However, if you are just starting out in the rental property business, it can feel quite daunting; there is so much to think about all at once. Chances are you have a lot to learn about investing in property if you have no prior experience and if you don’t have someone guiding you through the process.
Thus, we have composed a helpful checklist you can reference when it comes time for you to purchase your first Anne Arundel County rental property. This checklist will provide you a basic understanding of what it takes to be successful in your rental property investments.
Anne Arundel Rental Property Investment Checklist
Expediting the purchase of an investment property in the Anne Arundel County area will help you get tenants in your property and begin the process of collecting rent quickly. That, of course, means the money will start rolling in right away. So in order to not waste time, look at this valuable list of things you should do when investing in rental property.
1. Research the Location
- Schools
- Shopping centers
- Sports arenas
- Restaurants
- Nearby housing options
- Major freeways
- Entertainment halls
Investing in a property that is near a booming section of the city will help attract tenants because it means more jobs and amenities for residents. Additionally, a booming location will likely allow you to raise your monthly rental rates in the nearby future, as well as allow you to increase the value of your property should you choose to sell.
2. Check with the Competition
Before investing your hard-earned cash into a property in hopes of making a large amount of positive cash flow, make sure you research your competition. When it comes to property investments, competition can mean one of two things:
- Local competition. It is crucial you check the surrounding area and comparable properties to make sure of two things. The first is that you are getting a fair deal when it comes to purchase price. The second is that other rentals similar to your property are leasing for enough to cover your rental property’s future mortgage and make you a profit as well.
- National competition. In addition to local prices, it is a good idea to check the national averages for comparable properties. This will give you a good idea as to whether your investment choice is a sound one compared to what the national market is experiencing.
In the end, you want to aim for getting the best deal possible on any property you purchase, while making sure there is room for a high rental yield and capital growth over time. The point is to find the perfect balance between getting a great deal and having room for value growth.
3. Have a Plan
4. Learn the Purchasing Process
Buyers of rental property should always understand each step that is involved in the purchasing process. And, while the steps may not always be the same for everyone looking to invest in rental property, Zillow real estate experts state that the purchasing process should always generally follow these seven steps:
- Offer and Contract. Once you find a property that interests you, assuming it is within your budget, you need to sign a written contract telling the seller you want to move forward with the purchasing process. Make sure this legally binding contract is drawn up professionally and you read every line carefully. You will want to know what provisions allow you to back out of the sale and what your responsibilities as the buyer are.
- Receive Disclosure Documents. Anyone selling a property must provide you with disclosure documents, a title report, and any city reports that will reveal specific information that could persuade you to stop moving forward with the property purchase. These documents will disclose any issues the property has that may affect its value.
- Appraisal Process. In order to receive a loan from the bank to purchase something as large as an investment property, the bank will have a professional appraiser inspect the home and make sure the agreed upon purchase price is correct, according to the property’s value. If the property is found to be overpriced, the bank may choose to deny your loan approval or place extra provisions into the loan agreement that you must follow.
- Conduct Inspections. As a buyer, you will want to inspect the property you are about to invest in to make sure everything is in working order. For example, the property’s foundation, plumbing and electrical systems, HVAC system, and more are checked for flaws and reported back to you.
- Full Loan Approval. After the appraisal process has been completed, the bank will want to run your credit history, verify your income, and inspect your debt-to-income ratio before finalizing the loan. Additionally, the bank will ensure the property you want to invest in has no prior liens placed on it because that will affect the property’s value.
- Perform a Final Walk-Through. Right before the closing process completes, make sure you conduct a final walk-through of your property for any last minute discrepancies. You should also ensure any issues found during the inspection process have been fixed.
- Closing Process. This process typically takes place with an escrow officer. During closing, the purchase papers are signed by both the buyer and seller and finalized as complete. Your Anne Arundel County rental property will now officially be yours.
Understanding the purchase process will allow you to feel more comfortable in your investment decision. You want to make sure you know exactly what is happening and why so that you aren’t pressured into making any decisions you are not 100% comfortable making.
Investing in rental property can be a complicated and drawn out process. However, by understanding what you are getting yourself into and by being as prepared as possible with professionals to help you along the way, investing in rental property can be a very lucrative thing.
In the event you find yourself wanting or needing help managing your rental property in Anne Arundel County, contact Bay Management Group today. With extensive knowledge of the rental property business, and specialized services to help manage everything from tenant placement to rent collection, maintenance calls to regular inspections, this Anne Arundel County property management company has everything required to keep your property occupied, maintained, and appealing at all times.
Bay Management Group has what it takes to make sure your investment property is being well cared for by the high quality tenants we help place in your property. So contact us today to see how we can help you with your newly acquired rental property.