Real Estate Investing in Maryland – Everything You Need to Know

Aug 26, 2020 | Real Estate Investing

Maryland Real Estate Investing

Why Invest in Maryland Real Estate

 

Maryland is an excellent location for real estate investments for a variety of factors. First off, the availability of distressed and outdated homes is high, with nearly 15% of homeowners being behind on their mortgages (pre-COVID – that number is likely much higher now). Maryland also boasts a robust economy of federal workers and contractors, making up a large portion of the buyer/renter market. This type of employment typically means well-paid individuals with job stability that are looking for updated and higher-end housing. Check out the hard numbers below to get a more in-depth look at the Maryland housing market.

Demographic Data (source: homeunion.com)

  • Median Household Income: $83,242 (2018) (2nd highest in US – DC is #1)
  • Population: 6.05 million (2019)
  • Unemployment Rate: 8.0% (2020)
  • Poverty Rate: 9.0% (2018)
  • Maryland’s private-sector industries were responsible for $331.1 billion in economic output in 2019.
  • The Free State also has the largest number of federal jobs per capita, which makes sense, given its adjacency to Washington D.C. Both the Social Security Administration and the Food and Drug Administration are headquartered in Maryland.

 

Geographic Location

  • While Maryland has a wide variety of jobs in-state, many residents of Southern Maryland commute into Washington, DC since it is cheaper than owning property in the city. The stability offered by the Washington, DC economy helps insulate much of Maryland from housing fluctuations, demonstrated by the more minor effects to Maryland housing by the Great Recession, whereas much of the country saw double-digit property values decreases.
  • Rental real estate is also popular in Maryland, as many local workers are in contract-based positions, or their work may require extensive travel/relocation.

 

Pent up Foreclosures Due to the Extended Moratorium

  • Extended as of June 29th, 2020 – terminated by end of “state of emergency” at a later date

Where to Invest in Maryland

Fix and Flip Investing

Maryland has many localities where fix and flip investing is popular and profitable. While you can’t pick an exact winner, here’s our list of the top cities and areas where you should look to start buying, renovation, and selling properties:

  • Baltimore
  • Silver Spring
  • Prince George’s County
    • Capitol Heights
    • Fort Washington
    • Hyattsville
    • Temple Hills
    • Upper Marlboro

 

Rental Investing

Unlike the fix and flip market, it is much easier to pick a clear winner for rental properties in Maryland. There should be no surprises here for anyone who has already done some preliminary research into the Maryland buy and hold market:

  • Baltimore
    • More than half of the residents rent.

 

Other Geographic Factors

Maryland has a ton of waterfront and low elevation areas throughout the state. While this can be positive in some aspects, it also brings a significantly higher potential for water damage due to flooding. Before investing in any real estate in Maryland, you should definitely research the potential for flooding that comes with it:

  • Flood zones
    • https://msc.fema.gov/portal/search
    • Depending on where a property is located and its associated flood risk, you may want to purchase flood insurance to ensure that you’re covered.

Who You Need to Know to Invest in Maryland

 

Permits Office Requirements

  • In the state of Maryland, permits are legally required for the following renovations:
    • Building permits are required for any construction on a building, which includes any alterations and/or repairs to existing structures.
    • Electrical permits must be obtained for all electrical work, which includes the installation of electrical work in new structures.
    • Gas permits are required for any equipment that involves gas fuel burning.
    • Plumbing permits are required for any plumbing project, which also includes the construction of any new structure where the plumbing will be present.
    • Mechanical permits are needed for any work that involves the installation of HVAC equipment.
    • Grading permits may be required if the project involves a disturbance to the Earth’s surface.
  • Permit requirements can alter depending on the location of the renovation within the state. For example, certain areas of the Baltimore metro area that are deemed historical districts may require additional permits regarding exterior renovations.
  • For even more info on permitting in Maryland check out our full blog post.

 

Investor-Friendly Realtors

Word of mouth is likely the best place to find real estate agents who can truly cater to the unique needs of an investor client, but here are some quick suggestions to get started:

  • Meetups
  • BiggerPockets

 

General Contractors

Finding a great contractor that has fix and flip experience can be extremely difficult. Referrals are likely your best bet here (like with realtors), but many investors may want to keep their favorite contractor crews to themselves, so here are some of the best places to start looking:

  • Scouting Active Job Sites
  • Home Depot/Lowes
  • Houzz
  • Thumbtack
  • Angie’s List
  • Home Advisor

 

Title Companies

Title companies can make or break a time-sensitive real estate deal, so choosing an experienced and efficient one is imperative. We know from hundreds of transactions in Maryland that a handful of title companies have really proven themselves to be stand-outs, so here’s our short-list. (No they have not paid to be on this list, they’ve earned their place by doing excellent work.)

 

Hard Money Lenders

No surprises here, but in our opinion, you only need to call one lender when you’re looking for financing for a real estate investment in Maryland. Since 2012 we have made Maryland one of the primary states where we do business, and we are able to offer you in-depth expertise on deal analysis and lending options.

 

Stagers

Professional staging is an often overlooked part of real estate investing, as many flippers try their hand at staging their own property. If you have a keen eye for matching decorations with target markets, then there is nothing wrong with self-staging. But at higher price points and competitive areas, you are likely better off to find a professional who has a proven track record of helping new listings sell fast.

 

Insurance Providers

As an investor, you need a fast and reliable insurance provider for your fix and flip and rental needs. You don’t want to get caught with insufficient coverage from an inexperienced provider, so check out some of the top providers for Maryland:

 

Property Management Companies (for rental investors)

Last but not least, if you’re interested in building a rental portfolio and don’t want to answer phone calls about clogged toilets at 1 AM, you’ll need to have a solid property management group on your team. There are plenty of management groups that serve the Maryland area, but here’s our top recommendation: