Recently, I encountered a case where a family was deciding whether to sell their home or rent it out due to a job transfer to another state. Initially, they were leaning towards selling, but after researching the rental market in Frederick, they changed their minds. The rental income would be sufficient to cover their mortgage and more.

According to RentCafe, the average rent in Frederick is $1,934. A one-bedroom apartment averages $1,717, a two-bedroom is around $1,941, and a three-bedroom goes for about $2,296. Fifty-six percent of the listings fall between $1,501 and $2,000. While these numbers are helpful, it's essential to find and compare a few similar properties to your own. Even within Frederick, there can be significant price differences between downtown and the outskirts.

In some cases I reviewed, skipping the home inspection at this stage led to a flood of repair requests shortly after tenants moved in. It's advisable to complete minor repairs and cleaning before advertising, and to check that smoke detectors and carbon monoxide detectors are functioning. Taking photos of each room on the day the tenant moves in and conducting a walkthrough can serve as evidence for the security deposit settlement later.

After setting the rent, it's time to advertise. Clearly state the indoor photos, rental price, move-in date, and pet policy to improve the quality of inquiries. If you're out of state, consider using a local management company to hold an open house or show the home via video.

When potential tenants appear, screening is necessary. This involves checking credit scores, income, and previous rental history. Many landlords use a guideline of three times the rent for income, and they may request credit reports, pay stubs, and contact information for previous landlords to verify this information.

You should also decide on a method for collecting rent in advance. If you live in another state, it's impractical to travel back and forth to collect checks, so using online automatic transfers or a rental management app to keep records is much easier.

The lease should include the rental period, payment method, security deposit terms, repair responsibilities, and how to contact the long-distance landlord. In Maryland, contracts signed after October 2024 will have a security deposit cap set at one month's rent. It must be kept in an interest-bearing account and returned within 45 days after the lease ends, along with a damage report. Failure to comply can result in having to pay up to three times the deposit plus attorney fees. This information is based on the Maryland People's Law Library.

If rent is overdue, a written notice must be sent 10 days in advance before you can file a court procedure. This regulation has been in effect statewide since October 2021. If you live out of state, these notice procedures can be delayed, so it's safer to have a management company or keep thorough records of mailings.

Insurance is another area to review. Standard homeowners insurance based on owner-occupied properties often does not cover damages caused by tenants or loss of rental income during vacancy periods. Switching to Landlord Insurance may be a safer choice for long-distance management.

Choosing to rent is not always the best option. You need to consider the risks of vacancy, repair costs, and the burdens of long-distance management. Tax reporting may also require looking at both the previous state and Maryland regulations. If you decide to rent, preparing by reviewing market rates and legal procedures can help minimize regrets later. This article is for informational purposes only and is not investment or legal advice. Please consult a real estate professional, tax advisor, or attorney if needed before making any decisions.