How To Maximize Profits When Selling Your Baltimore Rental

Are you experiencing negative or low cash flow on your Baltimore-Area rental? You’re not the only one. From labor and material costs, to insurance coverage, to property taxes in some areas, expenses have been on the rise in recent years. Baltimore City’s 2018 rental license requirement added additional expenses on City landlords, too. And new legislation calls for landlords throughout Maryland to pay added fees when filing in rent court, which can’t be recovered through the tenant. Maryland investors are feeling the squeeze. 

The good news is, property values in many areas throughout Baltimore have continued to rise, while housing inventory for buyers remains low. You may be surprised what your investment property could sell for. 

So what do you do if you want to sell your Baltimore-Area rental? I can help. I have sold 28 rentals for my clients in the past four years.

I've been in the Baltimore real estate industry since 2008. I specialize in representing home sellers in the Greater Baltimore Area and earning them the most profit possible on settlement day. So what do you need to do if you want to sell your Baltimore- Area rental property? We first need to determine your exit strategy by reviewing the the highest and best use for your property. Then I can guide you from start to finish in getting your property sold.

1 - Determine The Highest and Best Use For The Property

The easiest way to do this is through the MLS system, which is accessible by realtors. Here we can pull records of all active, pending, and recently closed sales.  I do this for perspective sellers for free even if they aren’t sure they want to sell yet. I will look at sales of similar properties that are occurring in your neighborhood and determine what circumstances yield the highest sales price. Many times the highest sales price is earned when a property is able to be sold to a homeowner, so I will cover that first, but also touch on other circumstances later in this article.

Preparing to sell to a homeowner :

2 - Plan for Vacancy

If selling to a homeowner is your best strategy to get the most money out of your Baltimore rental property, you first need to get the house vacant. You may decide to continue to rent the house until the tenant gives you a notice to vacate. Or, you can give the tenant notice to vacate, but must abide with Maryland  law, local law, and the terms of the lease in doing so. I can guide you through this process. While you’re preparing for vacancy, go through the other steps below so when your home is vacant you can act quickly and reduce the down time between vacancy and listing. 

3 - Mirror The Most Successful Listings

There shouldn’t be any guest work here and there’s no need to reinvent the wheel. Simply evaluate what works and aim to  replicate it. I can show you the most similar properties that recently sold for the highest price and in the shortest amount of time. We will use the selling points of those homes to guide us in the repairs and maybe improvements to your home to squeeze every last dollar out of your Baltimore investment. When the work is done, we will do a deep clean to make your home really shine.

4 - Stage To Impress

I will have your house professionally staged with furniture to give it a modern look, make the pictures look appealing, and allow buyers to envision how the home could be set up. Staging costs roughly between $1,600 - $2,500 per home and is a worthwhile investment. It makes the pictures look better. Better pictures generate more clicks on the listing, more showings as a result, a better showing experience because the buyers can envision how the house can be set up, and therefore more conversations about offers.

5 - Execute A Comprehensive Marketing Plan

I will execute a comprehensive marketing plan and cover all costs to do so. I will have your Baltimore-Area home professionally photographed, have a professional flyer designed that will be displayed inside your home and also in a brochure box outside your home for passersby, disperse a professional marketing email advertising the property to agents who have brought buyers to the area recently, advertise your home on social media outlets, and of course, make sure that your property listing looks outstanding and includes a compelling description. 

How To Sell Your Occupied Baltimore Rental

Now for the occupied rentals. In Maryland, you can sell a home while it is under lease. Some areas have low homeownership but stable rentals with strong rents. If we find this is the case for your property, to sell for the highest price you will need to demonstrate that :

• You have a written lease in place. Believe it or not, some circumstances in Maryland allow for oral leases. A written lease outlines exactly what is expected of both parties and makes it clear to a prospective buyer exactly what terms are in place.

• The rent is ‘market.’ In other words, you aren’t under charging on rent; the amount is in line with the rents of other similar units in the area. If you aren't sure where your rent stands, I can do an analysis for you.

• The rent is paid up. A new landlord isn’t going to pay top dollar if upon purchase they have to play collection agent, and potentially start the court process to enforce payments. 

• There is a valid lead certificate in hand, if the structure was built prior to 1978, per Maryland law. Note that there are three types of lead certificates - full risk reduction which needs to be renewed upon each new tenancy, limited lead free which needs to be renewed every two years regardless of tenancy, and lead free, which once issued, is good forever. 

• There is a valid rental license in place.  Many counties in Maryland require a rental license to rent property. These expire and you will need to make sure yours is current.

• There are no open maintenance issues. Make the repairs so the new owner doesn’t have to, and so the new owner doesn’t have to fear that the tenant is going to initiate a rent escrow action with the court until repairs are made.

• The house is being maintained. This part is on the tenant. Are they doing their part to keep up with the house and reduce damage?

• You have offered the tenant the opportunity to purchase the property, as required by Maryland law. I can guide you through this.

Once the above are in order, we can execute the above marketing plan to get your home sold. 

The above may seem like a high bar and you’re going to realize just how important it is to qualify your tenants before entering a lease with them and also how imperative it is that you get into compliance and remain in compliance. If you’re reading this because you’re exhausted by being a landlord, your tenant hasn’t paid, there are open maintenance matters, etc, you will have work to do to make your rental ready for sale. The more boxes you can tick on the above list, the stronger the price and terms you can sell your rental for. The more headaches the new landlord will have to address, the deeper the discount he or she will want on the purchase price. 

Is it the right time for you to sell your Baltimore rental?

This is a personal choice. If rising costs are eating into the profit you once had on your Baltimore rental, and/or the time you spend managing it is outweighing the income you are generating from it, you may want to consider selling your Baltimore-Area rental. Our housing inventory levels are still low and homes are selling in Baltimore City in a median of 16 days on market (source : Bright MLS).