Rental property investing in Maryland: cash flow, taxes, and what to expect

The Maryland setup, at a glance

Maryland sits at roughly 1.06% effective property tax, which matters more than most new investors realize. On a $180k-$260k Baltimore property, that's about $1,908/year in taxes alone - call it $159/month before you've paid anything else. Run the rental cash flow calculator with that line item baked in or your projection will look better than reality.

Eviction stance here is balanced. Balanced. Failure-to-pay-rent filed immediately, hearing 7-14 days. Baltimore City slower than counties. That timeline directly affects your vacancy assumption: in balanced-friendly states like Maryland, you can underwrite 5-7% vacancy on B-class properties; in slower states you'd want 8-10%.

Where the math actually pencils

Baltimore - $180k-$260k for typical SFR, $1,200-$1,650/mo for 2-3BR rents. rowhouse cash-flow market, lead-paint regs strict.

Frederick - $380k-$510k for typical SFR, $1,900-$2,500/mo for 2-3BR rents. DC-spillover commuter market.

Salisbury - $220k-$310k for typical SFR, $1,350-$1,750/mo for 2-3BR rents. Eastern Shore, slower pace.

The 1% rule (monthly rent >= 1% of purchase) is a smoke test only, but it filters fast: a $180k-$260k property in Baltimore renting at the high end (1,650/mo) clears 0.8-0.9% in most cases, so you're already in the "needs the rest of the math to be tight" zone before vacancy + capex + management.

Maryland-specific things that bite

Baltimore has strict lead-paint registration requirements + rental license per unit. Skipping these is a fast way to get fined.

A few cash-flow-killer line items that catch out-of-state buyers in Maryland:

Property tax escrow. Lower than the national 1% average, but the homestead exemption you'd get as an owner-occupant doesn't apply to rentals.
Insurance. Standard hazard policies are still reasonable here, but ask about wind/hail riders depending on the specific zip.
PM costs. 8-10% of collected rent is typical. On a $1200/mo property that's $108-120/mo - works out to about a month of vacancy each year.

What "good enough" looks like in Maryland

For a stabilized buy-and-hold in Maryland, the rule-of-thumb deal targets most investors I see are:

Cap rate: 6%+ on the actual NOI (not the broker's pro forma). Below 5% and you're paying for appreciation, which is fine if that's your thesis.
Cash-on-cash: 8-10% minimum at year 1 with 20-25% down. 12%+ is solid for the work.
DSCR: 1.25+ if you're using a DSCR loan. Lenders increasingly want 1.2 as a floor, 1.25 to clear comfortably.
Reserves: 6 months of PITI. Maryland's slower eviction process means you may need 8-9 months of reserves in a worst-case turn.

The play that works here

Maryland has tilted toward appreciation rather than cash flow in most major metros. Cash-flow seekers usually need to look at secondary cities or accept lower CoC for the appreciation thesis.

Run your specific deal through the rental calculator with the state's effective tax rate (1.06%), realistic Maryland insurance quotes, and 8-10% PM. If it still pencils after that, you've got a deal.