits?

Though it can be hard to judge the overall feel of a homeowners association without having actual experience with them, it is important you do your best before purchasing an investment property.  Try talking to the board members to get a feel for who they are and what their roles on the board entail. Or, try to converse with prospective neighbors and see how they like the neighborhood and what they think of the HOA.

Here are the most important things your future homeowners association should do for the community:

  • Respect all homeowner interests
  • Enforce the democratic process where all opinions are heard and weighed equally
  • Offer community services and amenities to all residents
  • Maintain the community’s values
  • Enforce the rules and regulations
  • Meet the financial obligations set forth in the CC&Rs
  • Conduct ethical behavior in all matters with transparency to all community residents
  • Balance the community’s needs and those of individual homeowners

 

In the end, where you plan to purchase your Montgomery County rental property is a big deal.  And, when you throw in the possibility of the property being in an HOA community, there is even more to consider.

If you are looking to purchase a rental property that has an HOA representing the community, make sure to do your research thoroughly.  You are financially obligated to an HOA once you invest in a property that has one and you want to make sure that you are happy with how the HOA conducts its business, maintains the value of your neighborhood, and enforces the rules, especially the financial ones.

In addition, if you are looking for an experienced property management company to help you manage your Montgomery County rental property, contact Bay Management Group today.  Not only can we help you with all things property related, we help manage your tenants and ensure they are following the HOA rules and regulations perfectly.  By enlisting the help of Bay Management Group, your concerns about HOA properties will disappear.

6 Tips to Successfully Show a Rental Property

Posted on by Bay Management Group

how-show-maryland-investment-property

Showing a client’s vacant rental property to prospective tenants is one of the principal roles of a property manager.

Though emphasis is often placed on appealing to the right tenant pool, as well as the importance of proper tenant screening, the truth is that the in-person showing of the home to potential renters is just as crucial.

Staging a vacant rental property can be done easily and without a great deal of time.  With a little bit of curb appeal and a nice looking interior, you will have more tenants wanting to lease your client’s rental home than you know what to do with.

But there is more to getting a tenant to sign a lease agreement than just a nice exterior and inviting interior.

Today we will look at the top tips for showing an unoccupied rental property.  If you follow these simple yet effective steps, you will find great success in your showings.

 

6 Tips for Wowing Tenants with Your Rental Property Showing

1. Remember The Basics

Every property manager knows that there are basic staging rules for showing a potential tenant their client’s rental home.  Let’s look at those basics:

  • Do not underestimate the power of curb appeal. Make sure the yard is well maintained, the property is freshly painted, and the all-around feeling is inviting as a tenant pulls up.
  • Clean, clean, clean. Nothing turns a potential tenant away faster than a dirty home interior.  Make sure to inspect the property beforehand to make sure its cleanliness meets you and your client’s standards.
  • Redecorate or upgrade. Install new carpet, paint the walls an appealing and neutral color, fix the window treatments, and make sure all appliances are updated and working.

In the end, these selling points will make a huge difference in whether a tenant is interested in leasing a property from your client.

 

2. Pre-Qualify

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As mentioned earlier, tenant screening plays a significant role in the leasing process.

Before you begin showing a property to interested tenants, pre-qualify them.  This will save you time, energy, and money and will ensure you are only showing the property to qualified tenants.

Here are some great topics to ask about when someone calls to set up a property showing:

  • Their credit score
  • Reason for moving
  • Estimated move-in date
  • Whether they have pets
  • Smoker or non-smoker
  • Number of people moving in
  • If they have references
  • Eviction history
  • Estimated income
  • If they have any questions

Keep in mind that pre-qualifying tenants for a property showing cannot violate any of the Fair Housing laws that are in place to protect prospective tenants.  In addition, make sure the pre-qualifying questions are the same for all prospective tenants to avoid discrimination allegations.

 

3. Be Safe

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Before showing a rental property, put your safety first.  Every year a number of realtors, property managers, and landlords are injured showing homes to prospective tenants.

If someone calls asking to see a rental home, get his or her full name and conduct a background check on your state’s public record website before agreeing to show the property.

Here are some ways you can protect yourself from potentially harmful situations while showing rental properties:

  • Always show properties during the daytime, never after dark
  • Call your office every hour to let them know where you are
  • Introduce yourself to neighbors so they are familiar with you and your vehicle
  • Have an “escape” plan in place for when something feels “off” (for instance, take an emergency phone call outside or inform the potential tenant another agent is on the way)
  • Always leave all doors unlocked and stand by the doorways while showing the property
  • Park on the curb rather than the driveway for a quick getaway, if necessary

Gathering information ahead of time about potential tenants and being aware of your surroundings will ensure your safety as well as a more successful property showing.

 

4. Make a Good First Impression

Small, seemingly insignificant (yet very effective) things you do before, during, and after a rental property showing will leave a lasting impression on potential tenants that view the home.

