Baltimore: New Landlord Info

[Kurtis Green]

Good Afternoon BP,

I have begun the process to learn and develop real estate investment strategies, and am interested in starting with rental properties in the Baltimore area. I was hoping that anyone that has become a landlord in Baltimore would be able to share their experiences with the process. Mostly interested in costs and processes of registering a rental property, obtaining/maintaining lead certs,  or any other cost or challenges that an inexperienced potential landlord may overlook before jumping in.

Any information that could be provided would be greatly appreciated. Thanks and looking forward to your responses.

[Russell Brazil]

Originally posted by @Ned Carey:

@Emery Green 

you said you didn't think the 50% rule applied as well to more expensive homes. I am curious if you think it is higher or lower on them?

I'd say it is considerably less on more expensive properties (In general, there are always exceptions)

Take my two single family rentals in Silver Spring. They rent for $2600 a month each. If I was spending $1300 a month on expenses on them, then something has gone drastically wrong.

My contention is that as you move up in price, the percentage of the rent that goes towards expenses, repairs and even cap ex becomes a smaller percentage of rent. Take a 1200ish square foot house in say Baltimore that needs a new roof, and the property is worth $50k. That roof may cost $5,000 or 10% of the total value of the house. Now take a similar size house in Rockville that is worth $500k. Now the roof will cost $5,000 but only be 1% of the total value of the property.

I'm using hypothetical numbers that allow for easy math, but I think the idea is understandable.  Though rents do not increase at the same rate as the increase in property value. 

Now some expenses will remain proportional to the rents (property management) and some remain proportional to the properties values (insurance, taxes). Cap ex will go up  some as nicer finishes are needed with more expensive properties, but won't keep pace proportionally, as many things have a ceiling on the cost (like roofs) and repairs certainly shouldn't keep pace ( replacing a toilet will have similar costs regardless of property value)