Why Rental Services are a Must-Have in Baltimore

Maryland is known to be a fairly tenant-friendly state, and the City of Baltimore tends to lead the pack in terms of regulations that are built in favor of renters. This means, as a landlord, you have to be very clear about your requirements as a property manager, or you could find yourself footing a costly bill in the event you misunderstand, unwittingly omit, or outright ignore the obligations set forth by the city, county, and state. Before you hand the keys over to your next tenant, you need to thoroughly understand lead paint laws and rental inspection requirements, which can be incredibly time-consuming in this particular area of the country. Of course, you also need to have a well-written lease, inclusive of all the appropriate addendums. If you’re feeling overwhelmed, remember this is why successful landlords entrust their investments to professional rental management services in Baltimore.

Lead Paint Laws in Baltimore

Like most cities, particularly those with older homes, Baltimore has lead paint laws. If your property was built before 1978, the state requires you to provide the MDE Lead Paint Pamphlet, the HUD Lead-Based Paint Disclosure, and the EPA Lead-Based Paint Pamphlet to your renters when you give them their lease. In order to be able to legally rent your property in Baltimore, you must meet the standards required by Maryland’s lead paint laws. There are three classifications of lead paint laws in Baltimore: lead-free, limited lead-free, and risk-reduction certifications. If your property qualifies for the former two classifications, you’ll be exempt from the Reduction of Lead Risk in Housing Act. In order to obtain these classifications, your property must be inspected by an accredited MDE inspector who has lead-paint tested the interior and exterior of your property to determine the amount of lead present.

Lead-Free Inspection Certificates

A lead-free inspection certificate confirms that all interior and exterior surfaces of your property have been verified to be free of the presence of lead-based paint in accordance with the MDE’s established criteria. To obtain this status, you’ll need to pay a one-time lead-processing fee of $10 per property, per unit.

Limited Lead-Free Inspection Certificates

Limited lead-free certificates indicate the interior surfaces of your property passed the inspector’s lead-free testing, but the exterior painted surfaces contain some level of lead paint.

The exterior paint of your property must be intact to obtain this certificate, which has a two-year expiration. After two years, you must recertify that your property’s exterior is free of chipping or flaking. Should your two-year limited lead-free certificate expire, you’ll need to obtain a new inspection certificate and pay the MDE an additional $10 per property per unit processing fee.

Risk-Reduction Certification

• Full-Reduction Inspection. This type of inspection is typically performed in vacant units. Inspectors will verify that any chipping, peeling, or flaking of paint has been removed from the walls and the air is free of lead-contaminated dust. The cleaner and more well maintained your unit, the more likely you are to pass the dust test.

The costs of not adhering to Maryland’s lead paint laws can be substantial. Tynae and Tajah Jefferson, who lived in a home riddled with lead-based paint when they were children were awarded a $5 million dollar settlement after their then-landlord admitted he knew of lead problems but did not disclose them at the time he rented his property to their family. In 2014, a 17-year-old boy was awarded a $2 million judgment as a result of suffering permanent brain damage at the hands of his negligent property owner.

If you need assistance with lead inspections for your rental property, consult the State of Maryland’s Department of the Environment for a full list of state-accredited lead paint inspection contractors, or contact a professional Baltimore rental property management company. Only those persons accredited by the state are qualified to inspect your property for the contents of lead.

Rental Licenses

As of August 1, 2018, new rental laws went into effect in the City of Baltimore; landlords and property managers have until January 1, 2019 to become compliant with the new terms. In order to obtain your license by the first of January in the coming year, you’ll need to have your inspections completed between 8/1/2018 and 12/31/2018. Failure to do so can result in hefty fines and penalties.

The new law requires landlords to obtain a certified inspection from a Baltimore City-licensed inspector in order to obtain the required rental license each property owner must possess in order to rent his or her space to a tenant. Inspectors will undertake a four-page inspection checklist to ensure your property is fit to be rented to tenants.

Baltimore County also requires certain licensing, which is necessary if your property contains one to six rental units. Should you rent your property without proper licensing, you’ll be subject to the “denial, suspension, revocation or non-renewal of the license or civil penalties of $25 per day for each day a violation occurs and $200 per day for each day a correction notice is not complied with, and there will be a $1,000 fine for not complying with the Rental Registration Law,” according to the Baltimore County Government’s website.