There are several ways to convince potential tenants that this property is perfect and that they need to sign a lease right away.  For instance:

  • Call and confirm scheduled showings a few hours beforehand
  • Set the temperatures in the rental to be comfortable upon arrival
  • Turn on all of the property’s lights
  • Dress professionally and check your personal hygiene
  • Smile when you greet tenants, shake their hands, and formally introduce yourself
  • Show them the grounds, both on and off the property (for example the pool, gym area, laundry facility, parking structures, BBQ areas, or roof decks)
  • Have general information about the property on hand so the tenant can remember you later. Include things such as pictures of the property, square footage, monthly rent and deposit amounts, number of bedrooms and bathrooms, and any extra amenities
  • Have applications ready for tenants to fill out immediately following the showing

In short, making a tenant feel welcome, at ease, and well informed about the property can go a long way in securing a lease agreement.

 

5. Be Informed

In addition to knowing everything about the property you are showing, it is a good idea to be knowledgeable about the surrounding area.  People often move to certain locations because they like the neighborhood or have heard it is great.

Emphasize the area’s selling points – nearby restaurants, shopping, entertainment, attractions, schools, parks, and roads for commuting.

The more information you can give potential tenants on the spot, without them having to pry, the better equipped and more trustworthy you will seem.  Plus, this information will help them to make a quicker decision and possibly forgo viewing other properties.

 

6. Follow Up

maryland-property-managers-should-have-emergency-plan

Property managers should base their entire showing process around customer service.  Doing so shows potential tenants that you are a reliable company that they can trust and easily contact to work out any issues that may arise with the property, should they decide to lease.

A day or two after showing the property, consider sending a follow-up email or making a call to the potential tenants who saw the property.

Make sure they have no further questions about the property or leasing process and wish them luck in finding their next home.

Although this seems trivial, a little kindness can go a long way when it comes to deciding which property to lease and call home.

In the end, the way you present yourself and your client’s property to potential tenants can make all the difference when it comes to getting a lease agreement signed.

By taking the proper steps before every showing, you ensure that your client will be satisfied with the amount of effort you put into filling their vacant rental.

On top of that, going above and beyond when showing rental properties can help motivate the most qualified tenants to lease your client’s property, making it a win-win situation for everyone.

 

Landlords Beware: How to Avoid Rental Fraud

Posted on by Bay Management Group

beware-scam-maryland-property-management-company

Rental fraud: What is it and how can Maryland landlords avoid it?

For those of you who have yet to experience the horror of rental fraud, we are here to explain to you exactly what it is.

Rental fraud is when someone who is not you or your Maryland rental management company claims to own your rental property and proceeds to lease it out to unknowing tenants.

Scary, isn’t it?

Rental fraud can lead to several difficult situations:

  • Security deposit and first/last month rent is collected by the fraud. Then, come move in time, tenants have no way of accessing the actual property. Meanwhile, the fraudulent landlord is already on the run with money in hand.
  • Your property’s locks are changed and tenants actually move into your rental home having no idea that their “landlord” is a fake.
  • You are forced to remove the innocent, although illegally residing, tenants who have been scammed.
  • You are left with the mess of having to prove in a court of law that the property is actually yours.

Though avoiding rental fraud may not be entirely possible, there are some proven strategies that can help reduce the chances of you ever falling victim to this type of scam.

 

Rental Fraud Comes in Many Formsbeware-maryland-rental-fraud

As mentioned above, rental fraud is when someone poses as either the landlord or property management company to illegally lease out your Maryland rental property. However, there are other types of rental fraud as well.

Landlords are also vulnerable to the types of rental fraud outlined below, and should be aware of their susceptibilities at all times.

 

The Eviction Scam

This type of rental fraud is when a tenant moves into your property with no intention of ever paying rent. As a result, you are forced to evict them.

Unfortunately, the eviction process can sometimes take months to pan out, as well as cost a great deal of money. This leaves the tenant plenty of time to live in your property while lining up another place to scam.

Avoid this scenario: The best way to prevent a tenant who is consistently evicted from every place they occupy is to conduct thorough screenings of each and every tenant you consider placing in your property. This should include a background check, credit check, income verification, and reference follow-up.

Another great tip is to meet each prospective tenant face-to-face, even if your rental management company typically does all the work for you.

Sometimes a first impression will leave you with a gut feeling not to go with a particular tenant, which can be helpful in avoiding scams.

 

The Utility Scammaryland-property-managers-fight-utility-scams

Did you know that many states hold landlords responsible for the water bill despite what the outlined lease agreement states?

Sometimes a tenant will avoid paying the water utility bill because they know that after it goes unpaid for long periods of time, the water company will go after the owner of the property (you) to pay the bill.

To add to this, many tenants are aware that the water company typically does not shut off the water supply to any given residence. This means your tenant is using water on your dime.

Avoid this scenario: The best way to avoid this utility scam is to call your local water company from time to time to make sure your tenant is current on all of their bills.

In addition, it is best to have your property management company draft a detailed lease agreement outlining the responsibilities regarding utility payments. This way, should your tenant neglect their financial obligations, you have a way to prove in court who was responsible for what.

 

The International Scambeware-maryland-international-rental-property-management-scams

This highly popular scam is an unfortunate one that many landlords fall prey to. Also known as the Nigerian 419 scam, this type of fraud involves a prospective tenant from overseas looking to lease your rental property in the near future.

