6 Reasons to Make Your Howard County Property Eco-Friendly

Posted on by Bay Management Group

How to Make Your Howard County Rental Property Eco-Friendly

Did you know 40% of the United States’ total annual energy consumption is swallowed up by residential and commercial sectors?

That’s a lot of energy.

In addition, it is suggested that Americans leave an average carbon footprint of nearly 5 times the worldwide average.

Measuring in at 50 tons of total greenhouse emissions per United States household each year, this is not something to be proud of.

Now, imagine how much greener and cleaner our environment would be if everyone combined their efforts to make their homes more eco-friendly.

In fact, if everyone took part in conserving the environment, the country as a whole would see a healthier planet, healthier citizens, and healthier plants and animals.

If you own rental property in the bustling area of Howard County, where income is high, students are excelling, and unemployment rates are low, you should consider making your rental more eco-friendly.

There are several reasons why all property owners should aim to make their investment properties more eco-friendly.

And today, we are going to explain those reasons in hopes of inspiring you to take part in conserving our planet’s natural resources.

 

Why Making Your Howard County Rental Property Eco-Friendly Is A Great Move

 

1. Your Rental Property’s Value Will Increase

Making Your Rental Property Eco-Friendly Will Increase Property Value

People are more aware than ever of how their behaviors and lifestyles are affecting the Earth as a whole.

This applies to your Howard County tenants as well.

Leasing a green rental property is enticing to many of your prospective tenants – they want to know they are doing their part when it comes to being eco-friendly.

Plus, they want to enjoy the benefits that a green rental offers them, such as healthier air to breathe, and lower utility bills.

Even if you only splurge on small eco-friendly upgrades to your home, – such as installing window treatments or upgrading your appliances to energy efficient models – your property becomes more appealing to those seeking an environmentally friendly rental.

With a tenant pool full of people wanting an energy efficient home, you will be able to command the highest rent rate possible, and reap the benefits in the form of additional rental income.

 

2. It’s Cost Efficient

The United States Green Building Council estimates that by increasing our eco-friendly building efforts, the United States can achieve upwards of $1.2 billion dollars in energy savings between the years 2015 and 2018.

You would be wise to think that those savings will trickle down to your Howard County tenants at one point or another if your investment property is part of this green effort.

In fact, more money in your tenant’s pocket means on-time rent payments, more money to spend on higher rent rates, and of course, more money to be spent on shopping, dining, and entertainment in the area your rental property is located.

All of this is helpful in keeping your tenants in your property for the long haul.

 

3. It Helps the Job Market

Eco Friendly Rental Properties Help The Job Market in Howard County

Although not directly related to your profits as a Howard County property owner, green construction can have the same trickle-down effect mentioned above.

Spurring nearly 1 million jobs in the United States by 2018, green construction is expected to directly influence the nation’s unemployment rate and economy.

And, as a property owner, you know that if the prospective tenants in your area have high-paying, stable jobs, they will have more money to spend on a rental home such as yours.

In addition, by investing in larger scale projects such as installing solar panels on your rental property’s roof, not only are you taking part in the eco-friendly movement with your own property, you are employing people that might otherwise not have had stable jobs before the green movement.

 

4. Your Tenants Will Breathe Easier

Eco-friendly rental homes offer your tenants better indoor air quality than any non-environmentally friendly, new or pre-owned home will because of the materials used to build them.

This makes being inside physically better for your tenants and their families, which is something any tenant can appreciate.

If your rental was not built to be eco-friendly, that’s okay.

One of the best ways to ensure healthy air for your tenants is to use paints and cleaners that are low in volatile organic compounds (VOCs).

This reduces your tenant’s exposure to carcinogens such as formaldehyde.

 

5. Your Green Rental Will Last Longer

Your Eco-Friendly Howard County Rental Property Will Last Longer

Sometimes recycled materials, even those used in the construction of your rental property, are more durable than traditional construction materials, giving your rental property the chance to last longer than ever.

For example, using recycled steel over wood planks, concrete as a form of home insulation, and dark colored roofing materials made out of recycled products, all help to make your property last longer, keep utility bills lower, and offer better health conditions for those residing in the actual property.

In the end, by using recycled (and oftentimes, more durable) materials on your rental property, you will spend less time and money maintaining your property, which means more money in your pocket.

 

6. You Will Lessen Your Impact on the Surrounding Area

Having an eco-friendly rental property does more for the environment than just help your tenants save on their energy bills and breathe easier.

Green building has less of an overall impact on the surrounding environment – that is the goal behind the entire movement of “going green.”

For example, construction companies will only take down foliage that is directly in the way of the project they are working on.

By keeping your backyard landscaping as natural as possible, even if you are simply re-doing the yard, adding a deck or pool, or are increasing the square footage of your rental property by adding an extra room, you can do your part by preserving the surrounding area.

In addition, by leaving the surrounding foliage, you allow this natural habitat to work for you.

Extra trees and bushes surrounding your home better insulate the property from the harsh weather conditions that affect your tenants during both the summer and winter.

 

If you live in the Howard County area, and own a rental property that is currently eco-friendly, contact Bay Management Group today to help place equally environmentally friendly tenants in your investment property.

