NEWSLETTER

May 2024 | Issue No. 22

Unveiling the Realities of Owning an Investment Property

Dear Investors,

 Navigating the world of property investment entails not just the anticipation of favorable outcomes but also the readiness to confront less-than-ideal scenarios. Here are seven crucial realities that every property investor should be mindful of:

Deferred Maintenance
 Investing in rental properties in Maryland comes with the harsh reality of navigating stringent landlord-tenant laws. Landlords are mandated to maintain their rental properties in compliance with health and safety regulations. However, they also bear the responsibility of promptly addressing serious hazards that could jeopardize a tenant's well-being, health, or safety.

 Should a landlord neglect to rectify these issues despite being duly notified by the tenant, the tenant retains the option to pursue legal recourse by filing a claim with the court. This can potentially lead an investor to lose a lot of their resources especially in more tenant friendly jurisdictions. This legal obligation places landlords under significant pressure to ensure the habitability and safety of their rental properties, underscoring the complex and demanding nature of property investment in Maryland.

Cash Flow Fluctuations: Even properties initially generating positive cash flow can swiftly turn negative, often due to unforeseen maintenance expenses. It's prudent to maintain a cash flow buffer to mitigate such eventualities.

Maintenance Demands: All properties require upkeep. Costly repairs, such as fixing structural defects or installing modern amenities, can arise unexpectedly.

Vacancy Risks: Even in high-demand rental markets, vacancies can and will occur. Factors like overpricing, market fluctuations, quality tenants interest in your property, or timing can contribute to prolonged vacancy periods, impacting rental income.

Tenant Challenges: Despite thorough screening processes, landlords may still encounter challenges with tenants who neglect property maintenance or violate lease agreements. It's essential to recognize that even well-screened tenants are susceptible to unforeseen circumstances such as medical emergencies, personal crises, or financial hardships, which can impact their ability to fulfill their obligations.

*Our landlord's insurance serves as a vital safety net against potential losses resulting from tenant-related issues. While diligent tenant screening is crucial, having added coverage provides added protection and peace of mind for landlords in the event of unforeseen circumstances beyond their control. Read more about this here.

Property Damage: Whether due to tenant negligence or natural disasters, property damage is a real risk for investors. Comprehensive insurance coverage is essential to safeguard against significant financial losses.

Tenant Rights and Eviction Processes: 

 Yes Tenants Have A lot of Rights!

 Navigating tenant evictions requires landlords to meticulously follow legal procedures and timelines, even in instances of tenant misconduct.

 While property managers possess expertise and experience in handling such matters, it's crucial to acknowledge that they are not miracle workers and are subject to the same legal requirements as everyone else. However, their full-time dedication to property management equips them with streamlined systems and processes to navigate the complexities of evictions more effectively.

 By entrusting this task to professionals who specialize in property management, landlords can benefit from efficient handling of disputes and adherence to legal obligations.

 While these realities may seem daunting, it's essential to approach property investment with realistic expectations and proactive risk management strategies. Property investing is a journey marked by both triumphs and challenges, and preparation is key to navigating its complexities successfully.

 Remember, those who persevere through the obstacles and maintain a balanced perspective often emerge as the most resilient and successful investors.

Happy Investing!

Running the rental owner statement report is very important in determining the amount of your available disbursement payment. The rental owner statement will show you all the transactions affecting the owner’s available cash. It is a great place to find missing or incorrect transactions on your rental property that will cause inaccurate information. 

• Check the property beginning balance. At times, changes to past transactions can affect the owner’s running available for payment balance. Running a rental owner statement with a prior start date will help you find discrepancies. 

• Run the rental owner statement including the transaction details. Seeing more a more detailed view can also help to find discrepancies or missing transactions

• This is the best summary report to give to a rental owner each month 

• Track the cash flow of the property(s) 

• Report liabilities held 

• Determine income and expenses recorded for an owner 

• View the amount you should pay your owners 

• Determine when an owner was not paid the correct amount

• The rental owner statement runs on a cash basis. 

• The beginning cash balance is the amount owed to/from the rental owner, less tenant liabilities and property reserves, as of the day before the date range of the report. For example, if the report has a date range of July 1 through July 31, then the beginning balance is as of June 30.

•  The beginning balance will represent a number other than $0 if you hold back money for a property reserve, are holding tenant liabilities, or if your reporting cycle differs from when you pay your rental owner. For example, if you pay a rental owner on the 4th of each month, a report run from the 1st through the 31st might not show a $0 beginning balance.

• Go to the Reports menu
• Click the Rental Owner Statement link
• Select your report parameters. More details:

• Click Download report!