The fraudulent tenant will send you a check for the amount owed at move-in, plus extra “by accident.” This extra money is usually double what you asked for move-in costs.

The fraud will then ask you to wire back the excess money and before you know it, the original check that was sent to you turns out to be fraudulent while the money you have wired back to this person was your real, hard-earned cash.

Avoid this scenario: It is best to not deal with overseas tenants, unless you have a professional helping you with the background checks.

In addition, never accept a certified check from anyone overseas. These checks will usually clear and then bounce weeks later because they are fake.

If by chance you are accepting money from an overseas tenant, only accept money orders through a reputable company, such as Western Union.

 

Monitor Your Vacant Propertiesmonitor-vacant-maryland-rental-properties

In addition to the above-mentioned rental fraud scenarios, there are other ways to avoid getting scammed by sneaky people.

Your Maryland rental property is most vulnerable when it is vacant. The last thing you want is someone breaking into your property and taking up residence with a fake lease agreement.

Should you notice someone squatting in your vacant home, chances are high that the police will have very little authority if the “tenants” have what seems to be a legitimate lease agreement.

The heartbreaking thing is that sometimes these scammers will demand you pay a “ransom” for them to leave your property. This not only costs you money but allows the trespassers a free pass. They never have to take responsibility for their actions and actually make money off of their scam.

And, if you decide against paying the frauds off, this situation will still cost you countless hours and money as you wade through the courts attempting to prove the lease agreement is fake and the “tenants” are indeed trespassers.

Avoid this scenario: Monitor your vacant properties regularly to make sure no one has stepped in and taken up residence.

You may even consider adding an active security system to your Maryland property so that if someone does attempt to break in, the police will have authority to charge him or her appropriately.

 

Watermark Your Photographs

These days, advertising vacant properties online is the norm. And, if you utilize a reputable rental management company, such as Bay Management Group, your rental home is promoted across several platforms to expose your vacant property to the widest pool of prospective tenants.

With any professional rental property ad, images of the home are a necessity. Anyone looking to lease a home wants to have a clear idea what the property looks like before inquiring about it.

The problem is, if someone if posing as you or your rental management company and posting a vacancy online, innocent tenants interested in your property may get scammed or end up living in your home without permission from the true owner (you).

Avoid this scenario: Add a watermark to all images of your property as an extra layer of protection. A watermark makes it more difficult for a fraudulent landlord to steal photos of your property and will likely cause them give up on attempting to scam you.

 

In the end, rental fraud can be a scary situation no matter the type you are involved in. That is why being proactive about your Maryland income properties is absolutely critical to keeping your money out of the hands of scammers and keeping unwanted tenants our of your properties.

If you are looking to safeguard your Maryland rental properties to the fullest extent, contact Bay Management Group.

With knowledgeable staff working solely in property management, Bay Management Group can protect you, your rental property, and your tenants from all types of rental fraud.

Peace of mind is priceless when it comes to your rental property business.

Use Bay Management Group to conduct thorough background checks, draft airtight lease agreements, and inspect your home regularly to make sure everything is in its right place.

 

The Lease Agreement Deconstructed

Posted on by Bay Management Group

understanding-harford-county-property-management-lease
If you have ever leased an apartment or home, you will likely be familiar with the lease agreement that was signed by both you and the landlord.

Yet, have you ever thought about the actual components that make up a lease agreement?

If you have not, and are thinking about using your Harford County home as a rental property in the near future, maybe you should start.

Drafting a solid lease agreement, even if completed by your Bel Air property management company, is a crucial step when it comes to leasing out your rental property.  It outlines important information, defines each party’s responsibilities, and becomes a legally binding document that can be relied upon if a landlord-tenant dispute ever arises.

Today we break down a traditional lease agreement into its most basic parts so that you will know what must be included should you decide to enter the rental property business.

Making sure that each of the following elements is clearly defined in your rental agreements will ensure that your lease agreement in legally compliant, that everyone is on the same page, and will hopefully prevent any problems from popping up unexpectedly after your tenant takes up occupancy in your Bel Air home.

 

The Main Elements in a Lease Agreement

Though every lease agreement that you draft will differ depending on the property, it is important to understand the basic framework that makes a lease agreement a legally binding contract.  This is why many landlords hire a high-quality property manager in Bel Air to handle all aspects of their income properties, including drafting lease agreements.

Having a team of experts knowledgeable about state and local laws related to your income property is the best way to protect both you personally and your rental business.

 

Tenant Names

Include the legal first and last names of all tenants that will be residing in your Bel Air rental property.  These tenants will be held accountable for the terms outlined in the lease agreement, including but not limited to, rent payment, property maintenance, and damages incurred.

This section should also include your legal name and your Bel Air property management company, if applicable.  This way, it is clear from the start who the contract binds together and which parties are involved.

 

Lease Term

It is important to include the length of time you would like the lease to be valid.  In other words, how long the tenant is allowed to occupy your property before a new lease agreement must be agreed upon. 

You should determine a start date (commencement date) and an end date (expiration date) so that both you and your tenants clearly understand when the occupancy of your property will begin and end.

