Best Property Manager in Kensington Maryland walks landlords through 5 questions Landlords should ask before leasing out their Kensington rental home.
1. You have 3 main options whenever you own a property. You may consider selling it, renting it, or continue living in it. Consider which option works best for you and your long term goals.
2. Does the rental property have the cashflow I'm expecting. To calculate cash flow of a rental, simply add all of the income that it will produce (most likely just all the rent) and subtract all of the expenses that will be associated with renting/maintaining the property; as well as, subtracting the monthly debt service (aka mortgage) on the property. This will either give you a positive or negative number. If negative, then you have a negative cash flow property and you will be losing money each month. If positive, you have a positive cashflow property and you will make money each month. It's up to you to decide how much positive cash flow is worth holding on to this specific property.
3. Is this property considered a "good rental"? Is it renter proof? Does it possess materials within the home that are durable and can stand wear and tear from a renter? Or does it consist of materials that will require constant maintenance, repair, and replacement over time, thus cutting into your profitability on the home.
4. Could your money do better invested in something else? Would the money tied up in the property do better in another investment vehicle such as the stock market, a business, or even other properties? By taking money out of a single high valued property and purchasing smaller/less expensive properties, you are able to diversify your tenants and thus minimizing your risk on rent collection should a property go vacant or a tenant not pay. If you only have one property then you're relying on just one tenant. If you have multiple properties then you can count on more than just one source of income.
5. Will this property appreciate over time? If the area your home is located in has a history of appreciating or there has been recent news of an outside influence coming into the area which could cause home prices to go up, then you may want to hold on to the property because it will be worth more in the future than it is today. However, if the home doesn't show any evidence of going up in value over time, then you may want to reconsider holding on to it as an investment.
Hope these tips help. Feel free to reach out to us at www.flatfeelandlord.com or call us at 301-265-5005.