What Inspectors are Looking For

The City’s goal is the safety of its residents. This is why the governing bodies put so much emphasis on regulations and licensed inspectors. When your rental property is visited by an inspector, he or she will be looking for:

• Properly placed smoke detectors and carbon monoxide alarms
• Electrical systems that have no apparent issues of hazard
• Functional plumbing with no apparent defects
• Operational windows
• Proper ventilation for all combustible appliances (furnace, heater, dryer, hot water heater)
• Safe secondary means of escape, particularly in sleeping areas

Before you hire an inspector, be sure he or she is licensed by the State of Maryland. This will likely save you a lot of frustration in the long run. Registration fees range from $40 to $50, depending on whether you live in the property you own, as well as how many tenants you have living in your property. Should you choose to rent your property without the proper licensing, you’ll be subject to costly penalties that can quickly translate into exorbitant costs.

If you’re concerned about the day-to-day dealings regarding Maryland’s landlord-tenant laws, consider hiring a rental property management company based in Baltimore to take care of these tasks for you.

Baltimore Landlord Documentation

Being a landlord is just as much about having the proper documentation as it is owning the property. Before you rent out your place, you’ll need to have a number of documents properly prepared and ready to hand to your future tenant. The following list is a brief summary of some of the most important documents you’ll need:

The Lease

First and foremost, you need to have a properly composed lease that puts all landlord-tenant obligations and expectations on the table in black and white. It’s highly inadvisable to go with an online lease template because rental laws vary greatly between states, counties, and cities. Make sure you’ve covered your assets by employing a legal professional who understands rental laws, specifically as they relate to Baltimore.

Lease Addendums

Related to the point above, Baltimore requires certain addendums you’ll need to present to your future renter, such as the following:

• Mold Addendum
• Asbestos Addendum
• Lead Addendum
• Pest Control & Bedbug Addendum
• Baltimore Flood Addendum
• Radon Disclosure
• EPA Radon Guide for Tenants
• Military Addendum

The Leasing Process

Photos are your best friend. Time-stamped images of the before and after conditions of your property will help you substantiate any claims that may need to be made in court. Walk through the property with your tenant and take photos throughout the process. Recreate this journey when your tenant moves out, so you have proper before and after images. Provide your renters with move-in and move-out checklists, so your expectations are kept on a level playing field. This documentation is imperative because it will protect you if a tenant later accuses you of renting an unfit space. It can also help you achieve recourse if your property is left in a mess.

Why A Baltimore Property Management Firm is Right for You

Dealing with lead paint laws, rental inspection requirements, time-consuming eviction processes, and proper documentation is a full-time job. There’s a lot more that goes into property management than most first-time investors realize, and they can quickly find themselves underwater when things start going south. This is exactly why professional property management companies exist. Using their industry expertise and full-time staff of dedicated property pros, property management companies eliminate the stresses of being a landlord from their clients. Once you see how much work goes into managing a rental property in Baltimore, an eight to 10 percent fee pays for itself by giving you peace of mind.

If you don’t know every detail about every necessary addendum, or if you’re not prepared to spend countless hours tied up in the court system, we have a solution! Bring your property management needs to Bay Management Group and let us deal with the rest.

Bay Management Group is Baltimore’s premier property management company, helping property owners and landlords understand the laws while fostering proper landlord-tenant relationships. If you’re ready to embark on a better way of managing your property, you’re ready to reach out to Bay Management Group.

With increased technology and globalization, cities are becoming more and more transient. When a landlord decides to up and move to a new city, one of the big decisions they face is what they are going to do with their home. Homeowners typically have two choices; they can either sell the property, or rent it out. If the homeowner decides to rent their property out, they can either manage the property themselves, or hire a property management company. With new laws and regulations coming out almost yearly, many homeowners are turning to property management companies to help assist them in the process.

In this article, we are going to focus on how to find a REPUTABLE property management company in Baltimore, Maryland. To start, Maryland is one of only five states that does not require property management companies to have a broker’s license. This means anyone in the state of Maryland can decide they want to become a property manager, and start managing other people’s homes with no experience or background in the industry. Due to this lax regulation, there are a plethora of property management companies in Baltimore to choose from.

How to Choose a Property Management Company

So, how do you decide which company to choose with all the different options available? First and foremost, our suggestion would be to never choose a company that does not have a broker’s license. In order to obtain a broker’s license, an individual has to first get their real estate salesman’s license and pass a state exam. After holding the license for the minimum three-year requirement, they can then sit for the broker’s license, and if they pass, a background and credit check will be completed. So again, when interviewing property management companies, the first thing to make sure of is that the company has an active broker’s license. This will help rule out many “fly by night” type companies.

