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.
Selling your property in the Virginia location, Maryland location, or Washington DC location is already a complicated process without stressing about the taxes you may have to pay. Depending on the type of property you are selling, your profits may be tax-free. Let’s take a look at how taxes are structured for property sales.
If the house you’re selling is your primary residence and you have lived there for more than two years, a portion of the profits that you earn from the sale are tax-free. If you’re single, you are exempt from paying taxes on home sale profits of up to $250,000. If you file taxes jointly with your spouse, up to $500,000 is tax-free. Any profit that exceeds these amounts needs to be reported as a capital gain.
The sale of an investment property you own, such as a rental home or apartments, could mean a chunk of your profits will be lost to taxes. Capital gains tax applies to the profit earned from the sale of a property that is not your primary residence. The IRS allows investors to take the profit earned from the sale of one property and re-invest it without having to pay tax on it. Investors can also offset the profit against losses in other areas to avoid paying so much in taxes, or you could avoid it completely by living in the home for two years prior to its sale. The fine print in all of these instances is important to take note of.
When filing taxes, homeowners can exclude up to $500,000 of their profits if they’re married. Investors can pair their profits with losses in other areas, or re-invest the money earned to avoid the high capital gains tax. Whatever your circumstances, be sure to talk to an expert to fully understand the tax policies and how you will fit into them when selling your property.
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.
If you are looking for a house in Virginia, Maryland or Washington DC, either to inhabit or as an investment, you might have heard the term “short sale” before. It can seem confusing, but in reality, it is an incredibly simple real estate term to understand and could save you thousands on your next property purchase.
In the real estate industry, a short sale is basically when the proceeds of a property sale aren’t enough to cover the balance remaining on the property’s mortgage loan. To put it simply, the seller of the property owes more to the mortgage lender (the bank) than what they are selling it for.
For the seller to do this, the bank must agree to discount the loan balance which is essentially agreeing to take less money than what is initially owed. The owner will have to prove they are dealing with financial hardships before the lender will accept a real estate short sale. It will have severe consequences on the seller’s credit.
Why Would a Lender Accept a Short Sale?
It is worth asking since any lender in their right mind would want only to accept the amount of money owed to them and nothing less, right? In reality, if a house is foreclosed upon by the lender, they must still list the home on the market and sometimes wait months or years to sell the home.
Foreclosure is expensive for all parties, and most lenders would rather go through with a short sale, cut their losses, and avoid the hassle of reselling the property themselves altogether.
Pros and Cons Buying a Short Sale
Short sales are not necessarily better deals than regularly listed homes. For example, if someone bought a house at the height of the market and went underwater, their loan amount could be way more than the house is worth. Short sale houses are also sold “as is”. This means you could be left holding the bag on issues. Banks are also notoriously difficult to deal with when buying a short sale as they are effectively losing money. All that said, the right short sale can be a great buy.
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.
Real estate is believed to be among one of the top 3 long term investments in the United States, coming only second place to stocks and ranking better than gold. In some economies particularly those in Europe, real estate is ranked highest in stable returns for any investment.
But where does the value of real estate come from? Do you just buy a house haphazardly or are there strategies? When you think of real estate investing, most people make it sound easy. House flipping shows have glamorized real estate, portraying many falsehoods and leaving out pitfalls. In terms of primary residences, many people believe any house they buy will go up in value no matter what. Buying houses should be taken as seriously as all other forms of investing.
Here are some tips for buying a house in Maryland or Washington DC that will appreciate in value:
1. Check your location
Let’s say you see a nice property that is really affordable and is selling at a lower price than the usual market price, it wouldn’t be a wise decision to just go straight ahead and buy the property before doing your research. Go to the local board and look for the plan of the neighborhood. If there is going to be an industrial area or even a land dump close by, the value of that particular property will drastically decrease.
2. Unusually High Houses for Sale
Unless a neighborhood is in its initial development stages, you should be wary of acquiring a property if more than five other houses in the area are for sale. People might be running away from that neighborhood for some a reason. Zillow is a great resource for this.
What facilities are in the area where you want to purchase property? The three facilities which are a must and will have a positive impact on the overall value of your house are schools, medical centers and shopping malls. If an area does not have these three or any plans indicating that these will be there soon, then it’s not a wise idea for you to get a property in such an area.
4. Fixer uppers are the best
Houses that will require work are usually the best investment. You can buy a house and get a 203K loan for renovations. This will usually lead to $30,000+ in instant equity.
So you’ve bought your first rental property. You spent months of researching homes, crunching numbers for positive cash flow, visiting homes on the market, calling realtors, negotiating with loan officers, considering property management companies, reading countless rental property tips blogs, etc. The process was tough, but you’ve made it to the next phase: landing your first tenants.
After positing rental listings on Craigslist and Zillow, you’ve found some potential rental property tenants. You then realize: I don’t have a lease agreement! Real estate laws are complicated and vary from state to state and county to county. You don’t have the money to hire an expensive contract lawyer.
Don’t fret! 8 Day Home Sale has put together a Lease Agreement template. While this lease agreement template is tailored for Maryland, it is generic enough to apply to most states/counties. In addition to establishing a standard rental contract based on monthly payments between the landlord and seller, the lease agreement:
- Enables the landlord to require a security deposit
- Protects the landlord from liabilities i.e. breaking of local laws
- Prohibits unsafe activities i.e. smoking
- Absolves the landlord of appliance maintenance responsibilities
The lease agreement can be easily modified and clearly marks where details need to be filled in. The rental agreement template is available for download as a docx and pdf.
Download: .docx or .pdf