Residential rental property in Montgomery County is a good way to make money. True or false?
True. If you do it right. Becoming a landlord can be very challenging, especially to a newbie. From finding a good Montgomery County home, to finding reliable tenants, to keeping up with property maintenance, there’s a lot to think about before getting started. Our friends at Noah’s Preferred Property Management Company in Montgomery County have five things you should take into consideration before the property hits the market.
#1 – Find the Right Tenants
The first step to a successful landlord? A reliable tenant. One who is on time with rent and respectful of your property. Here’s a few things to look for in the application process:
- Can pay rent in full
- Has previous rental experience, and a positive one at that
- Has no criminal history
#2 – Know Montgomery County Housing Laws
Housing laws impact your tenants and you as the property owner. It’s important that you know your Montgomery County housing laws ahead of time, so if an accident or liability claim happens, you’re not scrambling to understand your rights and your tenants’ rights. Here are some good resources:
- The Office of Landlord and Tenant Affairs: https://montgomerycountymd.gov/DHCA/housing/landlordtenant/index.html
- Landlord-Tenant Handbook: https://montgomerycountymd.gov/DHCA/housing/landlordtenant/handbook.html
- Landlord Rights: https://montgomerycountymd.gov/DHCA/housing/landlordtenant/landlord_rights_responsibilities.html
- Tenant Rights: https://montgomerycountymd.gov/DHCA/housing/landlordtenant/tenant_rights_responsibilities.html
#3- Invest in Your Property…With Purpose
It seems like an obvious equation: Upgrade your property —> Increase Property Value. Unfortunately, this is not always true. Not all upgrades lead to a return on investment, or at least a substantial one. For example, a new roof or driveway can cost thousands of dollars. If the rent is $1,000/month and the roof cost $10,000, it’s going to take you 10 months just to recoup the cost, all the while not reaping any profit. What’s worse, if you have tenants that don’t stay long, you could lose money for years.
On the other hand, there are renovations that, over time, can help you see good returns, such as:
- Adding a deck: recoup an average of 80 cents on the dollar
- Minor kitchen remodel: recoup an average of 79 cents on the dollar
- Home office remodel: recoup an average of 50 cents on the dollar
#4 – Master Payment Management
Collecting rent is the very transaction that makes you a landlord. Therefore, this has to be your priority. Make sure your tenants are very clear on the payment due date, and what penalties will occur if they miss their payment. The way you accept payment can also make an impact on whether you collect them on time or not. You should consider an online payment setup. Not only are online payments more convenient for both you and your tenant, they are also more secure than check and cash payments. Here are a few popular options for online payment systems:
- Apple Pay
#5 – Consider a Property Manager
The above considerations are just a portion of what goes into managing a rental. Some people thrive as a landlord, but others just don’t have the time for all of the work that goes into it. In this case, you might want to consider hiring a property manager. A management company can do everything from screening tenants and marketing your property, to collecting rent payment and dealing with challenging tenants. If you have any questions about how to get started with rending out your Montgomery County home, we’d be happy to help. Please give us a call anytime at 301-657-9700 and we’ll share our experience with you.