It is not unusual to have your tenants agree to a one year lease.  This allows for a consistent supplemental income to flow into your bank account, while also allowing you to raise the monthly rent amount fairly easily after the year is up.

This section is also a good place to include basic identifying info about your Bel Air property including its official name, if it has one, as well as its full address including any unit numbers.

Don’t forget to add the city, state, and zip code either.  Although this may sound obvious, you want to be as thorough as possible to avoid any potential confusion.

 

Payment of Rent

collect-rent-tips-property-manager-harford-county-mdIt should already be agreed upon between you and your tenant how much the monthly rent will be.  However, you must also include this in writing in the signed lease agreement.  Include things such as:

  • The total amount of rent due
  • The exact date the rent is due (g. the first of every month)
  • The forms of payment accepted and how to make said rent payments
  • Where rent should be delivered if applicable
  • The consequences for a late or non-payment of rent

Having all of these details in your lease agreement will ensure you that your tenant has willingly acknowledged and understood their financial obligations.

It also protects you in the event that you have to evict your tenant for non-payment.

 

Deposit Amounts

If you are collecting any type of deposits from your tenant up front, you should outline this in the lease agreement.  This way at the end of the lease term, when most people forget how much they paid and when, it can easily be referred to in the signed agreement.

Deposits can include things such as:

If you do collect a security deposit, which is advisable, make sure you understand your state and local laws regarding that money so that you don’t land yourself in trouble later on.

 

Fees, Fines, and Charges

There should be a section in your drafted lease agreement that will detail any potential fees or fines the tenant may face.  For example:

  • Late rent charges
  • Bounced check fees
  • City fines
  • HOA fees and fines
  • Attorney and court fees

 

Tenant Responsibilities

Oftentimes a tenant is unaware of basic maintenance or utility duties they are responsible for.  And while providing your tenants with a tenant manual at the beginning of the lease term is definitely helpful, it is important that serious matters be included in the lease agreement too.

If you are paying for the properties water, sewer, and trash bill make sure that is included.

If you want your tenant to maintain the backyard pool maintenance, include that.

If you are prohibiting certain types of alterations to the property (such as painting the walls), you guessed it, include it.  This way, your tenant can never claim they didn’t know.

It is also important to add how a tenant can call in a maintenance request or repair.  After all, this is your Bel Air investment property.

The last thing you want is a tenant who has a pressing issue with your home’s plumbing and no way of contacting either you or your Bel Air property manager.

Include the process for making a maintenance request and include phone numbers that can directly connect your tenant with someone that can help.

 

Property Access Expectations

harford-county-property-manager-talking-tenant

Here, you can outline when your tenant can expect you to enter the premises (with proper notice of course).  This can be for inspections, to check on repair statuses, or even to show a rental property that is on the market to potential buyers.

Make sure you include what kind of notice will be given and what will happen if there is no response to said notices.

While you may not enter the premises whenever you want, especially with the intent to harass your tenant, your tenants are also prohibited from changing the locks on your property, denying you access.

 

Use of the Property

While most people have a general understanding that breaking the law is well, illegal, it is a good idea to state the intended use of your property as it applies to your tenants.

This may include provisions such as:

  • The property is to be used as a residence.
  • There is a limit on who can stay in the residence and for how long.
  • No business can operate out of the property.
  • No illegal activities will be permitted.
  • Peaceful enjoyment of the other tenants and neighbors is required.

In this section, add in the potential consequences for breaking the rules.

 

The Signatures

rental-lease-signed-harford-county-property-management
After the lease has been drafted, discussed, and agreed upon by both parties, make sure everyone on the lease agreement signs their name.  This proves everyone is in agreeance and confirms that a formal understanding of the terms and conditions of the lease agreement has been met.

 

Final Thoughts

Leasing your Harford County rental property starts with a solid lease agreement and high quality tenants.  These two things will often lead the way, whether positive or negative, for the kind of lease term you and your tenants will experience.

If you are interested in hiring a property manager and have a rental home in the Bel Air area, contact Bay Management Group to help you.

Not only will we handle all things property management related throughout the lease term, we will also get you started on the right foot from the get-go with a thorough and legally compliant lease agreement.

Contact us today and see how we can help you draft your lease agreement, place quality tenants in your Bel Air home, and manage everything else that comes next, so you can have the peace of mind that you and your property are protected.

 

The Most Common Lease Clauses Explained

Posted on by Bay Management Group

Once your Bethesda property management company has found a suitable tenant for your rental home, and you have agreed on the terms and conditions of the lease, it is time to place those terms on paper in the form of a legally binding contract.draft-lease-clauses-bethesda-montgomery-countyThis contract, also known as the lease agreement, is a formality that each party must agree to and sign so that both you and your tenants are protected.

While some lease agreements are short and sweet, sometimes they can be pages and pages long, outlining every single detail that is involved with leasing your rental property.  Further, as you gain experience as a landlord, you may choose to add additional provisions into your once simple lease agreement template.

Today we will look at some of the most common lease agreement clauses and riders that many landlords outline so that both landlord and tenant understand their legal responsibilities.

Having a basic understanding of each of these lease clauses will help you in the future when you are drafting a lease agreement for your Bethesda income property .

