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
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
- 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
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
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.