Are you thinking of offering your Baltimore area home for renting? Planning on buying rental property in the Metro or Bay area as a prospective passive income vehicle? If you answered “Yes” to those questions, then good for you! Given how stock and bond markets are behaving lately, rental property is a great investment choice. However, before you take that leap of faith, it’s a good idea to check with a Baltimore rental management specialist, and understand a bit more about the process, risks, and opportunities of becoming a landlord.
Not a One Size Fits All Scenario
The average rent in Baltimore City is $1,508 for an 824-sq-ft unit. That’s approximately 8% below the national average of $1,628. However, considering that Baltimore area rents were hovering in the low-to-mid $1,200-range a few months ago, current rents reflect a decent return on investment (ROI) growth for landlords and rental property owners.
If investors had been in the stock market during this year, their investment returns (as reflected by the Dow Jones industrial Average (DJIA) would be down nearly 6% on a year to date basis. Rental property investments are, therefore, a comparatively better move.
Facing Up to Reality
Still, experts in rental management in Baltimore often caution their clients and prospective investors about grounding their expectations to reality. Here are three factors to consider before you decide to become a landlord:
- Be realistic in your expectations: What you may earn in rental income depends on where, in Baltimore, your property is located. For instance, rental property owners in the Abell neighborhood rent their properties for an average rent of $1,681 – that’s 11% above the average rent of Baltimore City. However, renting out a property in the Allendale neighborhood would fetch only $1,095 – that’s 27% below what the average Baltimore City property rents for!
- Form productive partnerships: Before putting your property out for rent, or investing in rental property, it’s a good idea to reach out to an experienced Baltimore rental management company and establish an ongoing understanding of how to proceed. There are legal formalities to comply with. Bylaws and city regulations to abide by. And there are also taxes and fees to consider. Professional rental property managers are your best resource to tap.
- Don’t forget your personal finances: If you currently own a home with a mortgage, and wish to rent out that property, you may (potentially!) put your mortgage at risk! Some mortgage contracts preclude the homeowner from renting the property. Doing so may expose you to unnecessary fines or, at the extreme, having your mortgage revoked due to breach of terms. A seasoned property manager can quickly advise you on how to proceed.
As a parting thought, if your home or investment property is part of a Homeowners Association (HOA) or condominium corporation, there may be other potential hurdles to navigate, before you become a landlord. Some HOA’s have restrictions on sub-letting or renting. In some cases, your application to convert the property into rental accommodation might require HOA management approval. Working with professionals in rental management in Baltimore can greatly reduce the stress and risks of becoming a landlord.
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