 

The Basic 5 Lease Clauses

All lease agreements must include some very basic personal information regarding the terms of occupancy.

Here are the basic 5 lease clauses that should be in every single lease agreement:

  • Involved Parties. Every lease agreement must clearly state in full who the lease agreement is between.  In the case of your Montgomery County property, this means outlining that the agreement is between you (the landlord) and the tenant.  It is a good idea to include somewhere in this provision whether you are employing a Bethesda property management company as well.
  • Identification of Property. Outline the name of your property and its full mailing address.
  • Terms of the Lease. This clause determines for how long the lease agreement will be valid.  This includes the start and end dates of occupancy.
  • Rent Payment Terms. This will show the tenant what financial responsibilities they have for leasing your Bethesda home.  It should include the rent amount and when it is due.  In addition, any grace periods, late fees, and all details regarding the submission of payment should be included.
  • Acknowledgement Clause. This is the end portion where each involved party signs and dates the lease agreement.  This makes it a legally binding contract that can be enforced in a court of law.  If either party does not sign and/or date the agreement, it may be found to be null and void.

 

Security Deposit Clause

security-deposit-lease-clause-bethesda-md-rentalWhenever you are leasing a rental home, it is a good idea to collect a security deposit from your tenants before they move into your property.

This deposit will protect you from several things including non-payment of rent, damage your tenant causes to your rental property, and any other expenses incurred due to a breach of the signed lease agreement.

It is also a good idea to spell out in your lease agreement the terms surrounding the security deposit so that your tenant is clear about what is required to receive a refund at the end of the lease term.

You should include things such as:

  • The amount collected
  • Terns regarding storage of the deposit (i.e. an escrow account)
  • The interest rate the deposit will collect during the lease term
  • Reasons for deducting from a refund at the end of the lease term
  • The process for returning the deposit

Not sure how to word a detailed security deposit lease clause? 

If you are not relying on a Bethesda property management team to draft you lease agreement, look here for some security deposit lease clause examples.

 

Security Deposit Acknowledgement Form

In addition to having a security deposit clause built into your lease agreement, you should attach a separate form that will serve as a rider to the original lease agreement.

This rider will acknowledge the receipt of your tenant’s security deposit amount.

Here are some reasons you may want to include this official rider into your lease agreement:

  • Formal acknowledgements serve as proof you collected a security deposit from your tenant and fulfills any state requirement that you notify the tenant in writing of the deposit terms.
  • Acknowledgement also serves as proof that a tenant did indeed provide a sum of money to the landlord to be used as a security deposit.

In Maryland, it is important that you follow the outlined state regulations when it comes to collecting and refunding a security deposit from your tenants.

Your Bethesda property management company will understand the state and local laws and can help you handle this in a legally compliant way.

 

Lead Paint Disclosure Clause

Lead poisoning is a very scary and serious situation.  And unfortunately, as many Bethesda properties are older, the risk of lead contamination is higher than in some newly renovated areas.

As required by Maryland state law, if your rental home was built before 1978, you must provide any new tenant with lead poisoning education materials and proof that your home has been professionally inspected and certified as being safe and habitable.

In addition, if your home was known to be affected by lead point at one time it is your legal duty to disclose this information to your tenant before they occupy your property and have them acknowledge that they have been properly informed and warned of the dangers that lead-based paint poses.

This can easily be done using a lease agreement rider labeled “Lead Paint Disclosure Statement.”

 

Pet Policy Clause

bethesda-md-rental-lease-petsBethesda tenants may want to bring their pet, whether that be a dog, a bird, a cat, or even a large hundred gallon fish tank to their new home.

If you prefer to prohibit pets from residing in your rental home, you must outline this in your lease agreement to avoid any trouble later.

If you decide to allow pets, again it must be outlined clearly in your lease agreement so your tenants understand whether they are allowed to have a pet or not.

You should also include any limitations on the pet policy, such as breed exemptions and size requirements, tank restrictions in upstairs locations, and what will happen if any of these terms are violated.

In addition, you should mention outright whether a pet deposit is required, refundable or not, and whether an additional monthly rent fee will be added as a result of having a pet.

 

 

Opt-Out Clause

Sometimes you may want to give your tenants the option to legally break the lease agreement and move out prior to the end of the lease term.

Called an “opt-out clause,” this clause will essentially let a tenant break a lease early for an agreed upon fee that must be paid when moving out.

This type of lease clause gives your tenants the assurance that if something happens and they must move, they will be okay so long as they pay the fee.  In addition, this protects you in the case your tenant leaves unexpectedly by covering most of the expenses required for placing a new tenant in your property.

This can also help prevent tenants from just up and leaving when circumstances change, leaving you short on rent and facing the difficult process of finding your tenants and taking them to court.

 

Final Thoughts

There is a lot that goes into leasing your Bethesda income property.  And, without proper experience in lease agreement drafting, you run the risk of failing to include some of the essential lease clauses that serve as protection to both you and your tenants.

If you have a rental property in Montgomery County and are looking for a quality property management group to help you with matters such as lease agreement drafting, call Bay Management Group.

We are up to date on all rental property federal, state, and local laws and are focused on every detail related to  property management.

