Tracking Rental Property Income and Expenses

6 Financial Considerations for Baltimore Property Managementbaltimore-rental-property-income

The key to receiving a return on your investment property is accurately recording income and expenses.

From reporting incoming rental funds to calculating total expenses, the entire process can quickly become overwhelming for busy investment owners and/or those with multiple rental properties throughout the Baltimore area.

With an understanding of what needs to be tracked and recorded, however, you can ensure you receive the optimal ROI for each property you own.

 

Income Sources and Expenses to Track

Understanding the net operating income (NOI) equation is important for any property investor. Without a firm grasp of this concept, you’ll find yourself making mistakes and missing out on potential profits.

The formula is simple enough: your net operating income is equal to your gross operating income minus operating expenses. But each of these variables has multiple inputs and expenses tied to it.

Your gross operating income is determined by taking your potential rental income, subtracting vacancy and credit losses, and adding other income.

If you are not currently working with a property management team, your operating expenses in Baltimore may include the following:

  • Advertising and marketing. This is the total amount you spend on Internet marketing, paid advertisements, signage throughout Baltimore, listing fees, and more.
  • Auto and travel. This refers to how much money you spend on traveling to and from your various properties for routine maintenance and inspections or to show the property to potential tenants.
  • Cleaning and maintenance. Whether it’s as simple as having the floors scrubbed and countertops wiped off or as time intensive as laying new flooring and installing new appliances, there are always cleaning and maintenance expenses incurred prior to welcoming a new tenant.
  • Legal fees. 78463454-001A lease isn’t anything to cut corners on. A high quality, accurate lease that protects your interests requires the attention of an experienced attorney.
  • Utilities and taxes. Unless your tenant pays for all utilities and taxes, you will incur some of these expenses. They should be accounted for.
  • Insurance. Rental property insurance is often overlooked by many landlords, but is crucial to protecting yourself and your property.

 

Other Expenses

It’s also worth noting that there are some additional expenses that are not figured into the NOI equation. These include debt service, depreciation, income taxes, tenant improvements, capital expenditures, and more.

 

Your Easy Button: Baltimore Property Management

Thankfully, as an investor, you don’t have to worry about all the finer details that go into turning a profit on a rental investment. By hiring a local Baltimore property management company, you can focus on the big picture while letting somebody else take care of the particulars.

From screening tenants, facilitating maintenance and repairs, and setting rental rates, to handing contracts and tracking expenses, a property management company can save you lots of time.

 

Bay Management Group

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At the Bay Management Group, we offer premier property management services in Baltimore.

Whether you have a large portfolio or a single property, we can help you by relieving the burden of tracking expenses and handling tenants. It is always our goal to reduce your expenses and increase your net operating income.

For more information, contact us today. We would be happy to discuss our services in further detail.

 


Landlords: 5 Steps to Get Prepared for an Emergency

Being a landlord is both rewarding and stressful. Finding responsible tenants is only one of the hardships you have to go through. If you want your undertaking to succeed, you have to be prepared for various emergency situations that may occur on your property. A slow or inadequate response during an emergency situation can cost you time, money, efforts, and even make you liable for negligence.

So what kind of emergency situations are we talking about?

Natural disasters: earthquake, flood, hurricane, fire, etc.

Security breaches: break-in, burglary, vandalism, etc.

Tenant emergency: health issues, involvement in crime, death on your property, etc.

Utility failure: no water, gas, electricity, AC, etc.

Life-threatening conditions: gas leak, mold, insect infestation, etc.

The main challenge is that you are not there when an emergency happens. This means your tenants will be taking the first step of notifying appropriate emergency services and you. Your role is to help your tenants protect their lives and possessions, as well as to help authorities and emergency responders do their job.

Bay Management Group is here to help property managers get prepared for any emergency situation. Here are a few steps to take.

1)  Educate your tenants.

Because most likely they will be the ones dealing with the emergency first-hand, it’s a good idea to provide your tenants with the key knowledge and tools. Create and distribute an emergency plan that should include:

–   A phone number to reach you 24/7

–   Emergency exits on the property and the location of closest shelters.

–   Phone numbers of emergency responders (medics, firefighters, police, etc.). Make sure your tenants know when to call you and when to dial 911.

–   Definition of an emergency, as well as situations that don’t constitute emergency, such as slow drains or minor drips. You still need to be notified about those, but not in the middle of the night.

–   Helpful information about how to detect problems on early stages.

2)  Know your tenants.

It’s easy if you only have one property, but if you own several apartments or the entire apartment building, things get complicated (our Baltimore property management pros know this from experience.) No matter how busy you are, it’s important to keep and update the list of your tenants. Emergency responders might ask you to provide it to make sure everyone is accounted for.

3)  Keep your keys and codes organized.

Medics or firefighters might need access to your locked basement, shed, garage or other facility. Make sure you have all the keys organized by property and accurately labeled – this could save someone’s life!

4)  Make an emergency calling list.

A flooded basement is not a reason to dial 911, but it’s still an emergency, because the water causes inconvenience to your tenants and damages your property. How fast you respond matters a lot, which is why having a list of reliable contractors who can fix different problems is essential.

Create a calling list to include names, numbers, emails, reliability and availability of different contractors. Make sure that you have at least one contractor per category (plumber, electrician, waterproofer, mason, etc.) who provides 24/7 services. Make copies of this list, so that you can access it anywhere: in your car, at home, at work and even on the go.

5)  Advise tenants to get renter’s insurance.

It’s a common misunderstanding among tenants that in case their possessions get damaged, they will be covered under the landlord’s policy. This is not true, and it’s a good idea to inform your tenants about renter’s insurance. It will cost anywhere between $15 and $30 a month and will be useful in case of property damage by fire, flood, storm or theft.

As you can see, the preparation might take some time, but at the end it’s worth it. It leaves no room for panic and lets you respond to any crisis situation in a timely and effective manner. Does it feel like too much? Our Maryland property managers can take care of everything for you. We have emergency plans set up for each of our clients and being on call 24/7 is a part of our job. Let us know if you need help taking care of your rental property.