Do you own a house or apartment building that you can rent out to tenants to generate income?
If you answered yes then you should jump at the opportunity.
Becoming a landlord is a fantastic decision for anyone who wants to create an income stream for themselves at any point in their lives. But if you want to go down this road, you’ll need a solid business plan.
Keep reading to learn how Montgomery County property managers and landlords can set goals and create a business plan that helps them achieve success.
How Landlords Can Create a Rental Property Business Plan
Establish a System
Being a landlord makes you a business owner, and you need to treat your business like more than a hobby. Depending on your tax status, you have a few options for establishing your business.
Most rental property investment companies are setup as LLCs. LLCs allow you to legally separate yourself from any business related liability in order to protect personal property and finances in the event of a lawsuit or other legal issues.
It would be wise to seek the advice of a business attorney who is experienced in matters that concern LLCs. Before you complete any paperwork you should consult a financial advisor who can advise you on all of your incorporation options.
You want your business to run like a well-oiled machine. That means establishing clear-cut routines that make everyday tasks straightforward and easy to manage.
You also need to be consistent. To stay motivated and be consistent, you need to determine your endgame – your ultimate vision.
Understand Your Vision
What do you intend to get out of being a landlord?
Maybe you want to pay off your properties or other debt. Maybe you want to accumulate additional properties to increase the size of your rental property business.
Or maybe you want to earn a specific amount of money every year to properly enjoy your retirement.
Some landlords opt to start small and steadily increase the size of their rental operation. Others choose to partner with a wealthier individual to purchase more profitable properties.
Don’t over-extend yourself, but realize that the larger your initial investment, the larger your potential profits. Whatever your vision may be, you need to clearly visualize it. Everything you do as a landlord should move you closer to realizing that vision.
Understand Your Finances
To be a successful Montgomery County landlord, you’ll have to know where the numbers come from.
First, you should define your market. What sort of properties will you be investing in and what types of tenants are you interested in leasing to– low income, high income, or commercial properties?
Unless you’re independently wealthy, you’re going to have to find a way to pay for your rental properties.
What sort of money will you be using to secure them – conventional, hard money, private money, equity partners, seller financing, lease options, or some other method?
If you plan to take out loans to buy your properties, lenders will want you to have an exceptional credit history with no history of foreclosures or evictions and a dependable source of income.
When creating your business plan, you should include a personal description of your day-to-day finances. What do you bring to the table? Are you starting from scratch?
Remember that any time your financial situation changes, you should update your description in your business plan. As you evolve as a landlord, it’s important to have your complete financial statement at the ready.
Prepare for Problems
One inescapable part of being a landlord is problem tenants and surviving the eviction process.
Most tenants will gladly pay the rent and treat the property like their own. They’ll treat their neighbors with respect and avoid giving you too many headaches.
But at some point you may have to intervene and get your hands dirty. Renters may damage your property or break any the rules you established in their lease agreements – and you’ll have no choice but to evict them.
Learn your state’s landlord and tenant laws regarding eviction in advance. Typically, you’ll need to go to your local court, file a notice, schedule a court date, and be ready by that date.
However, there may be many extra obstacles in the way of a clear eviction, so be sure you know how to avoid common mistakes landlords make during the eviction process.
Many of these issues can be avoided by choosing the right tenants every time.
Create a Daily Plan
Being a successful landlord requires day-to-day involvement. In order to maximize your daily efforts, you should break down your grander vision into smaller pieces that allow you to work towards your long-term goals efficiently.
Sometimes your days will revolve around ensuring your rental properties are full. Because vacancies are one of the biggest costs associated with being a landlord, you need to be sure to find and keep good tenants.
Everything you do needs to play into your overall plan. Commit each day to working on strengthening and expanding your business, and make sure you track your progress. Before you know it, you’ll be a successful Montgomery County landlord.
Get Professional Help When You Need It
If you intend to become the property manager of your own rental properties, you will need to consult a real estate lawyer to establish a proper lease. You’ll employ plumbers, electricians, and other contractors as well.
If you decide to expand your business, you’ll likely reach a point where you can’t (or don’t want to!) handle all the work yourself, so you’ll need to build relationships with trusted contractors. These relationships take time to build, and it can become challenging to scale your staff and connections along with the size of your operation.
A Montgomery County rental property management company can inspect your properties regularly, take those late-night tenant calls you want to avoid, and keep your business running smoothly.
Sure, you’ll still want to keep an eye on things, but the majority of your stress will be lifted.
Look over your business plan – do you think you need a property management company you can trust to help you build and manage your rental property business?
If so, contact us today. We can handle all your unwanted tasks, and provide you with all the feedback (and stress relief) you need to grow your business – your way. We serve multiple counties in MD and PA including Philadelphia, Baltimore, Washington DC and nearby.