With aggressive advertisement of your vacant property to the tenant pool that seeks an eco-friendly rental home, we can make sure to get the highest quality tenant in your rental property.

Our thorough screening process ensures placement of tenants that appreciate your efforts to help save the environment and reduce your carbon footprint, as well as their own.

In addition, your eco-friendly rental will bring in high rent rates, and will be carefully monitored by an experienced Bay Management Group property manager to make sure your tenants are caring for your eco-friendly property as they should.

7 Ways to Increase Your Baltimore County Rental Property Income

Posted on by Bay Management Group

How to Increase Your Baltimore County Rental Property

If you own a coveted Baltimore County rental property, chances are you are commanding an exceptional rent amount each month.

Thanks in large part to Towson University, and the peaceful serenity of the suburbs, mixed with the nearby excitement of the city, having an investment property in the nearby Towson region is one of the easiest ways to become a successful property owner.

But what if there were things you could do to increase your already-impressive rental property income?

It should come as no surprise that property owners want to maximize their rental property income, and keep Baltimore County property management costs as low as possible.

However, unless you are taking proactive steps towards increasing your rental property income, chances are you will remain in the same place you are today for the rest of your career as a landlord.

Luckily, we have some practical ways you can generate additional income from an already profitable Townson rental property.

 

Ways to Boost Revenue on Your Townson Rental Property Income

 

1. Consider a Rent Increase

Although a seemingly obvious solution to making more money as a property owner, increasing the rent on your Baltimore County investment property is not as easy as it sounds.

After all, if you choose to raise the rent on current tenants, or advertise a vacant property at a high rent rate, you can’t go too far – remember, you must remain competitive in order to succeed.

Before raising the rent on your property, make sure to research current market trends in your particular area, compare similar properties, and find out what they are leasing for.

Also, capitalize on upgrades, amenities, and special features your rental property offers prospective tenants.

 

2. Aim for “Perfect” Tenants

Aim for the Perfect Tenants For Your Baltimore County Rental Property

The “perfect” tenant may not actually exist in the real world.

However, with proper tenant screening, especially if conducted by your Baltimore County property management company, you can place a tenant in your property that is as close to perfect as anyone can get.

In addition, catering to your model tenant type will help you to narrow your tenant pool significantly.

Here are some tips for finding out what your ideal tenant looks like:

  • Research the demographics of the area that your property is in
  • Find out information about employment rates and job opportunities
  • Evaluate the location and the lifestyle of nearby people
  • Match your property’s amenities to the type of families that are likely to move in

A high-quality tenant that is seeking what you have to offer will net you higher rent rates than ever before, and also increase your chances of having a long-term tenant that cares for your property.

All of these things will help you earn more income in the long run.

 

3. Implement a Pet Fee

If you are impartial to allowing pets in your Towson rental property, but are looking for an easy way to increase your monthly income, consider adding an extra pet rent provision to your lease agreement.

Requiring even an additional $25 per month for a pet adds up over the course of a lease term.

And, if you follow a strict tenant screening process, you should be placing high quality tenants in your property, which usually means better-behaved pets.

Quality tenants typically have good pets.

And, those with pets usually love them enough to be willing to pay an extra rent fee each month to have them in a property.

 

4. Prorate Months

Prorate Rent for Your Baltimore Rental Property

Though a vacating tenant usually leaves your rental property at the end of the month, ask yourself this: how often are you able to turn a vacant property in less than one day?

Getting your property rent-ready in a matter of days is often not possible.

It is likely to take a week or so for you to make your Towson rental property sparkling for the next tenants that are moving in.

This is especially true if your property needs things like new carpet, a fresh coat of paint, and a deep cleaning.

And don’t forget any maintenance or repair issues that need addressing.

One way to get around having to wait for tenants to move in at the start of the next month (essentially leaving your rental vacant for one month), is to consider prorating the last two weeks of the month, and allowing your new tenants to move in “early.”

This lets you collect an additional half-month’s worth of rent, which of course will add to your overall annual income.

 

5. Add a Lease Termination Fee

If your tenant wants to break their lease early, there isn’t much you can do about it.

However, by implementing a lease termination clause in your lease agreement, you can at least recoup a few months worth of rent to make up for your inevitable loss.

Try charging an amount equal to two months of rent in the case of an early lease termination.

Although this doesn’t necessarily pad your rental income for the year, it does add to your bottom line in the case a tenant decides to leave.

 

6. Furnish Your Rental Property

Furnish Your Rental Property to Increase Profits for Your Baltimore County Rental

Though this option may not be for everyone, furnishing your Baltimore County rental property is no doubt an excellent way to garner higher rents from tenants, and thus boost your annual income.

Offering a furnished property is enticing to those that are moving from other states, those renting for the first time, or those looking for short-term leases.

The ease of moving into a rental property that is already fully furnished is priceless to some tenants.

And the best part is, property owners such as yourself are bound to benefit from the added monthly rent amount you charge tenants for providing them with a fully furnished home.

 

6. Enact Roommate Fees

The topic of roommates is a tough one when it comes to your rental property.

At the start of the lease term, you may think that you have placed two adults into your rental property for a set amount of rent each month.

Then, as a few months pass, you may be surprised to find out that the two tenants have now grown into three tenants.

