So You Bought an Investment Property, What’s Next?

Have you recently bought an investment property in Washington, D.C. Baltimore, or anywhere in the capital region? 

Congratulations. That’s a great investment that you’ve made, and it’s likely to continue appreciating in value. You’ll collect rent from tenants every month and steadily pay down your mortgage debt, if you have a mortgage. 

If this is your first time investing in rental real estate, you might be wondering what to do first. Should you just take a few pictures and throw together a listing? Ask around for anyone who knows a tenant looking for a home? 

Not so fast. 

Before you can market your home and move in some tenants, you need to make sure you’re taking care of some logistical steps along the way to a successful rental experience. 

Here’s what to expect as you wade into the real estate waters. 

Licensure and Legalities

If your rental property is in Washington, D.C. or in northern Virginia, your status as a landlord means that you’re considered a member of the residential rental business. You’ll need to apply for a basic business license (BBL) for your rental unit. If you decide to continue growing your portfolio, you’ll need a separate license for each rental property you own. Renting multi-family buildings, apartments, and any other type of property with more than three units requires a separate apartment business license.

In Maryland, your need for a license or permit will depend on where your rental property is located. In Prince George’s County, there is a licensing requirement. Baltimore City also requires that all rental units are licensed, inspected, and registered. 

Make Any Necessary Repairs to Your Rental Property

Hopefully, the investment property you purchased is in generally good shape. If you had an inspection, you’re likely aware of any habitability, safety, or maintenance issues that need your attention. 

Fix everything before you rent out the property. Some of these things will seem minor. Maybe it doesn’t make much sense to replace that closet door that sticks or the window screen that’s a bit shredded. 

But, it does make sense. Tenants, when they’re looking for a rental home, will notice these imperfections, and if they’re good tenants, they won’t rent your home. They’ll look for a property that’s in better condition. 

Make sure that everything is working perfectly. You don’t want to spend the first few weeks of a tenancy responding to multiple maintenance requests because things aren’t the way your tenants expect them to be. 

Conduct a detailed inspection once you close on your investment property. Walk through every room and make a list of what needs to be repaired or replaced. Maybe it’s fresh paint that’s needed or new carpet. Perhaps the windows need to be replaced or an appliance is malfunctioning. 

Make Your Property Competitive With Upgrades and Improvements

When we talk about real estate, there’s usually a huge focus on location. 

That’s valid, but here’s a professional secret: property condition is just as important. 

There’s not much you can do about the location of your rental home once you own it. But, you can make an impact on its condition. Tenants care about living in a home that’s attractive and modern. So once you’ve invested in a rental property and you’re preparing for everything that comes next, think about where you can make some minor updates and improvements. 

Making these upgrades can be cost-effective. As long as the home is well-maintained, you don’t have to worry about a total kitchen renovation or a complete rehab. Instead, look for small ways to make your rental home stand out. You’ll increase your rental value and your property value. You’ll find you attract a larger pool of tenants, and you won’t have to worry about ongoing maintenance concerns. A new appliance is less likely to need a repair than a 15-year-old appliance, for example. 

Some of the best types of upgrades that we always recommend include: 

• • Flooring. Get rid of old carpet. Maybe get rid of carpet altogether and consider installing hard surface floors. They don’t have to be expensive hardwoods. Tenants will love them because they’re easier to clean and maintain. There are fewer allergens, odors, and dirt to worry about living in the carpet fibers. You’ll have an easier time during turnovers. And, they look better. You can earn more rent with hard floors versus carpet. 
  • Lighting. Bright lights are especially essential in the kitchens and bathrooms. Inspect your outdoor lights too, because those are important for tenant safety and security. 
  • Fixtures. Those knobs on the cupboards and the drawer pulls and even the faucets can get an easy upgrade that isn’t too expensive. They’ll look shiny, modern, and attractive. 
  • Landscaping. Pay attention to your curb appeal. The first impression you create will impact how quickly you attract tenants and how much they’re willing to pay to live in your property. 

Once you know your property is well-maintained and modern, you can confidently list it on the rental market and attract some of the best tenants looking for local rental homes. 

Next: Price Your Property

It’s easy to feel intimidated when it’s time to price your rental home. What if you’re asking too much and no one applies? What if you’re asking too little and you’re stuck collecting below-market rents for the length of the lease term? 

Pricing a rental home is both an art and a science, and it always helps if you have good data to guide you towards the right rental value. 

Here are your most important considerations when you’re pricing your metro D.C. property:

• The Rental Market Dictates Your Price Range

Study the market. Rents have been rising recently, and that should embolden you to price your home a bit higher than you might have a year ago. Don’t get too bold, however. You still need to fall well within the market averages. Take a look at the competing properties that are also on the market. Compare your home to those. Gather information on what the homes most similar to yours are renting for, and how long it’s taking them to rent. 

When there are a lot of homes similar to yours available for rent, you’ll have to be more competitive with your price. When the market is tight, however, and rental homes are hard to find, you can raise your price a little bit. 

• Location Always Impacts Price

Location is just as important in the rental market as it is in the sales market. Tenants are going to pay more for a home that’s close to restaurants, shopping, and schools. In a market like ours, they’ll want walkability and access to public transportation. When evaluating how much you can charge for your rental property, always consider location. 

• Pricing Is Seasonal

Time of year can also impact how much you can earn, especially in a market like ours, where snowy, cold winters can dissuade a lot of people from moving. You also have new tenants moving in at the start of the school year. The late spring and early summer will allow you to price your property higher. In the dead of winter or near the holidays, you may have to be more competitive. 

You can look at online rental sites for an idea of what homes like yours are renting for. A better idea is to talk with a property manager in the local area, who can give you data that’s more precise and evaluate your home to establish the right price.  

Your Most Important Next Step: Property Management Support

We always recommend talking to a property manager before you buy an investment property. 

If you didn’t get a chance to do that, however, make sure you partner with a good property manager as soon as you can. Choose an experienced management company with a great local reputation. As a new investor, you’ll really benefit from resources and expertise that a property manager can provide. Here’s why you need to get in touch with a management company as soon as you buy your property (if not before):

• • You can leverage a great network of vendors and contractors without screening and hiring them yourself. 
  • You’ll have the expertise and knowledge you need when it comes to pricing, marketing, tenant screening, and preventative repairs. 
  • You’re protected from the risk and liability that comes with renting out property. 
  • You’ll have less work to manage yourself and more time to do what you love.
  • You’re likely to earn more and spend less on your investment. 

Good property management is a huge value to new and experienced investors in and around Washington, D.C. When you’re ready to find a property management partner, we hope you’ll consider our team. We have experience working with new investors as well as seasoned property owners who are successfully growing their portfolios. 

Please contact us at Stripe Management. We work with owners, investors, and both residential and commercial properties in Prince George’s County, Montgomery County, Washington, D.C., and anywhere in the DC metro area.