The team at Bay Management Group will have every detail you wish to have included, plus those you never knew should be included, placed into your lease agreement so that you have the peace of mind that everything is protected.

 

Step-By-Step Guide for Rental Property Work Orders

Posted on by Bay Management Group

As a landlord, you must make sure your rental properties are in habitable condition. That means that any time damages require your attention, you must respond as soon as possible to repair them.rockville property manager repairing rental apartmentThe best way to do this is to encourage your tenants to submit work orders and follow up on them quickly. If you don’t, you could damage your relationship with your tenants.

So, lets go over how landlords can make it easier for tenants to get repairs taken care of. By the time you’re done reading this post, you’ll be well-equipped to make positive changes to the way you handle tenant repair requests.

 

How Rockville Landlords Should Handle Repairs and Maintenance

Know Your Tenants’ Obligations

Your tenants’ responsibilities to you, the landlord, and to other tenants are based on a few things, including the law and the rules laid out in the rental agreement.

If your tenants fail to meet these responsibilities, you can end their tenancy and evict them.

One of the major obligations a tenant has is to keep the rental property clean, safe, and free from damage. They are not required to pay for normal wear and tear, but they must pay for repairs for any damage caused by them or one of their guests.

And they should always submit a work order to notify you of any damages that occur.

 

Know Your Obligations as a Landlord

You are required to make sure your rental property is habitable when the tenant first moves in, make necessary repairs, and conduct maintenance to keep your property in habitable condition.

A “habitable” property is one that meets heating, water, electricity, and cleanliness standards. It should also be structurally sound. Look to your local laws regarding these standards because they sometimes vary from city to city.

Also, be sure to provide your tenants with work order request forms to fill out whenever they have an issue that needs your attention.

Remember: you aren’t required to foot the bill for damages caused by your tenants’ carelessness and neglect.

 

Understand Why Maintenance is Important

Some of the only face-to-face contact you have with your tenants is when something is broken and needs to be fixed. And if those issues aren’t handled right, things can quickly go sour.

That’s what makes timely and effective maintenance so important for your relationship with your tenants. It’s the best way to impress them after they’ve been impressed enough to move into your property in the first place.

Also, depending on your state’s laws, your tenant could withhold rent until the repair is made. Or, your tenant could go around you and hire an outside party to make the necessary repairs – which would end up being deducted from their next rent check.

If the problem violates any state or local building or health codes, you could be in for a mess of legal trouble. Your tenant could contact local authorities, and you might be subject to fines or other substantial penalties.

Last, and maybe worst of all, your tenant might decide to simply move out of your rental property and end the lease agreement. This could lead to a construction eviction lawsuit against you. All the tenant needs to do is prove that uninhabitable conditions were a result of your reluctance to perform maintenance and that they left the property in a reasonable timeframe.

If you can’t put up a strong defense, you may face worse consequences than just the stress of filling a vacancy.

 

Assess Maintenance Issues

rockville property manager fixing apartment drainIf your tenants know they can rely on you to take care of work orders promptly, there’s a good chance they’ll want to continue renting from you.

So, after a tenant has submitted a work order, you need to assess the seriousness of the repair. Some critical repairs you may need to make to your rental properties include:

  • Waterproofing and weather protection of roof and exterior walls
  • Securing the plumbing facilities (including hot/cold running water and sewage)
  • Maintaining and repairing air conditioning and heating facilities
  • Fixing a faulty dishwasher, washer, or dryer
  • Reinforcing weak flooring in second-story units
  • Keeping a working toilet, wash basin, and bathtub or shower in a ventilated room that allows for privacy
  • Ensuring natural lighting in every major room through windows or skylights
  • Verifying an operable deadbolt lock, smoke detector, and safe fire or emergency exit into a street or hallway

These are common maintenance issues most landlords take care of to keep their rental properties up to minimum standards.

 

Give Your Tenants Notice

The last thing a tenant wants is for their landlord to barge into their home without any notice. And if a landlord does, they could face a lawsuit. In Maryland, you’re required to provide notice to your tenants before you ever enter the rental property.

Always inform your tenants that you need to enter to make repairs at least 24 hours in advance, and try to provide tenants with an estimate of how long each repair will take as a courtesy. However, keep in mind that you may enter at any time without notice if the repair is an emergency.

 

Have a Rockville Property Management Company Handle Work Orders

Think about the time you spend handling repairs – that’s time you could be spending on more profitable tasks.

Why not devote your time to those profitable tasks by hiring someone to handle maintenance and repairs for you?

Some of your choices are to hire a contractor, hire a handyman, or have the tenant themselves perform the repair. But these range from expensive to risky.

That’s why you should look for a property management company to take care of your tenant repair requests.

To help you find the best residential property management in Rockville, MD, you should ask your potential property manager a few important questions, such as:

  • What is your maintenance process?
  • How do you handle emergency calls?
  • What’s the average time it takes to close out a work order?
  • How do you handle complaints?
  • Do you provide tenants with maintenance surveys after you complete work orders?
  • How many maintenance technicians do you have on staff? Or, do you use contractors?

It takes a little time and care to find the most qualified property managers in your area, but it’s worth the time you’ll get back when you’re relieved of your unwanted maintenance tasks.