As a way to boost your rental income, and ensure your rental property does not become a hub for all friends needing a place to “crash” for a while, consider implementing roommate, or extra occupant, fees.

Run a background check on the new person, update the lease agreement to include the additional occupant, and charge a nominal fee of $50 per month extra.

 

7. Employ a Baltimore County Property Management Company

Employ a Baltimore County Property Management Company to Increase Profits

The services that an experienced property management company can offer Towson rental property owners far outweigh the management fees that are charged.

This is especially true if you go with Baltimore’s best property management team, Bay Management Group.

With the lowest management fees in the area, Bay Management Group offers a whole suite of property management services designed to ease the hassle of self-managing your rental, reduce the headaches that come from managing tenants, and of course, save you money in the long run.

Take for instance the following benefits:

  • Aggressive advertisement of vacant property for the fastest tenant placement possible
  • Thorough tenant screening
  • 24/7 on-call maintenance team of highly qualified, timely, and affordable contractors
  • Enactment of security deposits, application fees, pet fees, and more
  • Strict rent collection policies
  • Proper move-in, move-out, and seasonal inspections
  • 12-month tenant warranty and free re-lease of your property, should a tenant be evicted within the first 12 months of leasing from you

As you can see, all of these management services aim to save you money – via placing a high paying tenant in your property as quickly as possible, reducing out of pocket costs thanks to proactive maintenance of your property, and collecting of additional rental income in the form of fees, if applicable.

 

In the end, Bay Management Group strives to garner you the most money each month as possible, while still being fair to tenants.

If you own rental property in the Towson area, and are looking for ways to increase your rental income, get in touch with Bay Management Group today.

We can help you maximize your rental income, minimize your stress, and ensure that you are making the most money possible each month from your investment.

Your Go-To Checklist for Investing in a Rental Property

Posted on by Bay Management Group

go-checklist-investing-rental-propertyInvesting in an Anne Arundel County rental property is on many people’s minds these days. Located near major industries, the shore of Chesapeake Bay, and larger cities such as Baltimore, Anne Arundel County is a great location to live in.

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

research-location-rental-property-investmentSure, Anne Arundel County is a prime rental home location. However, before jumping in and making an investment decision, research the surrounding area of the properties you are interested in. This means scoping out things such as:

  • 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

plan-rental-property-investment-anne-arundel-countyInvesting in a rental property is going to take a lot of time and money. It is important you get everyone that can help you onboard from the beginning. This includes your financial advisor, banker, accountant, and/or mortgage broker. These professionals are experts at handling your money, have a full understanding of your overall wealth, and can help you decide which price range is going to be the responsible range for you.

 

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.

The Benefits and Risks of Buying an Off-the-Plan Property

Posted on by Bay Management Group

benefits-risks-off-the-plan-property-investment

Would you invest in a Harford County rental property without first seeing it?

If so, you are one of the many property owners that might enjoy the idea of purchasing a not-yet-constructed, brand spanking new rental home.

While being the first to purchase a property that has never been lived in can be exciting and offers plenty of benefits, there are also risks that come along with investing hard-earned cash into something that is not yet complete.

If you are considering buying an off-the-plan property in the Harford County area, read on to see some of the most common benefits and risks of buying this type of property.

 

What Does Investing Off the Plan Mean?

Essentially, investing in a rental property that is off-the-plan means purchasing it before it has been built.  Typically, you enter into a contract with the housing developer to buy a property that may not be completed for some time.  This may mean months or even years, depending on the status of the community the property is located in.

The overall process of buying an off-the-plan property is simple.  Oftentimes you will receive digitalized imagery of the property, view scaled models, or even enter real life showrooms to gain insight into what your off-the-plan property will look like upon completion.  From there, you make your decision based on the property’s plans, location, and expected finishing touches.

 

The Benefits of Buying an Off-the-Plan Harford County Property

benefits-off-the-plan-property-investment

There are many perks to investing in an off-the-plan property, especially in the growing Harford County region.

 

Price Locks

One of the biggest advantages to buying an off-the-plan property is the price lock you will enjoy.  Though your property will not be finished until a future date (when appreciation and market growth may call for higher housing prices), you are locked into the current market price at the time of purchase.  This equals the potential for large savings down the road and of course, higher positive cash flow when you lease your rental to tenants.

 

Discounted Purchase Prices

In addition to reveling in current market prices, you may enjoy the fact that developers often propose off-the-plan properties at discounted rates with additional incentives in order to make the status quo and secure the finances needed to finish building the community.  It is important to note, however, that this is not always the case and that you should always research your investment decisions before finalizing them to make sure you get a great deal.

 

Buy Now and Pay Later

The process for investing in an off-the-plan property is usually the same regardless of where you are buying.  When the property is under construction, you will usually pay a 10% deposit to the developer, thus securing your purchase.  The remaining balance is not typically due until the development is complete, which can vary anywhere between 12 months and 5 years.

 

Customization Options

When you decide to invest in a Harford County rental property that has yet to be built, chances are you will have more flexibility when it comes to your choice of flooring, fittings, and finishes.  And, while all of these extras do cost more, they ensure your rental will have the exact appeal you want it to have in order to secure top-notch tenants come completion time.

