When it comes to renting a house in the Maryland location, every state has its own laws laid out for both landlords and tenants. These laws protect both parties in various situations and provide the framework for rental agreements. If you’re looking to rent a house in Maryland, here are a few of the most important laws you need to know.
Maryland law puts a limit on how much money a landlord can require for a security deposit. A landlord cannot hold more than two months’ rent as a deposit and is required to return money owed within 45 days of the tenant vacating the property. A landlord who asks for more than the total of two months’ rent is breaking the law.
Did you know that in some cases, it is within your rights to withhold your rent? A rental agreement between a tenant and landlord lays out all the responsibilities of both parties. If the landlord does not uphold their end of the bargain, you can hold your rent money until they do. For instance, if a landlord refuses to take care of an imperative repair, such as a broken water heater, you can keep your rent until they do.
A number of laws are specifically geared toward protecting the tenant. One example a law that protect tenants from retaliation of the landlord when practicing their legal rights. If a tenant complains to the authorities about unsafe living conditions, landlords are not allowed to take action against them. Evictions, handling abandoned property, and fair housing rights are also all covered through Maryland laws.
In addition to state and federal laws, Maryland cities or counties could have their own laws as well. When looking for property to rent in Maryland, take the time to read tenant/landlord laws for the state as well as the county and town you’re looking to move to.
While we can’t ever predict the fluctuations of the market with absolute accuracy, it’s always a good idea to explore ways to be prepared for the next possible real estate market crash!
So, how can you protect yourself and your investments to weather the next real estate storm?
BE CAREFUL TAKING OUT LOANS
Buying a home is an investment. For many, it’s the single most expensive thing they’ll buy in their lives. But, in an unstable market, it’s much more difficult to judge whether your home with appreciate with time or not. It’s always smart to only take out a loan for what you can reasonably pay.
DIVERSIFY YOUR INVESTMENT PORTFOLIO
Don’t put all your eggs in one basket, as the saying goes! If you want to be prepared for a housing market downturn, you may want to diversify your portfolio with stocks, bonds, as well as with home equity.
CREATE A SAVING PLAN
To be better prepared for a sudden market downturn, it’s best to start saving for it. Build up an emergency savings account. You should save enough money for 3 to 6 months’ mortgage payments so you don’t need to worry as much about defaulting or a foreclosure.
LOCATION OVER DESIGN
If you’re worried you won’t be able to sell your home when the market crashes in the Maryland location, Virginia location, Washington DC location, or anywhere else, remember this simple phrase: “location over design.” Even when the housing market turns sour, people still need to buy homes. Good neighborhoods won’t suffer in a market downturn as much as bad neighborhoods.
GET A FIXED-RATE MORTGAGE
This is possibly the most important piece of advice to take away from this article. Fixed-rate mortgages give you a huge amount of security because, if the market goes down, your mortgage won’t go up. This is something worth sacrificing a bit of square footage over!
If you’re bettered prepared for the next housing market downturn, you can ride out the storm in relative security and comfort even while others scramble to sell their depreciated homes and try to find a way to pay their rising mortgages.
When you sell your house in the Maryland location, Virginia location, Washington DC location, or Baltimore location, any profits you make are subject to capital gains or recapture taxes. To avoid paying those taxes, you can reinvest the profits in a new property under 1031 exchange. To do this correctly, you’ll have to have a properly structured exchange.
There is a timeline for completing this exchange and you have just 45 days to find a property of similar or greater value than the one sold. You only have 180 days total to complete the purchase of the new property. This timeline is a bit tight if you want to take your time to shop around.
Another restriction on the 1031 exchange is the type of property purchased. You can’t sell your business property and buy a house, or vice versa. The property that is sold must be of like-kind to the property purchased. They don’t have to be exact though. You could sell a business and buy a business, or sell land and buy an apartment complex.
Debt and Equity
The 1031 exchange needs to be 100% in order to defer the taxes. This means that the equity or profit from selling the property needs to be reinvested 100%. If you make $50,000 on the sale of your house, you need to put that full amount back into the new property. If you owed $200,000 on the property, you need to replace that same amount of debt as well. You are exchanging the equity and the debt of one property for another.
Hire a Professional
Unless tax law and real estate are areas you considered yourself to be an expert in, you may want to consult a professional when looking at a 1031 exchange. There are risks involved and if not done properly, you’ll still have to pay the taxes you’re trying to defer. This is a great option for many people selling and buying a home, but to find out if it’s right for you, take the time to really learn the ins and outs of 1031 exchanges.
Are you interested in purchasing property to rent to others in Maryland, Virginia, Washington DC, or Baltimore? Whether this is your first time investing in rental property or if you have some experience, there are a few characteristics you should take into account when considering a property to make sure that you are getting the most for your investment.
The area and neighborhood where the property is should play a crucial role in your decision process. The area will significantly affect the rent prices, the type of tenants that you will attract, and potentially your vacancy rate.