Next, it’s important to make sure “property management” is the company’s primary business. Many real estate brokerage companies whose primary business is buying and selling houses for their clients, do property management on the side for them as well. If a company’s primary business is not property management, this should be a red flag. Companies like Long and Foster, Coldwell Banker, Keller Williams, etc. are prime examples of doing property management on the side.

You will also want to make sure the company you choose has been in business for at least five years and has at least 500 units under management. Our analysis shows most property management companies have between 50-200 units under management. The problem with this is that many of these companies tend to be very understaffed, and lack the infrastructure needed to make sure your property is in compliance with all of the rules and regulations required when you rent it out. These companies also tend to lack good policies and procedures because they are fairly new to the business, and in property management, having a company that is organized, is paramount.

What is the Real Difference in Fees Between Property Management Companies?

So, what is the real difference in fees between property management companies? They can vary drastically. However, below are some that you will want to take note of:

Any individual that is considering hiring a property management company should think less about the yearly fees, and more about the following:

• Which company is going to put good quality tenants in the property
• Which will provide good customer service
• Which will protect the value of the asset year over year

Why Bay Management Group?

Time and time again Bay Management Group will take over a property from another management company, and find that the previous group had put the wrong tenants in place. For example, they’ve found everything from HVAC filters that haven’t been changed in five years, and gutters that haven’t been cleaned, to minor maintenance issues that had manifested into much larger issues (leaking basement, leaking roof, etc.).

With a good property management company your home will be leased out quicker, a higher rent will be obtained each month, there will be higher lease renewal rates, better pricing with vendors for maintenance work, they will ensure the owner is compliant with all city and state regulations, and much more. Being penny wise and dollar foolish in picking a property management company can have devastating effects. A home is typically the most valuable asset an individual will own in their lifetime, so paying an extra $30 or $40 more per month should be a no brainer. Our advice is to go with a trusted and reputable group like Bay Management Group. You may pay a small amount more each year, but it will save you 10-fold in the long run.

Being a landlord in Baltimore certainly has its benefits, but it’s not always easy. Fortunately, when you partner with the right property management company, they do the hard work for you. Finding the right property management can be tough. You need a firm with an awesome reputation, outstanding customer service, and the willingness to go above and beyond to make sure your rental property is well maintained and attracts the right tenants.

Naturally, a partnership like this comes with a price. So, how much do property managers charge in Baltimore? If you find the right firm, the fee is well worth the frustration you could experience by trying to navigate the waters of being a landlord all by yourself. If you don’t do your homework, though, you could find yourself paying far more than you really needed to. Let’s take a look!

How Much Do Property Management Companies Charge in Baltimore?

When you’re shopping for a property management firm, it’s important to know the fee structure can vary greatly. Beware that some firms will advertise incredibly low rates, but they’ll often slide hidden fees into the fine print of the paperwork. Generally speaking, fees typically range between 8% and 10% of the amount of money you collect each month in rent once a lease has been signed. At Bay Management Group (BMG), we proudly offer some of the most competitive property management rates in Baltimore with monthly management fees ranging between 5% and 8% of the collected rent.

While a place is vacant, a property manager will usually charge you a fee for the price of maintaining and marketing the property. One month’s rent should cover this cost. If the property management firm you’re considering hiring charges more than a month’s rent, be sure to investigate what the charges cover and obtain a detailed list that explains how the funds are allocated.

You should also expect a nominal charge for lease renewals.

What You Need to Know About Property Managers and Hidden Fees

Like most things in life, if you find a deal that looks too good to be true, it just might be. Reputable firms will put all of their costs on the table, enabling you to make the choice to hire them with optimal transparency, but some property manager fees are hidden out of plain sight. If the rate you’re being offered is a low, flat monthly cost (as opposed to a percentage of the rental income), chances are, there’s more than meets the eye. Here are some things to look for:

• Supervisory Fees. Some companies offer insanely low monthly fees, only to charge you every time they have to perform routine maintenance. These costs can add up very quickly, often surpassing fees you’d pay to companies that include supervisory fees in their package rates.
• Vacancy Fees. The cost of renting a vacant unit is one thing; marketing costs money. However, be advised that you may come across a property management company that continues to charge a monthly fee, even when your property is vacant.
• Start-Up and Termination Fees. This is why it’s important to read the fine print before you sign. Start-up and termination fees can easily be hidden within the verbiage of an agreement. Know what you’re getting into before you commit to a company!

At BMG, we don’t believe in hidden fees. We offer the most competitive pricing in the industry without any added costs.