 

The Risks of Buying an Off-the-Plan Harford County Property

risks-investing-off-the-plan-rental-property

As thrilling as landing a great deal, outfitting your investment property to match your exact design needs, and not having to pay the full purchase amount until sometime in the near future is, there are definitive risks that come with buying an off-the-plan rental home.

 

A Falling Market

If anyone could have foreseen that in the mid-2000s the American housing bubble would burst wide open, leaving even some of the strongest banks in the nation to collapse thanks to mortgage defaults, no one would have risked purchasing an off-the-plan property.

Why, you ask?

Because the purchase price you conveniently locked in the at the time of purchase, the one you had high hopes of appreciating over time as the housing market thrived, would have been a major overpayment by the time the development of your investment property was complete – if it was even finished.

Overpaying is a major risk you face when buying an off-the-plan property.  More so, you may find it more difficult to secure financing for the rest of the amount you owe come completion time if the housing market has gone down.

 

Failed Expectations

Many developers will not let property owners view their purchased properties until the entire project is completed.  This increases the risk that what you envision the final product to look like will not meet your expectations.  And unfortunately, since you have already invested in the property, you are stuck.  In addition, you may be disappointed with the quality of the workmanship.  Again, except for investing more of your hard-earned cash into the property to fix these failed expectations, you are simply out of luck.

 

Financing Issues

Home loan pre-approvals are usually only valid for 3-6 months.  That’s why it is a good idea to renew your pre-approval periodically during construction.  If not, you may be ready to pay the remainder of the purchase price for your Harford County rental property at completion time and find yourself unable to qualify for a home loan.

 

In addition, keep in mind that lender policies frequently change which may hinder your pre-approval being renewed throughout your property’s construction period.  In the end, meeting with your lender regularly will help offset some of the financial risks of purchasing an off-the-plan property, but will not guarantee complete protection against a loss of financing.

 

Builder Bust

Though unlikely to happen, investing in an off-the-plan property always makes you vulnerable to the stability of the developer.  There are plenty of horror stories circling around that involve developers going broke before the completion of a development and halting construction altogether.

In order to protect yourself from financial ruin that leaves you with no property to lease, it is vital you discuss what measures will be taken should the developers go into bankruptcy or halt construction for any reason.  This may include what type of guarantees the developer will offer you and whether you will get your deposit back should the project fail.

 

In the end, there are many pros and cons to buying a Harford County rental property off-the-plan.  And, while the notion of purchasing a never lived-in property can be exciting, you should really weigh the risks when it comes to paying for a property that is not even built yet.

If you do find yourself in the Harford County area with a completed off-the-plan property that works perfectly for your rental property business, consider contacting Bay Management Group to help you manage your property.  With lots of experience in the rental property industry, Bay Management Group provides property owners with exceptional property management services.  For instance, property managers on staff handle all tenant screening, lease drafting, regular inspections, and much more.

If you want to purchase a property off-the-plan and then let someone else handle everything property management related, contact Bay Management Group today.

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.

How Many Properties Should You Buy and Manage as a Montgomery County Landlord?

Posted on by Bay Management Group

Rental properties are a great way to invest your money and supplement your income. This is especially true if you are investing in the Montgomery County area. With plenty of properties to choose from in a quickly-growing region with lots of appealing amenities, owning rental property in Montgomery County will provide you a steady cash flow from the start.

But how many investment properties should you commit to owning and managing? 

The answer to this question is not cut and dry. In fact, a number of factors can potentially affect how many investment properties you have in your portfolio. Thus, it is essential you evaluate your own individual situation before making a decision.

That being said, there are some general things all property owners in Montgomery County can consider when deciding the total number of rental properties they would like to purchase and manage.

 

Rental Property Questions To Ask Yourself

Investment properties provide excellent opportunities to build a passive income and fund things such as your bank account, vacations, or even retirement. However, there are several things to ask yourself before investing in every Montgomery County property you find matching your rental needs.

 

Question #1: What Are Your Big Picture Goals?

Be Sure To Know Your Goals Before Deciding How Many Montgomery County Properties You Should Invest In

Many people want to jump right into the rental property business and start making money as soon as possible. The problem is, with no long-term goals in place, it is hard to determine how many properties are needed to meet those goals. Worse yet, not having a basic plan can ruin any goals you may have for the future. After all,

“If you fail to plan, you are planning to fail” – Benjamin Franklin

 

Here are some things to figure out before choosing how many rental properties to purchase:

  • How will you be financing the first property you plan to purchase?
  • Are you looking to supplement your income and keep a full time job, earn enough money for fancy vacations, or secure enough for an early retirement?
  • How much involvement in the management of each property do you plan to invest?
  • What is your exit plan should your rental property business not yield your desired results?

 

Question #2: How Will You Finance Future Purchases?

Getting your first Montgomery County purchase under your belt is one thing; making multiple purchases down the line is an entirely new ball game. You must have a way to finance future purchases. In the end, no matter how many properties you think you should own and manage, you must have enough money in the long term to purchase successive properties.