Are you interested in residential property management in Rockville, MD?

If so, consider Bay Management Group. We can take care of your tenants and relieve you of unwanted property management tasks so you can save time and build a more profitable rental property business. Contact us today to learn more.

 

7 Reasons Why It’s a Great Time to Invest in Maryland Rental Properties

Posted on by Bay Management Group

tips-invest-maryland-rental-properties
If you’re interested in becoming a property owner in Maryland, I have some exciting news for you:

Now is a great time make it happen.

More and more people are opting to rent rather than own due to the high costs of home ownership, the desire to change location frequently, and various other reasons. On top of that, millennials have abstained from home ownership for longer than previous generations did at their age, so a lot of them are looking for places to rent.

However, that doesn’t mean you can just start investing in random rental properties and expect to become an overnight success. Some markets are much more lucrative than others, and you need to pick the most lucrative markets (like Maryland) to start and run a highly profitable rental property business.

Now, you may be wondering:

Why is right now such a good time for me to purchase Maryland investment properties?

Keep reading to find out.

 

Why It’s a Great Time for You to Become a Maryland Landlord

1. Data shows that Maryland is currently a great place to invest.

Not only is Maryland full of potentially profitable rental properties – recent research that compared gross rental yields in many different cities showed that Baltimore City, Maryland had the highest annual gross rental yields at 28.5%.

The same research cited zip codes 21223 and 21205 in the Baltimore area as being top zip codes for single-family rental returns. The Baltimore Sun even noted that it can be cheaper to buy than it is to rent in the Baltimore area, which is great news for landlords looking to invest.

On top of that, you can find many Maryland investment properties in college towns like Baltimore City, Towson, or College Park. This is an attractive market for landlords because young people attending school often prefer to rent rather than buy.

Bottom line: If you’re thinking about investing in rental properties, you need to start looking around in Maryland – especially the Baltimore area!

 

2. Rental properties help you diversify your income streams.

Think about it – what would happen if you suddenly lost your day job or one of your main income streams?

Chances are, you’d take a huge financial blow. You might even struggle to pay your bills if you were fully dependent on the income stream you lost.

That’s why it’s a good idea to diversify your income streams by purchasing Maryland investment properties.

When you invest in rental properties, you gain a new source of income. Not only does that enable you to make more money – it allows you to gain peace of mind knowing that you’ll be able to get by financially, even if you lose one of your income streams.

 

3. You can save for retirement (or something else!).

When you own a profitable rental property business, you don’t have to rely solely on your 401K account to start saving for retirement. You can raise your rents as your property values increase over time to build long-term wealth and make sure that you have plenty of money to retire on.

 

Related reading: How to Fund Your Retirement with Rental Property Income

 

4. Rental properties tend to be stable, depression-resistant investments.

Even when the economy is struggling, people need a place to live. And when times get tough, they probably aren’t going to want to splurge on a mortgage – they’re going to rent instead.

Of course, rental property investing isn’t a foolproof way to make a lot of money. You have to be careful about the tenants and properties you choose if you want to make it work. But once you learn how to do that, there’s a good chance you’ll have a stable source of income for a long time!

 

5. You can become completely self-employed.

Maybe you’re thinking about becoming a landlord because you want to quit your day job. You dream of the freedom associated with being self-employed, and you’re ready to become your own boss.

It’s true that becoming a landlord can allow you to do that. When you run a rental property business, you get to call the shots in every aspect of your business. Self-employment also gives your personal freedoms, like the ability to set your own work schedule and vacation dates.

Of course, you won’t be able to take a vacation any time you want – you’ll still need to get organized and set regular work hours so you can take care of your tenants and properties unless you hire a property manager to run your rental property business for you.

 

6. You become exposed to new networking opportunities.

You’ve probably heard this saying before:

“It’s not what you know – it’s who you know.”

That certainly seems to be true in the business world. Often, you can majorly benefit from utilizing your connections and social networks.

Fortunately, when you become a landlord, you can meet all kinds of new people, like:

  • Bankers
  • Real estate agents
  • Tenants (some of whom may have professional connections you can benefit from)

So if you decide to take the plunge into rental property investing, get ready to start networking and make the most of every opportunity. Who knows – you might just find yourself connecting with someone who can help you make your rental property business more profitable than ever!

 

7. Investing in rental properties can be semi-passive income.

Don’t get me wrong – owning a rental property business can be a demanding job if you go at it alone. You cannot simply purchase properties and collect a check every month. You have to handle maintenance and other tenant requests, deal with late rent payments, screen tenants properly, advertise your rental properties effectively, and more if you want to be successful.

However, you can turn your Maryland rental property investments into a source of semi-passive income by hiring an experienced property manager.

When you hire a property manager, they’ll relieve you of stressful, unwanted landlord tasks so you can take a more “hands-off” approach to your rental property business.

To learn more about how Maryland property management can help your business grow, contact Bay Management Group today.

 

5 Ways to Collect Rent and Get Paid on Time

Posted on by Bay Management Group

collect-rent-tips-property-manager-montgomery-county-md

Collecting rent is one of the most important tasks you’ll handle as a landlord. If you can’t collect rent consistently, your rental property business won’t earn you the income you need to pay the bills.

