Closing a rental property in a week and need a lease contract

10 Replies

After hunting for my first investment property for several months, I've finally secured a townhouse in Baltimore, MD and I will be closing in a week. I am trying to have everything ready, so I can begin renting it out immediately after settlement.

Any insurance companies you guys would recommend for landlord insurance?

Where would be a good place for me to find a good lease agreement? Lawyer?

Is there anything else I should do in the meanwhile to be completely ready?

@Ethan Kramer , greetings!!

Congrats on taking action.

Here is my insurance referral: Hillpoint Insurance

You can check the File Place for a lease but definitely have it reviewed by a lawyer.

Not sure if you are in Baltimore County or Baltimore City. I know in the city you will have to get the property inspected and registered as a rental property with the city. You also need to set up your lead inspection. Other things to consider; tenant screening process (will you charge an app fee, how will you process apps, how will you handle showings, what qualifications/criteria does tenant have to meet, etc), how will you collect rent (in person, by check, electronically, etc), how much will you charge for rent, how will you process an eviction, how are you going to handle maintenance issues, and I'm pretty sure I'm missing something but experience is the best teacher!!

I wish you the best!!

The property will need to be inspected and registered as a rental (with either the city or the county, depending on where it is located).  I have my rentals insured with Liz Mika of Redmer Insurance Group, I suggest looking her up and giving her a call for a quote.  Good luck and Congratulations!

hey @Ethan Kramer , congrats! That's awesome!

Here's my full stack of tools.

For Insurance, shop around. I recommend you find a broker. I ended up with Liberty Mutual. One thing to consider, you'll want insurance specifically for a rental property coverage and not standard homeowners insurance. Additionally, shop around an umbrella coverage.

Speaking of insurance, have your lease mandate tenants also carry renters insurance and provide evidence of the renters insurance prior to move in.

Probably obvious, but I use Avail for customizing applications, tenant screenings (background, credit, eviction check), creating a lease, and collecting payment. One thing really nice is Avail by default requires renters insurance and makes it EXTREMELY easy for tenants to get and upload renters insurance. 

Make sure to invest a little time and or money into high-quality photos of your place for marketing purposes. Yes, this is good for documenting condition, but photos can make ALL the difference in marketing your property.

Absolutely, positively, be sure to review and learn landlord tenant laws for your area. Found this resource on a quick Google search. http://www.marylandattorneygeneral.gov/Pages/CPD/landlords.aspx. Other pages to reference include BiggerPockets blogs and education materials and Avail local laws pages. Also the BiggerPockets Tenants Screening guide is great. https://assets1.biggerpockets.com/uploads/user_file/file_object/1740/Ultimate-Guide-to-Tenant-Screening-Ebook.pdf

Way to make it happen, Ethan. Post an update when you get you unit filled!


Ethan,
Some additional info regarding the Insurance. Most Carriers will want to cover the rented Townhouse (condo?) with a Dwelling Fire form. There are some that use a Condo Homeowners form (HO6 form in industry speak). If you do get a quote and it is on a Homeowners form just be sure they are aware you are renting. Somethings you will need to know:
1. Value of the contents you will own in the unit (not the tenants contents)
2. Value of the Improvements & Betterments (parts of the condo building you own). Look to the bylaws of the Association. The description of the unit will tell you what you need to insured (could include Sheetrock, fixtures, internal wiring/plumbing, etc.)
3. What you want to insure for Loss Assessment. Covers assessment from the association for a loss that is from a covered peril (ie. Fire, theft, etc..) that they do not have adequate coverage. Could come from undervaluing the property, High Deductible, big liability loss, etc.
4. limit of liability. My recommendation is take the max that you can on the policy and then get an umbrella above it.