Bay Management Group is Baltimore’s preferred property management firm. With a competitive fee structure and a reputation for outstanding service, we’re proud to say that we’re a cut above the rest. If you’re ready to put your rental property into the hands of experienced property management professionals, reach out to our BMG team today!

Being a landlord can be quite exciting. You get to meet new people, troubleshoot problems, and be your own boss. Of course, there are also a lot of things you need to know before you jump into such an endeavor. If you’re considering becoming a landlord in Baltimore and you’re wondering how to manage a rental property, we’ve got some property management tips to help you get started.

Being a Landlord in Baltimore 101: The New Rental Licensing Law

If you plan to rent your home in Baltimore, your property must be licensed to operate as a rental no later than January 1, 2019. This is a new law that was passed in early 2018 and became effective August 1, 2018. It applies to all forms of rental properties, including single-family, two-family, and multi-dwelling units. The new rental property license is issued by the Department of Housing and Community Development (DHCD) as long as property owners:

• Are registered with the DHCD.
• Have received a property inspection from a Maryland State-licensed and Baltimore City-registered Home Inspector.

If you rent your property without obtaining proper inspection and registration, you could face serious penalties, including a $1,000 fine, suspension, revocation, or denial of your license.

Screening Your Tenants

Most major cities have tenant-screening laws; Baltimore is no different. Before you advertise your space online, you’ll want to have a plan in place to make sure you attract optimal candidates. The trick is understanding what you’re legally allowed to do and ask before you make a devastating screening mistake.
Here are a few pointers:

• Charging Application Fees. Neither the state of Maryland nor the city of Baltimore limits the amount you can charge for application fees. In the city of Baltimore, all application fees are non-refundable. Keep in mind that security deposits and application fees are two different things, which means they have different laws governing them. Be sure to investigate both types of fees before collecting cash from your tenants.
• Running Background Checks. You may wish to run background checks on your potential tenants, so you can learn more about them before you hand over the keys. Be advised that Baltimore landlords are required to obtain written consent from potential renters before a background check can be performed. Without written consent, a background check is illegal.
  Evicting Bad Tenants in Baltimore

Unfortunately, there may come a time when a tenant decides not to pay up or causes severe damage to your property, resulting in the need for eviction. Evicting someone isn’t necessarily easy, and it’s seldom fun, so it’s important to have all your ducks in a row before you deadbolt the door.

• Composing Your Lease. As a landlord, your lease is one of the most important documents you’re going to possess. This is where you clearly spell out your expectations, requirements, and penalties for failure to meet those requirements. It is absolutely imperative to have a professional firm compose your lease to ensure it captures everything you’ll need to protect yourself. You must provide your tenants with copies of their leases at the time they sign them.
• Absentee Ownership. If you won’t regularly be in the metropolitan Baltimore area, you must include the information of a managing agent on your lease.
• Service Notice. You’ll need to file an official complaint, at which time the sheriff or constable will serve the summons to your tenant or attach it conspicuously to the property. The summons will instruct the tenant to appear at a hearing five court days after the complaint was filed.

Did you know you can be a landlord without being left to figure everything out for yourself? A great property management company will help you every step of the way. At Bay Management Group, we’ve got everything you need to ensure a successful rental situation. We invite you to learn more about our property management services today!

If you ask the older generations what was their best investment during the course of their life, a lot of them would say their home. The general premise is that over time, houses tend to appreciate in value, and you end up paying off the debt year over year, so down the road you have tons of equity in the property. In this blog, I am going to discuss some benefits of renting a house and argue why renting is a better option than home ownership for the current millennial generation.

In today’s world the average millennial is much less likely to work in the city they grew up in. Through globalization and technology, it has become easier and easier to find jobs in other cities, and thus packing up and testing out a new city has never been more effortless. If you purchase a home, statistics show you are much less likely to pack up and move to a different city vs if you are renting. There is no hard evidence to understand why this is the case, however one could hypothesize that the homeowner feels trapped with their home and unwilling/unable to pack up and leave. When the average homeowner purchases a home, they typically start underwater. That is simply due to the fact that the homeowner ties the closing costs into the mortgage. Also, if the homeowner were to sell the property they would have to pay a realtor to sell the property along with transfer/recordation taxes. The cost to sell your property for most homeowners is about 7.5% of the total cost of the house (6% to a realtor and 1.5% for transfer and recordation taxes). The most common mortgage in the United States is a 30-year fixed mortgage. If you get a 30-year fixed mortgage for your property, the first few years almost all of the mortgage payments to the bank each month are for interest, and very little of that mortgage payment is going to pay off the actual debt on your house. Here is a URL link to an amortization schedule for a 30-year fixed mortgage for a house that is purchased at $300,000. https://www.myamortizationchart.com/

You will notice that to have more than $40,000 of the house paid off, you will have to live there for over 7 years.

