Why Rental Property Investments May Help You Retire Quicker than a Pension

rental-property-investments-help-retire-quicker-than-pensionIf you are a Baltimore County resident who is teetering on whether to invest in a rental property rather than relying solely on a pension plan for retirement, you are in the right place.

Though the debate between property investments and pension plans oftentimes leans more towards pension plans as the better choice, the truth is that more than half of 30-64 year-old Americans fear outliving their money after they retire. And it is this fear of not having enough money to retire on that is driving many people to begin looking for additional ways to pad their retirement fund and even boost income long after retiring.

If you are debating whether to invest in Baltimore County rental property even though you have a solid pension plan in place, keep reading.

Today we will discuss what a pension plan is, the hidden risks involved in relying solely upon a pension plan, and the appeal that owning rental property can have on potential property owners when it comes to supplementing your monthly income before retirement, and keeping you afloat during all of your golden years.


What is a Pension Plan?

In short, a pension plan is a retirement account maintained by your employer that pays out a fixed sum of money to you upon your retiring. The length of time you worked for your company and your annual salary will largely determine how much of a pension you will receive when you have officially retired.

Your employer manages your pension during your working years by regularly investing sums of money and placing that money into a pension fund. This means when you retire, you are paid your entitled pension amount from the reserved pension fund your company has set up. None of the pension money paid out to you for your retirement will come from the company’s payroll. Rather, it comes directly from the pension fund your company has been building while you worked for them.


The Pitfalls of Pension Plans

pitfalls-pension-planSure, pensions come with lots of great benefits. For instance, they protect you from the risks associated with investing your own money. This is because it is your employer and company that take a loss if the investments they place pension fund money into go sour.

Additionally, the security that comes with a pension plan easily outranks many other retirement fund options. This is because with a pension plan, you will always know upon retirement exactly how much money you will receive on a monthly basis. It doesn’t matter what the market looks like at the time of your retirement because your payment will always remain the same.

That said, there are several pitfalls associated with pensions that may cause you to reconsider your reliability upon them as your sole source of retirement income:

  • Inappropriately used funds. Some employers allow, or even require, their employees to contribute a specific sum of money into their own pension plan. Unfortunately, this money is then invested as the company sees fit, regardless of how you feel. This means some of your hard-earned cash may be invested in ways that do not directly benefit you or your pension fund.
  • Possible pension reductions. Though pensions are supposed to be guaranteed at the time of retirement in terms of monthly payouts, if your company goes under, declares bankruptcy, or faces other serious legal troubles, there is the possibility your agreed upon payouts will be reduced.
  • It is taxable income. Despite what many people think they know about pensions, the money you start receiving from your company upon retirement is taxable income. In addition, be aware that receiving a pension check each month during retirement may disqualify you from other governmental benefits, such as Social Security.
  • Long employment requirements. If you are lucky enough to stay with one employer the length of your career, good for you! However, for many people this is simply unrealistic. Many pension plans require you work for the same company for a decade or longer before becoming vested with the company. This creates a battle between a guaranteed retirement payout and better career opportunities elsewhere. In the end, if you leave a company that was offering you a pension plan, you lose out on all of those benefits and must start your retirement savings over.
  • Loss of control. Many people seek to have full control over their retirement funds. This cannot be achieved with a pension plan since you have zero control over how your money, or the company’s money that is added in on behalf of you, is invested.

In the end, pension plans come with many restrictions and hidden risks that you may not want to deal with come retirement time. This is especially true if you are relying solely on your pension for retirement. Though pension plans are generally a wonderful benefit given to many American workers, there are ways to offset these risks and help better guarantee a successful retirement.


Investing in Baltimore County Rental Property


If you are worried that your company’s pension plan will fail to suffice come retirement time, this is the perfect opportunity for you to consider investing in rental property. There are many ways investing in a rental property can supplement, provide for, and exceed your goals when it comes to padding your retirement fund.


Steady Income

Rental properties provide steady income for years to come if done properly and managed by an experienced Baltimore County property management company. This income not only funds your retirement needs before hitting retirement age, it also carries over and continues to provide you income well into retirement. And, if a property management company manages your property while you are retired, this mostly passive income will serve you well as you enjoy life after work.


There is No End

There will always be people leasing homes, whether they are leasing because they prefer it over buying or whether they are leasing because that is their only option. Knowing that the market for leasing will always exist, you can rely upon the fact that you will always have some sort of cash flow coming in on a rental property in Baltimore County so long as the home doesn’t go vacant for long periods of time.