And for some landlords, collecting rent can be a serious challenge. Even with a solid lease agreement in place – which includes strict guidelines and information about additional fees for late rent payment – some tenants still fail to pay their rent on time regularly.

The question is: How do you, as a Montgomery County landlord, make sure that you can collect rent on time, every time?

Let’s answer that question today with these 5 ways to collect rent.

 

5 Easy Ways Montgomery County Landlords Can Collect Rent

1. Use an Online Payment Method

One of the newest and most efficient places to accept rent payments is online.

montgomery-county-md-tenant-paying-rent-online

There are quite a few options available online as well, depending on your specific needs. Some sites, like ERentPayment, RentMatic, or RentMerchant serve the simple purpose of allowing your tenants to pay with their bank accounts.

The price you pay for these services varies depending on your plan as well. Many sites offer basic plans that focus on rent collection, while other sites offer a wide range of services like online rent roll and the ability to upload your important documents. Some even allow you to send messages to your tenants and act as miniature social networks.

Another popular online option is PayPal. It’s free to use, but your tenants need to know exactly what they’re doing or else you might be charged a fee.

If the tenant does not mark the payment as a personal payment, for instance, you’ll be charged a business transaction fee on your end. Or, it might take several days for the payment to go through.

But remember – not everyone has access to the internet. If you wish to accept rental payments online, you’ll have to allow another form of payment.

 

2. Check or Money Order

These days, many landlords accept money orders from their tenants but do not accept personal checks, except on rare occasions.

With personal checks, there are few ways to verify if the check is valid or if the funds are available until you attempt to deposit the check. You don’t want to go through the hassle of a bounced check with your tenants.

A money order, on the other hand, is much simpler. Your tenants can get a money order from their bank, local post office, or even some convenience stores. When you receive a money order, it’s a lot like getting a gift card with the rent payment on it.

All you have to do is require your tenants to stop by and deliver their payment this way by a specified date, and you can cash their rent payments at your leisure.

 

3. Email Transfer or Direct Deposit

This option, which is growing in popularity, is seen by many in the rental properties business as a little too casual. Depending on your relationship with the tenant, though, it could be right for you.

Email transfer or direct deposits provide ease of access and convenience for instantly collecting rent payments – without going through a middleman like a rent collection website.

Because most of your tenants will have internet access and conduct their banking online, all it takes is a simple transfer of funds from their bank accounts to yours. There’s even the added bonus of automatic digital records that give you an electronic paper trail you can rely on if there’s any doubt about when you received payment.

The only real drawbacks of this system are relying on the internet, and an occasional small fee on the transfer. However, this fee is normally very small compared to most other forms of accepting rent payment.

 

4. Accept Payment By Mail

In some situations, it may make sense to have your tenants mail the payment to a certain address every month. This is especially useful if you don’t have a rental property office nearby.

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This option helps you save time because you don’t have to worry about collecting the payments yourself.

The biggest drawback for this option is undoubtedly timing. If you find one of your tenants is late, they might use an excuse like: “The check is in the mail!” They could be telling the truth, but you may still not receive the payment for several days, and you could not consider their rent as being late.

Fortunately, you can provide your tenant with pre-addressed and stamped envelopes and require a certain postmark date to make the process go more smoothly.

 

5. Use a Property Management Team

You also have the strong option of outsourcing your rent collection to a third party by hiring a Montgomery County property management company.

A property management team will take a professional approach to collecting your rent and disburse it to you with ease through electronic direct deposit or a standard check.

Montgomery County landlords can hire a company to not only collect rent payments, but also to deal with tenant problems, fill vacancies, handle maintenance issues, and accomplish all other unwanted tasks.

Depending on the size of your operation and your specific needs, a property management company may be the perfect choice for your rental property business.

 

The Wrong Way to Collect Rent

One word: cash.

Cash is hard to trace, easy to lose, and you almost always have to collect it in person. The only time you should even consider accepting cash as payment is if you merely rent out a room in your home or have a single, trustworthy tenant.

But even then, you should always provide your tenant with a receipt that both acknowledges they have paid and provides you with record of them doing so.

Your best bet is to establish a strict “no cash” policy from the beginning – one that is clearly communicated in your lease or rental agreement.

 

Final Thoughts

If you put one or more of these reliable rent collection methods in place and your tenants still fail to pay on time, you may have to get tough. Sure, it’s okay to forgive a tenant who fell on hard times – once. But any more than that and you could be seen as an overly lenient landlord.

To avoid this, you have to make the consequences for late payment known. A repeatedly late tenant should be reported to a credit agency – which can significantly damage their credit.

Of course, you don’t want to report anyone. You may only include this sort of threat in the lease agreement as a means of ensuring you collect your rent on time. But you still need to know how to follow through by calling these credit bureaus:

Equifax: 1-800-685-1111

Experian: 1-888-397-3742

TransUnion: 1-800-916-8800

If you read this and realize that you don’t want to go through the trouble of collecting rent every month, maybe it is time you went with option number five: a Montgomery County property management company.