Here are some ways to save money in an effort to increase the number of property purchases you can make:

  • Regularly evaluate your property value so you know exactly how much equity is built in
  • Research your properties and only purchase ones with positive cash flow
  • Get an interest-only loan and place the excess cash into a separate account as savings for your next purchase
  • Continue saving money just like you did for your first rental property purchase

 

Question #3: How Will You Improve Loan Approvals?

Despite how many Montgomery County properties you want to own, or how much money you want to make each month, the bank has a great deal of control over what you actually do.

Bank lenders want to minimize their risk when it comes to loaning money to investors looking to purchase multiple properties. In order to continue building your portfolio, you need to improve your serviceability and prove to the bank you will pay up each month.

Here are some great ways to convince banks you will follow through on your financial obligations:

  • Increase your income any way you can – take a job promotion or start a side business, and save, save, save
  • Invest in positive cash flow properties – banks tend to approve loans for those receiving positive cash flow each month
  • Get experienced in negotiating with lenders – present all of the reasons you will follow through on your loan obligations and why you make a good investor

 

Question #4: How Much Time Do You Have to Manage Multiple Properties?

How Much Time Do You Have to Maintain Your Multiple Montgomery County Rental Properties?

If you are like many property owners, you have a full time job in addition to your involvement in the rental property business. Owning many properties can quickly become overwhelming if you choose to manage them all on your own. And, if you overexert yourself and spread yourself too thin, chances are your career and properties (including your tenants) will suffer in the long run.

If you aim to own multiple properties, but do not have a lot of time to manage them on your own, one solution is to hire Maryland’s leading property management company, Bay Management Group. The knowledgeable staff at BMG can manage every aspect related to your rental properties. This includes things such as:

  • Vacancy advertisement
  • Tenant screening
  • Lease drafting
  • 24/7 maintenance and repair services
  • Regular property inspections
  • Legal backup
  • Strict rent collection procedures

 

In addition to employing the help of an experienced property management company such as Bay Management Group, you might consider partnering up with someone so that some of the tasks related to your properties are split. In addition, the finances and experience of a well-balanced partner can make your rental property business that much more successful.

 

In the end, the answer to the question regarding how many properties you should own and manage is this: as many as you want, as long as you are willing and able to work for it.

Everyone’s situation will differ and pose challenges along the way when it comes to purchasing multiple rental properties. However, none of these difficulties can prevent you from achieving your goals as long as you educate yourself in the rental property business, have clear goals in mind, and have a plan before jumping right in.

Additionally, you can enlist the help of Bay Management Group to take a lot of the stress of owning multiple rental properties away and make matters even easier to handle.

 

If you are looking to boost your Montgomery County portfolio and add more properties to increase your income, contact Bay Management Group today and see how we can help you manage your multiple rental properties, leaving you room for the fun things in life.

 

 

 

Dealing with a Tough Homeowners Association for Your Rental Property

Posted on by Bay Management Group

 

What To Do if You Own Property in an HOA (homeowners association) That Is Tough To Deal WithHomeowners associations (HOAs) are gaining popularity all across the state of Maryland and property owners are flocking to purchase property that is part of an HOA.  Take a look at this list to get an idea of just how many HOAs there are in existence right now, with additions consistently being made.

So why the increase in HOAs?

Homeowners associations appeal to many property owners because their aim is to maintain property values, serve the best interests of those in the community, and keep some order amongst a diverse group of people.  And, as a property owner that leases a home, these are great benefits.

You want your home to maintain value.  You want your tenants to have their best interests served.  And of course, you want a peaceful neighborhood so your tenants want to stay.

 

However, HOAs have a reputation for being difficult to deal with.  And unfortunately, this difficulty trickles down to property owners, their property managers, and even their tenants.

Thankfully, we have some great tips for handling a tough HOA that you and your tenants can take advantage of to ensure the best possible leasing experience.  In addition, if you employ Montgomery County’s leading property managers to care for your property and tenants, these tips can pass from manager to tenant easily during the move-in period.

Today we will look at what exactly a homeowners association is and how best to handle one if they are tougher than the norm.

 

What is a Homeowners Association?

A homeowners association, or HOA, is a legal entity created to manage and maintain the common areas of a community.  These common areas include places such as pools, clubhouses, landscaping areas, parks, streets, and roads.

And, as mentioned earlier, they are quite popular.  As of 2012, nearly 60 million Americans live in a community that is regulated by a homeowners association.

HOAs are typically established in communities that include condominiums, single-family homes, or townhouses.  And, as the leaders of the community, HOAs provide rules, called the “Declaration of Covenants, Conditions, and Restrictions” (CC&Rs), regarding what can and cannot occur within the common areas of the community.

Here are some of the key traits of a typical HOA:

  • They are usually non-profit corporations
  • They have the authority to enforce the bylaws within the CC&Rs
  • Membership of the HOA is mandatory for all those living within the community
  • Mandatory dues are collected monthly from property owners
  • There is an elected board of members, most of which are volunteer homeowners of the community
  • Many HOAs hire a property management company to conduct things such as maintenance, bookkeeping, and dues collection

 

In addition, HOAs provide services such as maintenance of common area landscaping, neighborhood security, activity organization for residents, and approvals for exterior home improvements property owners want to make.