With pension plans, there is always the risk that your company will go under, you will quit or get fired, or that the amount given will not be enough to suit your retirement needs. With a rental property investment, you can rest assured that everyone needs a place to live. This means that with the right advertisement, tenant screening, and lease drafting compliance, you can have high quality tenants placed in your properties at all times. This equates to regular rent collection and money in the bank for you to enjoy both pre- and post-retirement.

In the end, the best way to fulfill your retirement dreams is to diversify. There are many ways you can fund your retirement, including a pension plan and investing in rental property. And while we do not think you should entirely forgo having a pension, we do believe that investing in rental property under the management of a knowledgeable property management company is a more secure route to retiring in peace.


If you are close to retirement age, or are just looking to plan ahead and want to get into the rental property business in Baltimore County, contact Bay Management Group today. Working solely in property management, Bay Management Group has what it takes to bring your retirement plans to the next level financially. Call today and watch your golden years unfold with the peace of mind that you will have plenty of money to enjoy the next major chapter of your life.

What to Consider Before Investing in a Rental Home with an HOA

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?

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


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.

7 Reasons Why It’s a Great Time to Invest in Maryland Rental Properties

If you’re interested in becoming a property owner in Maryland, I have some exciting news for you:

Now is a great time make it happen.

More and more people are opting to rent rather than own due to the high costs of home ownership, the desire to change location frequently, and various other reasons. On top of that, millennials have abstained from home ownership for longer than previous generations did at their age, so a lot of them are looking for places to rent.

However, that doesn’t mean you can just start investing in random rental properties and expect to become an overnight success. Some markets are much more lucrative than others, and you need to pick the most lucrative markets (like Maryland) to start and run a highly profitable rental property business.

Now, you may be wondering:

Why is right now such a good time for me to purchase Maryland investment properties?

Keep reading to find out.


Why It’s a Great Time for You to Become a Maryland Landlord

1. Data shows that Maryland is currently a great place to invest.

Not only is Maryland full of potentially profitable rental properties – recent research that compared gross rental yields in many different cities showed that Baltimore City, Maryland had the highest annual gross rental yields at 28.5%.

The same research cited zip codes 21223 and 21205 in the Baltimore area as being top zip codes for single-family rental returns. The Baltimore Sun even noted that it can be cheaper to buy than it is to rent in the Baltimore area, which is great news for landlords looking to invest.

On top of that, you can find many Maryland investment properties in college towns like Baltimore City, Towson, or College Park. This is an attractive market for landlords because young people attending school often prefer to rent rather than buy.

Bottom line: If you’re thinking about investing in rental properties, you need to start looking around in Maryland – especially the Baltimore area!


2. Rental properties help you diversify your income streams.

Think about it – what would happen if you suddenly lost your day job or one of your main income streams?

Chances are, you’d take a huge financial blow. You might even struggle to pay your bills if you were fully dependent on the income stream you lost.

That’s why it’s a good idea to diversify your income streams by purchasing Maryland investment properties.

When you invest in rental properties, you gain a new source of income. Not only does that enable you to make more money it allows you to gain peace of mind knowing that you’ll be able to get by financially, even if you lose one of your income streams.


3. You can save for retirement (or something else!).

When you own a profitable rental property business, you don’t have to rely solely on your 401K account to start saving for retirement. You can raise your rents as your property values increase over time to build long-term wealth and make sure that you have plenty of money to retire on.


Related reading: How to Fund Your Retirement with Rental Property Income


4. Rental properties tend to be stable, depression-resistant investments.

Even when the economy is struggling, people need a place to live. And when times get tough, they probably aren’t going to want to splurge on a mortgage – they’re going to rent instead.

Of course, rental property investing isn’t a foolproof way to make a lot of money. You have to be careful about the tenants and properties you choose if you want to make it work. But once you learn how to do that, there’s a good chance you’ll have a stable source of income for a long time!


5. You can become completely self-employed.

Maybe you’re thinking about becoming a landlord because you want to quit your day job. You dream of the freedom associated with being self-employed, and you’re ready to become your own boss.

It’s true that becoming a landlord can allow you to do that. When you run a rental property business, you get to call the shots in every aspect of your business. Self-employment also gives your personal freedoms, like the ability to set your own work schedule and vacation dates.

Of course, you won’t be able to take a vacation any time you want – you’ll still need to get organized and set regular work hours so you can take care of your tenants and properties unless you hire a property manager to run your rental property business for you.


6. You become exposed to new networking opportunities.

You’ve probably heard this saying before:

“It’s not what you know – it’s who you know.”

That certainly seems to be true in the business world. Often, you can majorly benefit from utilizing your connections and social networks.

