My name is Ryan Vertucci. I am the owner and listing agent for the Southern Maryland office of Real Property Management Gold, serving from St Mary Charles to Calvert County in Maryland.
Coming out of the pandemic, Southern Maryland is in a very hot rental market. Right now, in Southern Maryland, we see an all-time low in inventory and supply of single-family rentals. In 2019, we averaged between 110 and 150 rentals on the market in a single month. Right now, we have 35 single-family rentals on the market at any given time. We’re looking at extremely low supply while demand is still very high for rentals in this area.
We live in an area where many military families are coming and going who only stay for a couple of years. There are contractors and other temporary people who aren’t in the market to purchase a home. And they want a single-family home because multi-family homes and apartments won’t work for them.
So they’re out looking for these homes. This drop in supply combined with steady demand has created a fight for rental homes. Which, in turn, is causing rental rates to increase. Right now, we are seeing a 20% increase in rental rates from where we were in 2019. We have homes that were renting for $2150 in 2019, and we’re putting them back on the market for $2600 and renting them out within five days.
On Lexington Park, we have homes that were around $1800/1850. We’re now renting them for $2300-2400. In Waldorf, over in South Prince George’s County, we can’t keep anything in stock. It’s crazy. We see massive, massive increases in rental rates, and we foresee this continuing to go up while the supply stays low.
As I said, this is affecting days on the market. We averaged eighteen days on the market in 2019 to get a renter. Right now, we’re at eight days, and a lot of them are going even faster, usually during the first weekend we put them up. We have multiple applications and can be more selective about the tenants we place in these properties. This is causing the credit scores and other requirements that we have actually to go up. Significantly more of our applicants have credit scores over 700. (Before, our average credit score of a tenant was around 650 or so. Right now, it’s closer to 720.)
People are asking, “is the pandemic causing people not to pay rent?” The answer to no. Our delinquency throughout the pandemic was extremely low. We only have 2% of our tenants who are more than one month behind on rent. We’ve only had eight people we had to push through the court system for being over one month behind.
Keep in mind that evictions are ongoing here in the state of Maryland. Anyone who is delinquent is being moved through the process unless they can prove that COVID directly impacted them, but there’s a lot of proof they have to provide to do that. We haven’t had any real problems with delinquencies or anything like that as well. In fact, our rate of delinquencies has improved throughout the pandemic as we’ve placed higher quality tenants due to the supply being so low.
If you’re looking to rent your house, the online evaluations from places like Zillow (or if you buy reports online via certain websites) are going to be low estimates. There’s not enough time for them to take all the data and give you an accurate report based on the current circumstances. If they quote you high rental rates, add another 10% and that’ll get you closer to what your house rents for in this crazy market.
One thing we hear a lot is about tenants staying in their rentals. If you’re a tenant right now, you should try to stay in your current rental. If you go back out in the market, it won’t be easy to find a property, and the rental rates will be significantly higher. If you can renew your lease with less than a 10% increase in rent for the year, I would go ahead and jump on that quickly.
If you go back out in that market, it’s going to be extremely difficult. Suppose you’re a tenant and you want to stay in your rental. In that case, you may have to make a significantly higher offer to your landlord to get them to continue to rent to you instead of finding something willing to pay a higher rental rate or selling the property with as high as the markets are at this time.
If you’re a tenant and you’re not in the mood to purchase a home right now, you should do the best you can to convince your landlord to re-rent the property to you. If you can make a higher offer, I would advise that you do so.
If you’re an owner right now, it’s a great time to rent. Rent is high, and they’re renting fast. We’re getting very highly qualified people, making it easier to manage the property and keep your cash flow going. People are turning the properties over in great condition. After the lease, everything is going smooth in terms of operations of rental properties right now, especially with our system and how we handle things.
If you’re an owner, it’s a great time to rent and invest in some investment properties. I would talk to a CPA; there are some tax benefits out there that you guys could find if you speak to a CPA about renting a house. Other people are finding equity in their homes. Instead of selling the house, they’re working with loan officers, taking the equity out of the house, and using it to purchase another home. There are lots of options here to invest in real estate right now. Real estate is on an upward trend, and it’s on fire. As I said before, we’re at a 20% increase in rental rates over 2019. And we foresee, over the next 2-3 years, at least a 10% increase per year on top of that. It’s a good way to generate some wealth and some additional income by owning rental properties right now.
That’s where we’re at here in Southern Maryland. As I mentioned, it’s a very crazy market, and things are flying off the shelf with high rental rates and quality tenants. It’s a great time to rent out your property. If you’re interested in doing so, reach out to our property management team here at Real Property Management Gold. Let’s get the conversation started.
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