If you purchase a house you will most likely want to furnish the house with couches, chairs, paintings, beds, tables, TV’s, etc… Aside from furnishing the house, you will need to have money set aside for any repairs or maintenance items that come up such as a roof leak, new siding, HVAC system, hot water heater, windows, toilets, locks, yard maintenance, etc..

Over the last 10 years, the average length of time a homeowner lives in their house is for 8.4 years. The prior 10 years from 1998-2008 the average length of time a homeowner lived in their house was just over 6 years. From these statistics, I would venture to say that most homeowners did not make much money when they sold their house simply due to the length of time the homeowner lived in the house.

I have given a few negatives to homeownership, but let’s look at some of the positives from becoming a homeowner. First is the tax deduction you are able to take as a homeowner. You are able to deduct all of the interest on your mortgage payment, along with the property taxes against your income each year. Another benefit is that houses tend to appreciate in value over time. Home prices have appreciated nationally at an average rate between 3-5%, depending on the index used for the calculation. Real Estate tends to be an inflationary hedge, so its appreciation is somewhat tied to the inflation rate. There is a reasonable connection and correlation to the inflation rate and home price appreciation. The link shows the correlation between home price appreciation and inflation.

Another benefit of renting is many cities in today’s market have been overbuilt with apartments, so the apartment complexes are offering tremendous deals to fill up their buildings. I think now is one of the best times to be a renter. You have negotiating power when you walk into an apartment or rental and are looking for a good deal. Many of the larger institutional groups have given their communities the leeway to negotiate pricing on their apartments. As home prices continue to climb, renting is becoming the more affordable option.

My argument would be if you are not dead set on holding onto your house for a long period of time (at least 15 years) it doesn’t make sense to become a homeowner. Some millennials will say they have extra cash and purchasing a home would be a good investment. If that is the case, I would recommend putting your money into a low-cost index fund that charges something like 7-10 basis points per year that mirrors the S+P 500. Here is a link to the returns from the S+P 500 over the last few decades.

The average return over the last 30 years has been just shy of 10% year over year in the S+P 500. A home does not come close to these types of returns.

As an owner of a residential rental property, you already know that you are responsible for paying the property taxes and maintenance costs, but what if your tenant requests upgrades and improvements?

What if they want a new refrigerator, a different style of carpet, or upgrades to the bathroom?

While landlords are always free to perform whatever upgrades they see fit to a rental unit, property improvements that are strictly cosmetic are not required under Maryland law. That means your tenants can’t demand a new set of stainless steel appliances or expect you to paint their living room in the latest trending colors – but they can ask.

In many cases, agreeing to pay for voluntary property improvements can make good financial sense for landlords, especially if the request is coming from a stable, long-term tenant. Providing your tenant with the upgrades they want can be a win-win situation – they’re likely to stay in their unit, and you won’t have to worry about filling a vacancy.

Temporary Improvement or Permanent Fixture?

Whether or not a property improvement is considered to be temporary or permanent can also be a source of conflict between landlords and tenants, especially in situations where a tenant has lived in a rental unit for an extended period of time.

For example, your tenant may decide to take it upon themselves to go ahead and install screens over the windows to keep insects outside during the summer months. Under Maryland law, those screens are considered to be “fixtures” that are now regarded as being an integral part of your property – that means your tenant must leave the screens in place when they move out.

If your tenant has voluntarily performed improvements to your rental property and they decide to ask you to reimburse them for their out-of-pocket expenses, in most cases you are under no obligation to pay your tenant.

Generally speaking, Maryland landlord and tenant law requires tenants to obtain written consent prior to incurring costs on behalf of the property owner, otherwise, the tenant is likely to lose any lawsuit aimed at recouping their costs.

When In Doubt, Create A Contract

It is always advisable to put any agreement regarding improvements, repairs, or modifications to your property with your tenant in writing, even if the issue at hand seems minor.

Clear documentation that outlines what work is to be done, who will complete the work, and most importantly, who is responsible for the costs can go a long way towards preventing conflict with your tenants.

For more information on navigating Maryland’s Landlord/Tenant Law, feel free to contact Bay Management Group today!