Owning rental properties is no cake walk. Although many people have the impression that landlords purchase properties, sit back, and watch the cash flow in, that can be very far from the truth. Honestly, there is a lot of work that goes into being a landlord, and owning rental homes has its fair share of ups and downs.
Today, we will take a look at some tried-and-true tips for making it in the rental property business that will ease your worries that although being a landlord can be tough sometimes, you can do it if you really put your mind to it.
The idea of purchasing your first Anne Arundel County rental property and striking it rich can be very enticing to anyone just starting out in the rental property business. After all, Anne Arundel County boasts very valuable property with plenty of amenities available for any kind of tenant.
It is important to remain reasonable though. Out-of-pocket repair costs, possible negative cash flow due to market fluctuations, and renovations to increase your property’s value will be just some of the financial roadblocks you will encounter. Unfortunately, it may take a while to secure that steady stream of income you are dreaming of.
It is easy to get caught up in the excitement of buying your first rental property. However, making sure you are thorough and don’t rush a purchase is essential if you want to make it in the rental property business.
Make sure you know how you will purchase the property you are interested in, do some research, and, if you think you will want to make the purchase, get it professionally inspected beforehand so you do not run into any costly surprises.
Here are some good things to look for when planning to make a rental property purchase:
- Look for areas of expected growth, such as in Annapolis where the population has steadily grown over the years and is not looking to slow any time soon.
- Find regions where employment opportunities abound so the chances your tenants will be laid off or relocated are minimal. One great place for this is Fort Meade. Known for being relevant on a national scale, job security is something many people in this area rely on.
- Seek areas where rental incomes are high compared to property values. This may seem obvious but you must do your homework in order to know this information.
- Check the vacancy rates. Long-term tenancy, as is often seen in the small town of Laurel, is not always easy to come by. Vacancy rates can ruin your rental property’s value and take income away from you.
- Check local amenities that may be draw tenants to a specific area. Take note of places such as Severna Park. Highly valued properties near the coast with nearby amenities such as concert and sporting event venues, restaurants, and major shopping centers are the types of places tenants are looking for.
Join an Association
As a new landlord, you will find out quickly there is much to learn about the rental property business. Consider joining a landlord’s association in your area for networking. Being around other landlords will allow you the chance to meet like-minded people who have a lot of experience in the rental property business. You may also have access to resources that are related to investment properties such as trusted professionals (contractors, lawyers, and accountants) or state and local laws that are landlord-tenant related.
Have an Emergency Fund
You never know when disaster may strike your rental property. Having an emergency fund to cover things such as broken appliances, damage from a nightmare tenant, or weather-related issues not covered by your insurance may lessen the loss of profit that can result. Even in highly valuable areas such as Glen Burnie, the most seasoned landlord cannot escape all rental property emergencies. These things happen and try as we might, sometimes they are impossible to avoid.
Get the Right Insurance
Having the right insurance for your rental property is crucial to avoiding a huge profit loss. While you may not need to purchase home contents insurance (that is for your tenants to purchase), you should have homeowners or landlords insurance to protect yourself and your assets (i.e. your rental property).
Be sure to check out the differences between homeowners and landlords insurance so that you make the right decision for you and your property’s needs. Things like your property burning down, a severe storm tearing off your roof or flooding your home, and your tenant damaging your property’s interior and then taking off without paying are all things that are covered under different insurance policies. If you are unsure about what type of insurance you need, talk to an insurance professional to help you select the right coverage for your property.
Get to Know the Right Professionals
Making friends with a lawyer that specializes in landlord-tenant laws, a tax professional that can handle rental property income, and a banker to help manage your funds is probably a good idea. It is not enough to have a legally compliant lease agreement, rent payments collected on time, and security deposits placed in the correct account type for holding. Owning rental properties is a business and all businesses come with complicated rules and regulations to uphold.
Don’t get caught trying convince someone you simply didn’t know the rules. This will only get you in more hot water should a problem arise. Networking with the right professionals is your best bet for protection.
Hire a Property Management Group
Being in the rental property business is not just the act of purchasing a property and watching the money roll in. There are many things that must be managed and you may find yourself overwhelmed very quickly if you are not prepared.
While it can be tempting to try and handle it all on your own, hiring a property management team to help you manage your properties is helpful in many ways. Check out some of the services your favorite Anne Arundel property management group can do for you:
- Proper and thorough tenant screening placing only top quality tenants in your property.
- Legally compliant lease agreements explained in detailed to both parties for a full understanding of expectations.
- Timely rent collection with eviction procedures on-hand for any non-payers.
- 24/7 maintenance services with only qualified and trusted contractors to handle any issue big or small so you don’t have to.
- Friendly and knowledgeable staff that is well versed in landlord-tenant laws with experience in filing legal suits when necessary.
- Routine inspections of your property to ensure tenants are in compliance with the signed lease agreement. Also included are move-in/out reports to ensure your property is well-cared for.
- Full transparency with monthly and yearly financial reports so you know exactly what your income and expenses are for each property being managed.
If you are just starting out in the rental property business keep in mind that there is a lot that goes into being successful. If have recently purchase a property in the Anne Arundel County area, or are even considering it in the near future, give Bay Management Group a call. They can answer all of your questions and get you started in the right direction so that in the future you may be able to sit back and watch the money from your rental properties just flow in.