Fortunately, when you become a landlord, you can meet all kinds of new people, like:

  • Bankers
  • Real estate agents
  • Tenants (some of whom may have professional connections you can benefit from)

So if you decide to take the plunge into rental property investing, get ready to start networking and make the most of every opportunity. Who knows – you might just find yourself connecting with someone who can help you make your rental property business more profitable than ever!


7. Investing in rental properties can be semi-passive income.

Don’t get me wrong – owning a rental property business can be a demanding job if you go at it alone. You cannot simply purchase properties and collect a check every month. You have to handle maintenance and other tenant requests, deal with late rent payments, screen tenants properly, advertise your rental properties effectively, and more if you want to be successful.

However, you can turn your Maryland rental property investments into a source of semi-passive income by hiring an experienced property manager.

When you hire a property manager, they’ll relieve you of stressful, unwanted landlord tasks so you can take a more “hands-off” approach to your rental property business.

To learn more about how Maryland property management can help your business grow, contact Bay Management Group today.


Tracking Rental Property Income and Expenses

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

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

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

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


Income Sources and Expenses to Track

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

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

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

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

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


Other Expenses

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


Your Easy Button: Baltimore Property Management

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

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


Bay Management Group

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

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

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


Top 4 Benefits of Owning an Investment Property in Howard County, MD

bay-management-howard-county-property-management-benefitsAre you considering purchasing a rental property in Howard County this year?

It could be one of the best financial moves you make.

Income potential is on the rise in Maryland and when you work with the right property management company, you’ll find that your rental property can be a stress-free investment.

There are several prime factors that make today an excellent time to consider buying an investment property in Howard County, MD.


  1. Demand Is High

Despite continued low mortgage interest rates, fewer people are able to buy homes these days. People who in other economic times might become first-time homeowners often are unable to come up with the 20 percent down payment they’ll need to purchase a property. Stagnant wages and increasing costs in Maryland have made it harder than ever for them to save for that purchase.

This means more people are renting today—and it shows in the demand. REIS, a real estate research firm, reports that nationwide vacancy rates for rental properties fell to only 4 percent in the first quarter of 2014, down from 4.2 percent in the last quarter of 2013. Although 2013 and 2014 statistics are not available for Maryland, figures for the state from 2007 to 2012 show a similar trend in decreasing vacancy rates, according to the U.S. Census Bureau’s American Community Survey.

Since the economy is still sputtering and showing only erratic signs of growth, these trends are likely to continue. If you buy the right rental property in the right areas of Howard County, you are likely to have potential renters knocking at your door almost immediately. If you choose the right company for property management, you’ll keep quality tenants (and rents) coming in.


  1. Mortgage Rates Are Still Low

Although the cost of borrowing money has risen slightly since 2012, mortgage rates remain low in Maryland. The real estate website Zillow lists the average market rate for Maryland mortgages at below 4 percent at the beginning of the second quarter of 2014. But with the Federal Reserve poised to reduce its purchase of bonds, no one knows exactly what the impact on interest rates will be. That means now is a good time to act.


  1. The Value of Residential Properties Is Likely to Continue to Rise

investment-property-howard-county-marylandZillow reports that the median home value in Maryland has risen by 4 percent over the past year; it also expects a rise in value over the next 12 months, although that will be a smaller increase.

Housing prices do decline (as we all learned during the recession) but for the most part they have increased over time. The average price of a Maryland home rose 7 percent from January 2013 to January 2014—where else can you get that kind of return on investment these days?


  1. Owning an Investment Property Doesn’t Have to Be Difficult

Being a landlord can be a time-consuming process. When you go it alone, you have to handle everything from routine maintenance (painting, landscaping, cleaning common areas, etc.) to collecting rents to emergency repairs. (Try finding a new refrigerator for a customer on New Year’s Eve, or listening to renters’ complaints when it’s a sweltering 95 degrees in August and the air conditioning goes out.)

That’s where property management companies, like Bay Management Group, come into play. A good property management company will reduce the difficulties of owning a rental in Howard County, starting with ensuring that your property is in compliance with local codes and laws and finding tenants who will respect your property and pay their rent promptly.

A reliable property manager will also keep up with the regular and long-term maintenance so that your property keeps its value over time. You get all of the benefits of investment property without the hassles.

If you have been thinking about investing in a rental property in Howard County, now is a great time to take advantage of all of the benefits that such a move would offer. From Columbia to Ellicott City and beyond, our experts have you covered!

Contact the property management professionals of Bay Management Group today to ease the burden of day-to-day management and maintenance related to investment properties. Then get ready to enjoy a steady stream of passive income.