Good luck with the investment

Thank you for the information. I just received a quote:

State Auto Insurance premium at $704.80 annually. This includes $133,000 on Dwelling which is the calculated replacement cost, $10,000 of Contents coverage, $26,600 Fair Rental Value & Additional Living Expense, $500,000 Liability, $5,000 Medical Payments, $10,000 of Water or Sewer Backup coverage, $1,000 deductible.

The property was appraised at $73,000 and it is already in great shape with roof, electricals, and plumbing having been updated in 2011 - no work needed and the property will pass the rental inspection and lead inspection easily, I believe. Value of the contents I will own in the unit will exceed no more than $5,000 - refrigerator, washer/dryer, and stove.

Is this a good price?

@Ethan Kramer I would suggest looking into setting strict screening criteria for what you are looking for in a potential tenant.  I would suggest staying patient while looking for the right tenant to make sure you are getting the most out of your investment.  Rushing into renting to someone who doesn't fit your criteria could end up being expensive for you in the long run.  I would suggest checking out the landlord resources tab to familiarize yourself with what options are available to you.

Hey congrats! All the advise specific to Baltimore is great. It sounds like you are holding onto the property. I found David Greene's BRRRR book to be a great overview of the entire process of acquiring, rehabbing, and renting. I also have found J. Scott's book on Flipping houses to be great. The day to day schedule for your rehab provides a great checklist for the steps necessary. You can modify and adapt to your specific project. Cheers!

Hey Ethan, Congrats on the first one! That can definitely be the hardest one for sure!  How did you finance it?  I also have some other thoughts and questions as a landlord myself:

1) When was the property built?  How are you going to deal with lead, are you familiar with the options and what is your plan?  Lead safe or lead free?  I have many rentals myself, started out doing just lead safe via dust swipes and am now doing only lead free rentals where they use a laser gun to find the lead.  I have found that properties built before 1950 or so, typically have more lead, which leads to a bigger rehab and costs in order to remove it.  In these cases, it is easier and more cost effective to do lead safe as you only need to encapsulate the contaminated areas. This also though does leave you exposed with more risk,so you need to be very careful and diligent with maintenance, and not having any chipping paint. For me these days, I am only buying properties now that are built in the 1950's or later that typically have less lead contamination if any and are easier and more cost effective to make lead free.  NOTE: If the property is fully renovated, then you will have to get a lead inspection and make a decision from there which way to go, as I am sure you won't want to do any renovations in this case. Contact Neal Roseman at Lead Probe for lead inspections.

2) Are you planning to manage the property yourself? If so, then there was some great suggestions here where to get info on landlord tenant laws.  If you are are planning to do more rentals and use a property manager, then they would be a great resource of information regarding tenant placement, and the legalities of property management. You might look at www.ManageBaltimore.com and ask for Mark . If you only need tenant placement, call Tony Lewis, I have used him for years, you can email me for contact info.

3) For leases, I would try to find a reputable source to get an existing lease. No need to recreate the wheel or pay a lawyer.  A realtor in MD can get you a copy of their MD Residential lease agreement approved by the Greater Baltimore Board of Realtors/GBBR.  A good experienced property manager can also get you a copy of a proven lease.  You might also reach out to Sal at www.marylandrentcourt.com or www.myrentcourt.com as they do evictions and the like and so have a ton of experience with rentals and may share a copy of their lease with you.  You can also get on www.gosection8.com if you are doing a subsidized rental and market your property there as well as take flyers to the Baltimore Housing Office on 1225 W Pratt St.

The GBBR also has free classes at times about rental properties, lead, landlord-tenant laws, etc.

4) On Insurance, you typically need a builders risk - vacant dwelling policy during renovations and then convert to a rental policy once the renovations are complete and the property is rented. For builders risk, you can try HU Dove & Co or Paul Dowling at Bayview Insurance.  Once the property is rented, you can try your own insurance company as they may be able to do that for you.  I use Erie Insurance for all my rentals.

I hope some of this helps!  Best Wishes and Great Job!  Feel free to reach out to me if I can help you in any way.