 

How to Handle Strict HOA Rules

The Do's and Don'ts of How To Deal With a Tough Homeowner's Association (HOA) in Montgomery County, Maryland

All HOAs expect residents, whether owners or tenants, to abide by the community’s CC&Rs.  However, as a Montgomery County rental property owner, it is your responsibility, or that of your property manager, to ensure your tenants follow the HOA’s regulations.  In fact, here are some things most HOAs will want property owners to provide any tenant that leases their home:

  • A copy of the HOA’s CC&Rs
  • HOA rules and regulations must be a condition in all lease agreements
  • Property owners or their property managers will be held responsible for tenant violations
  • Tenants must communicate with HOAs via the property management company
  • Multiple tenant violations can lead to termination of residency

As you can see, there is a lot of responsibility that falls onto property owners and their property managers when leasing a home that is a part of an HOA.

Here are some ways you can lessen that burden and ensure a smooth tenancy that satisfies both your community’s HOA board members and your tenants.

Know Your HOA Bylaws . . .

. . . and follow them.  It is a good idea as a property owner to read your HOA’s CC&Rs thoroughly.  Your Montgomery County property manager should do the same.  This prevents any unusual violations, such as parking in your driveway, from occurring.  After all, violations result in fines and possibly termination of your tenant’s stay.

Communicate with Your Neighbors

One of the benefits of owning property within an HOA community is that all of your neighbors are in the same HOA as well.  Everyone is following the same rules set forth by the HOA and everyone pays the same monthly dues.

In the case your HOA begins enforcing rules that you feel are unnecessary, or hiking monthly dues beyond that of what is reasonable, reaching out to neighbors you already know to voice your frustrations will be a lot easier.  Plus, you can all band together and make a common complaint against the HOA board.

 

Get Approval for All Changes

Yes, this can be tedious, and often seems unfair.  However, living in an HOA means you must have approval for all exterior changes to your home and landscaping, backyard included.

To make things easier with a tough HOA that enforces every single bylaw perfectly, just get approval first.

Getting approval will protect you from fines, complaints from neighbors, and legal trouble.  In addition, it is important that your property manager enforce this with your tenants as well.

Make sure your tenants are aware they cannot make any changes, even small ones such as adding a pet fence in their backyard, without gaining prior approval.

 

Pay Your Dues on Time

To Avoid Issues, Be Sure to Pay Your HOA (Homeowner's Association) Dues On Time

This seems obvious, but a quick way to get on the wrong side of a tough HOA is not paying your dues.  If you refuse to pay your HOA dues, or even just fall behind, your HOA may have the power to foreclose on your home.  Chances are very slim that late dues would result in the foreclosure of your home, but that hefty price for falling behind on dues is not worth the risk.

 

If You Get Fined, Pay Up

Maybe you have fallen victim to the toughest HOA in the country.  As unfortunate as that is, if you receive a fine and the HOA acted within their power to impose such a fine, the best option is to pay the fine.

However, there are three additional options for dealing with an HOA fine if you adamantly believe you shouldn’t have to pay it:

  • Ask for a variance. This means you or your property manager are requesting the HOA make an exception to the bylaw violation.  If the HOA does not initially agree, they may hold a hearing where other homeowners can come to hear your case and make a decision.
  • Take legal action. If the HOA was in violation of their power, with the help of your property management company, you can file a lawsuit against your HOA in response.
  • Don’t Pay. Although not recommended, you can refuse to pay the fine.  However, if you are dealing with a tough HOA, risking additional fines and a possible foreclosure is simply not worth it.

 

In the end, dealing with an HOA can be difficult at times. However, there are some wonderful benefits in owning property in a Montgomery County HOA that you may feel are worth the potential extra hassle.

If you are looking to take some of the work off your shoulders, and the stress of dealing with a tough HOA does not sit well with you, contact Bay Management Group today.  Working solely in property management and ready to take on the task of managing your property, tenants, and tough HOA, BMG will assure you peace of mind.

Bay Management Group is knowledgeable about how to draft solid lease agreements that include HOA regulation compliance and will protect you should any legal issues arise.

In addition, we are exceptional at taking care of tenant screening and placement, maintenance issues, rent collection, and everything in between that involves your property and tenants.

So, contact us today and start handling that tough HOA in a proactive and beneficial way.

The Benefits of Investing in a Foreclosure

Posted on by Bay Management Group

montgomery-county-md-foreclosure-rental-property-investmentFor many people, investing in a rental property in Montgomery County will be one of the largest, and most stressful, purchasing decisions made to date.

Finding an ideal property on the market, in the right neighborhood, with enough amenities to appeal to prospective tenants, and of course funding the down payment, just scratches the surface of what goes into investing in rental homes.

 

But what if I told you there was a way to ease a bit of your down payment funding stress by reducing the cost of home buying?

 

Oftentimes the word “foreclosure” conjures up negative feelings, especially for those who are looking to purchase a home.  Horror stories of ripped out plumbing and filthy interiors scare even the most frugal of homebuyers from considering a foreclosed home investment.

However, the truth is, investing in a foreclosure offers some wonderful and unique buying opportunities.  Moreover, if you take the proper precautions, you can actually grab a deal on your next investment property and be well on your way to a positive cash flow via your foreclosure investment.