Referencing the location, what changes will the area experience in the coming years? If there is significant development planned around the property including shopping centers, apartment complexes, and business parks, it is a good sign and can have positive impacts on the property’s value over time.
If you are in the market for family-sized rental properties, the quality of the local schools should play a significant role in your decision-making process. Having quality schools close to your property will significantly improve its value in many ways besides price. For instance, families will be willing to stay longer if their kids are enrolled in a school they like which helps you reduce your vacancy rates.
Work that Needs to Be Done
When looking at rental properties, you should perform an adequate evaluation of the condition of the home. If you aren’t very experienced, you can hire someone to take a look at the property to make sure that you know what you are buying. If the home needs extensive work and you don’t have the skills or desire to fix it, it’s best to pass and find a property that is in better condition.
Property taxes will vary from area to area, and because you are hoping to generate income from the rental property, you need to know how much you’ll be losing to taxes. Visit the local assessment office to see the property tax rates for the area so you can accurately include it in your revenue estimates.
As a landlord with a rental property in Maryland, Virginia, or Washington DC, you want tenants that will not make your life and property a living hell. At 8 Day Home Sale, we have years of experience managing rental properties. If you are looking for a good tenant to rent your house in Maryland or Washington DC, here are a few things you should do:
1. Perform background and credit checks
Figure out your prospective tenants credit score, past evictions, past rental records, potential criminal records, bankruptcy, etc. This might cost you $30 but will be worth it in the long run. Do not rent to people that you do not know the history of.
2. Ask for their references.
References include previous landlords, employer, etc. You tend to get first-hand information about the person coming to rent your property if you are able to have actual discussions with the people involved with them. Bad tenants will have a very hard time providing references.
3. Meet them physically.
It’s impossible to get a real feel for a person without meeting them. It’s tempting to just let them sign a lease without seeing them. However, it will benefit your rental property in Maryland or Washington DC in the long run if you actually meet them.
4. Take a large security deposit.
This is usually done to cover damages should your tenant turnout to be the troublesome. Protect yourself in case the tenant causes problems or breaks the lease.
5. Know who will be living in the house and add it to your lease.
It’s very common for tenants to bring in family members to live in the house. This can be fine unless the family members are high risk individuals. Have your tenant commit to who will actually be living in the house.
6. Verify employment.
Check your prospective tenants employment history and ensure they have a stable job. Good tenants almost always have stable jobs.
7. Use a good lease agreement.
Make sure to use a legally sound lease agreement. 8 Day Home Sale has a lease agreement ready-to-use for Maryland.
So you have a decision to make on your empty property: are you going to try and make money from renting it out to tenants on a contracted rental basis (traditional rental property), or can you put it on Airbnb and make more money that way? There are benefits to both, but which is better?
Firstly with Airbnb, you or someone representing you will have to constantly be back and forth between the property. Whether it is letting new tenants in or clearing up once they have left. If you are not doing this you will need to oversee it so the condition of the property is always left in a good condition for the next visitors. There is also the fact that you will have to constantly check Airbnb and may need to answer questions, you could find yourself at the mercy of the app. With traditional renting you have the chance to speak to your potential tenants, sign a contract and once they are in you will only need to visit the property when a problem arises; you may even do it through an agency, although this can cost you it will also save you time. You will only have to visit the rental property or speak to tenants in the event of something that needs addressing.
Airbnb is a good way of making more money from your property. You might get $1000 a month from renting your property to tenants as a traditional rental property. But if you were able to charge $100 a night for your home on Airbnb, your property would only need to be used for more than 10 nights to make more money, and if you managed to fill near on 3 weeks of the 4 in a month you would make around $2000. With traditional rental properties however, your $1000 is steady income every month, whereas you don’t know if anyone is guaranteed to book through Airbnb, unless you are in a desirable location. The money you make on Airbnb also has to be spent on the utility bills, whereas in traditional renting this is covered. You need to weigh which is the most profitable option depending on the cost of utilities in your area.
With Airbnb you are flexible not only on the rate that you charge but also on the amount your rent your place out. If it is in a location you like to visit, you can use your property at the times it is not rented. You can also change your terms and conditions at any point to suit you.
It will be appealing for most to know that their property is occupied, and they do not have to constantly find tenants. That is why a traditional rental property is the favorable option for many. The competition on Airbnb alone can make it challenging for many to make the money they desire. The problem with tenants in a traditional rental property is the fact that if you have difficult tenants, you might be stuck with them for a long time. The other side of this is Airbnb might leave you with some good, some bad every month.
These are all the elements you will need to weigh up when deciding what to do. It depends on the sort of person you are, if you want to leave the property alone and know your income is constant then traditional might be the way for you to rent your property. Maybe you’re more of a people person, or will be ok with the demands of renting your property out on Airbnb, the pros and cons are there for all to see.