(The following article appears in the July 2, 2014 issue of RockvilleLiving.com)
Recently my husband was offered a job transfer requiring an out-of-state move. With only two-months notice before heading to an unfamiliar city, it made sense to rent our home here and rent an apartment there. My project-manager self kicked into high gear and in the process I learned a lot about renting a house, including regulations specific to our Maryland city. I think these are worth sharing in case any Rockville Living readers find yourselves in a similar situation.
1) List your house for rent right away. The rental market in most suburban areas is not as dynamic as sales. Houses can sit empty for a long time. Carrying two homes—a mortgage and a rental—would have been an uncomfortable budget stretch for us. Fortunately we listed in May, as summer is that transition time when many families are looking to move. You can hire a real estate company to handle the entire rental process; the standard fee is equal to one-month rent.
2) Utilize social media. Coming from a PR background, with my husband in interactive media and commerce, we have a pretty good grasp of the power of online marketing. So we decided to market the house ourselves. A search using the popular real estate app Zillow Rentals found comparable single-family homes for rent in our area that helped us set a reasonable market price. I snapped flattering, high-resolution digital photos of our home exterior and main rooms (de-cluttering room by room). The photos and a written description that spotlighted the advantages of our home and its location were easily uploaded to Postlets, an aggregate service that distributes the post to online real estate sites. A word to the wise: do not show the ugly. You would be surprised how many photos of dirty dishes in the kitchen and nasty-looking laundry rooms are posted to supposedly attract renters! Within a week we had five queries and scheduled three viewings (for after a cleaning crew came).
3) Apply for a landlord license. Rockville requires a license for rental property. The lead-time between applying and receiving the license is 1-2 months, and licensing is dependent on a physical inspection of the property. You will have to designate a Maryland property manager if you are moving out of state (professional, or a friend or relative). A downloadable application is available on the Rockville City Police Department website and the fee is $200.
4) Clean and repair. Just as every homeowner does, we live with some imperfections in the house because we have other priorities. But looking around with a critical eye, there were a number of cleanups and minor repairs to be made. The tax code allows deductions for landlord maintenance and repairs, but not improvements. Also, a tenant expects a clean, freshly painted house. As a friend pointed out, if we rented the house for one year and then wanted to continue to rent, we would have to bear that expense again to put it back on the market. So we decided to consider a two-year lease if a tenant requested it.
5) Protect yourself legally. A landlord takes on a lot of legal responsibility, in everything from the language used to advertise the property, to reviewing applications and choosing a tenant, to actually leasing and managing the property. The American Bar Association has a valuable list of which Federal laws to consider. If you are taking applications, there are reputable companies that conduct tenant credit checks and background searches that legally an individual can’t perform. With the number of services online, it’s okay to start with a standard lease document found this way, too, a lawyer advised me, as long as we customized it to include specific expectations of the tenant with regard to payments, property care and maintenance. Maryland has laws that protect the rights of landlords and tenants that also need to be included in the lease. Be sure to have a lawyer review the final document before it is signed. Another thing we found out is that we needed to convert our homeowners insurance to a landlord policy. We were advised to consider adding an umbrella policy to the property; for about $200 a year we could increase our liability coverage to $1 million, thereby increasing our ability to settle a potential lawsuit without catastrophic financial loss.
A lot to take care of in a short time! As it happened, we did not move after all; my husband is instead working in a new position locally. After some initial regret of missing out on a new adventure, we now feel lucky that we get to stay in our wonderful city of Rockville!