And, once your Montgomery County property manager places a highly qualified tenant in the residence, the money investment will really start paying off.

 

Today we will look at some of the often overlooked benefits of investing in a foreclosure in Montgomery County so that the next time you are in the market to purchase a rental property, you might just consider investing in a foreclosed home.

 

What is a Foreclosure?

What is a Foreclosure?A foreclosure is a legal process in which the lender (typically a bank) attempts to retrieve the balance of a loan they had previously issued to a homeowner who is no longer making payments on their mortgage.  In a foreclosure, the lender can also claim possession of the property since the homeowner, or borrower, is no longer fulfilling their financial obligations.

There are many reasons a homeowner goes into foreclosure on their property:

  • Unexpected job loss
  • Inability to work due to medical conditions
  • Excessive debt and mounting bills
  • Divorce or other family problems
  • Job transfers
  • Market crashes in which the property’s value plummets far below what is owed (also known as an “underwater mortgage”)

 

During a foreclosure, the lender has several options to resolve the issue of non-payment:

  • Revise the payment schedule to make the house more affordable to the homeowner
  • Put the home up for public auction
  • Take legal ownership of the home in hopes of selling it privately

 

In the end, a foreclosure is actually a complicated process that seeks to protect both lenders and homeowners.

The process usually occurs in many distinct stages depending on how the loan was originally structured and what the individual circumstances surrounding the foreclosure are.

In fact, most foreclosures take months to fully resolve and will largely depend on how the borrower decides to react to the initiation of foreclosure proceedings.

 

The Pluses of Montgomery County Foreclosures

Despite the problems some foreclosures create when it comes to purchasing one to add to your rental property portfolio, there are plenty of benefits that you can capitalize on if you do your due diligence before buying.

 

Discounted Price

Foreclosed Homes Typically Have Reduced Prices to Get Rid of PropertyMany times a foreclosure’s sale price will be marked down significantly from other properties in the same neighborhood.

And, since foreclosures are not limited to poor neighborhoods with no nearby amenities, chances are you will be able to find a great rental property in Montgomery County that will have great appeal to potential tenants.  All you have to do is a little research.

In the end, opening up your eyes to foreclosures makes properties that might otherwise be unavailable to you now available, and at a considerable discount.

 

Increased Bargaining Power

In addition to coming in at much lower prices than value market prices, homes that have been in foreclosure for a long period of time are sometimes easier to grab at even lower prices with a little bit of bargaining.

Homes that are in foreclosure hurt lenders—they are not receiving any of the money they agreed to loan to the borrower during a foreclosure and as a result, the lenders suffer financially.  Lenders want to get rid of foreclosed homes quickly so that they can begin receiving money again.

Using this knowledge to your advantage, you may be able to provide a seriously low offer to a lender.  You never know—they might consider your “lowball offer” just to get rid of a property that has been sitting on the market for a long time.

 

Quick Buying Process

Lenders are looking to sell foreclosures as quickly as possible so they can recoup as much lost profit as possible.

This means closing deals tend to happen quickly.

The lender, acting as the seller, will have no reason to back out last minute, making you a proud property owner once the papers are processed.  Then you can hire your trusted Montgomery County property management company and get a tenant placed in the property as soon as possible.

And what does this quick buying process mean for you?

With this faster buying process, monthly rents will start coming in faster than if you purchased a property the traditional way, giving you the financial freedom to potentially invest in additional properties.

 

Lower Down Payment

Typically, lenders will accept lower down payments from investors on foreclosures.  This gives first-time rental property investors a great opportunity to get started in the rental property business with a property that is more valuable, and without having to come up with such a hefty down payment.

One important reason lenders tend to consider lower down payments when trying to sell off a foreclosed property is because investors demand it.  Since foreclosed homes usually have lower interest rates, those investing in them want to have a matching lower down payment requirement as well.

 

Value Building

If you invest in a foreclosure at a significantly lower price than other similar properties in the neighborhood, and the values of those homes increase as a whole, your buyer’s percentage increase will be greater than even your next-door neighbor’s.

In addition, buying a foreclosure “as is” means you have a great opportunity to upgrade and renovate the property as you see fit.  These improvements will skyrocket your property’s value and demand higher monthly rent rates.

Lastly, if you decide to sell down the road, your overall profit will likely be much higher than what you originally paid for the property.

 

In the end, a foreclosed property does not have to be a deal breaker.  There are many reasons why investing in a foreclosure will work to your advantage and make you more money in the future.

If you are looking to purchase a property in Montgomery County, consider the foreclosures available in the neighborhoods that interest you.

Do some thorough research, offer a low deal to the lender, and see what happens.  And, when you have made the deal of the year on a foreclosed property, contact Bay Management Group right away to begin the process of placing a tenant in your new rental.

Experienced staff knowledgeable in advertising vacancies, screening tenants, drafting airtight lease agreements, and managing your property throughout the lease term is just some of what Bay Management Group can offer you.

Ultimately, we offer you the peace of mind that your property and tenants are well taken care of so you can enjoy other important aspects of your life.

Should I Buy a Low-Income Rental Property in a Rough Neighborhood?

Posted on by Bay Management Group

prince-georges-county-low-income-rental-property
When people look for a rental property to live in, they might first look for a “nice” neighborhood.

