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So, you want to get into the rental property business in Baltimore – but you don’t have the money to buy real estate outright. Even though interest rates are at historic lows, your bank isn’t offering you very favorable terms for a real estate investment loan. What are your options? Well, why not speak to a company already providing rental property management in Baltimore, and ask them about Seller Financing. You’ll be amazed at what you learn, and it might just be the big break that you’re looking for!
What is Seller Financing?
As the term implies, Seller Financing is a real estate deal where the seller agrees to finance the sale of their property. Sellers don’t advance buyers a loan – they just agree to a deferred (installment-based) recouping of the sale price. In return, you (the buyer) could work with professional Baltimore property management companies to operate the rental property, collect monthly rent, and pay back the seller in monthly (or quarterly) installments.
Most seller-financed deals do involve a down payment, typically 10% to 25% of the selling price. So, that’s the amount you’ll need to arrange from your personal sources. However, unlike a bank-financed deal, the overall transaction usually ends up less costly for the buyer. And given that rental homes are in such demand in a city like Baltimore and its neighboring communities, it’s a win-win for both sellers and buyers.
In agreeing to recoup their sale price over a longer period, in the form of a slice of your regular rental income, sellers benefit from such deals too. Rather than sell for a large lump-sum, and trigger a massive capital gains tax, they collect smaller income installments and defer the amount of (hopefully less) tax payable.
Why Work with Property Management Companies?
One word: Networks!
When a company is involved in rental property management in Baltimore for many years, they develop a network of contacts in the industry:
– They know the industry better than you
– They know which neighborhoods command higher rental value, and which ones to avoid
– They have a good sense of which properties are well-managed and, therefore, make good investment targets
Most importantly, a Baltimore-area property manager has a list of contacts within other allied players in the business – fellow property managers, real estate agents, building contractors, and building inspectors. They constantly hear news (via the grapevine) of landlords looking to sell their rental properties to move on with their lives. This information isn’t instantly available on real estate websites, and learning about prospective sellers early can sometimes avoid pricey bidding wars.
Working with representatives from Baltimore property management companies, you’ll learn, firsthand about prospective investing opportunities. Because of the property managers insight of the industry, and the potential revenue-generation prospects of the property, buyers can construct a proposal that’s fair and equitable for both seller and buyer. More importantly, once you buy that rental property, you’ll probably need professional help managing it. And who better to assist you with the day-to-day management than the company that initially made you aware of the opportunity?