In fact, you’ll probably never come across someone who says, “I want to live in the roughest neighborhood in the area!”

As a result, you might feel that purchasing a rental property in a not-so-nice neighborhood is a waste of money.

Don’t think that way. You’ll always find people who want to live in more affordable housing, and it’ll cost you a fraction of what you’d have to pay upfront for a middle- to high-income property.

Let’s delve a little further into what you need to know when you consider buying a low-income rental property in a “rough” neighborhood.

 

What Prince George’s County Landlords Should Know About Buying Low-income Rental Properties

Place-Based Investing

The differences between the properties you find in a rough neighborhood and those in a nice neighborhood can be pretty vast.

That’s because properties in neighborhoods across the country usually reflect the general income levels of their residents. And when you search for investments specifically based on such criteria, it’s called “place-based investing.”

While higher-income neighborhoods tend to have a single category of “nice” houses, low-income neighborhoods present a range of properties that are inexpensive for numerous reasons.

These range from uninhabitable homes to the upper level of low-income properties that are still inexpensive but can present a number of benefits to savvy investors who know an opportunity when they see one.

 

The Purchase Process

prince-georges-county-md-rental-property-purchaseAcquiring rental properties in low-income neighborhoods in Prince George’s County can be done in a number of ways – including the incredibly cheap foreclosure auction.

Truth be told, regardless of what type of property market – whether booming, busting, or flat lining – there are always advantages to investing in a “rough” neighborhood.

For example, it’s possible to invest in a rental property for very little money that could rent for just a little cheaper than a property you had to pay full price for in a higher-income neighborhood. In that situation, you’d have fewer expenses and get a proportionally better return on your investment.

Think about it like this:

If you buy a house for $40,000 that rents for around $900 a month, you’ll make money quicker than if you paid $100,000 for a house that rents for $1,000 a month.

But, because low-income properties are often so cheap to purchase outright, you should probably make as large a down payment as possible.

Paying off your mortgage on these should take a lot less time than a home in a “nicer” neighborhood, so reduce the time you spend dealing with a mortgage from the start. The larger down payment you make, the sooner you can turn a profit on the property.

Also, while these properties are usually much cheaper than many others, keep in mind that you may have to spend some money rehabilitating them. Any time you acquire a rental property, include the costs of rehabilitation and other expenses in your considerations.

 

Dealing with Tenants

The biggest concern most Prince George’s County property owners have when it comes to low-income neighborhoods is that they attract low-income tenants.

Remember that low-income neighborhoods by definition feature people who aren’t capable of paying high rent, so you’ll always have to keep your rent rates on the low end. If you run into a financial issue and realize you have to raise the rent on your low-income tenants, you may end up with a lot of vacant properties.

However, low-income tenants don’t necessarily have to be more troublesome than middle-income people. You just need to screen every prospective renter properly so you don’t end up with a particularly problematic tenant.

The best way to handle interactions with this wide variety tenants and upkeep on your properties is to hire a rental property management company in Prince George’s County. They’ll handle all of your unwanted landlord duties and make sure your low-income property investments are manageable.

 

Keep an Eye Out for Red Flags

prince-georges-county-md-property-management-tips
If you think you might go through with purchasing a low-income rental property, there are still some red flags you should look out for. These deal breakers are pretty simple, and should be known to any rental property investor regardless of what sort of housing he or she considers purchasing.

First off: if the seller can’t provide you with statistics or other hard facts, you should hit the road and never look back. Some of these include:

  • Rental vs. vacancy rates
  • Neighborhood allure
  • Year-to-year year profits
  • Crime rates
  • Average income levels
  • Employment rate

One thing investors need to know how to identify at once is something called a “trap house.” These properties harbor a higher-than-usual amount of the criminal element and can be identified by the frequent in-and-out traffic of people engaging in illegal activities.

Any time a trap house is nearby, there’s a good chance you’ll hear about it again in the future once you have tenants move in – and it won’t be pretty.

If property crime is known to be seriously high compared to other neighborhoods nearby, don’t make an investment there, plain and simple.

Tip: Check out this blog post for more information on preventing crime in your rental properties!

The damage to the property (as well as the potential for damage) also needs to be taken into careful consideration.

If the property is in decline or has been neglected for far too long, it might cost you more trouble than it’s worth in maintenance bills.

You should also avoid buying properties in neighborhoods that include severely damaged homes as a result of fire, flood, or otherwise. And, if there’s anything happening that you could reasonably expect to either destroy the property or force your tenants out within a few years, don’t risk it.

The low-income properties you should focus on are those nearest to schools, shopping centers, and highways.

 

The Bottom Line

Some rental property investors might never take the risk and put their money into low-income housing in rough neighborhoods. And they’re missing out.

Sure, there are poor investments and bad tenants in every bunch – even in middle- to high-income neighborhoods. But if you’re an aggressive investor dedicated to growing your business, you can’t be afraid to get your hands a little dirty.

Plus, there’s always the option of seeking the extra help of rental property managers in Prince George’s County.

The best course of action is to always do your research before making any major investment decision. If you come to a solid conclusion that you’ll turn a profit on a rental property in a rough neighborhood, why not go for it?