Your first rental in Baltimore: real numbers.
Theoretical real-estate math is everywhere. Here's an actual pro forma on a $190,000 Baltimore-area 3-bedroom — using HUD's published Fair Market Rents for the Baltimore-Columbia-Towson MSA and the 2026 Baltimore City rental license costs landlords actually pay.
In this guide
1. The example property
| Field | Value |
|---|---|
| Property | 3-bed, 1-bath, 1,024 sqft townhome — Dundalk, MD |
| Purchase price | $190,000 |
| Financing | 25% down conventional investment loan |
| Down payment | $47,500 |
| Loan | $142,500 at ~7.5% (investor rate, 30-yr fixed; placeholder for current rate) |
This mirrors a real recent Baltimore-area sale (a $190,000 closed Dundalk townhome from a recent transaction).
2. Purchase costs
| Item | Cost |
|---|---|
| Down payment (25%) | $47,500 |
| Closing costs (~3% — see MD closing-cost guide) | ~$5,700 |
| Initial repairs / make-ready | ~$3,000 |
| Inspections (general + radon + sewer scope) | ~$900 |
| Total cash in | ~$57,100 |
3. Monthly income (HUD FMR baseline)
HUD publishes Fair Market Rents (FMR) annually for each metropolitan statistical area, used to set Section 8 voucher payment standards. They're a useful neutral benchmark for what mid-market rent looks like in a region.
For the Baltimore-Columbia-Towson, MD MSA (which includes Dundalk), 2024 FMR data shows [1]:
- 2-bedroom average FMR: $1,943/month (range $1,749–$2,137)
- 3-bedroom average FMR: $2,519/month (range $2,267–$2,771)
For a 3-bed Dundalk townhome in livable condition, market rent typically sits modestly below the FMR ceiling — let's assume $2,200/month as a defensible target.
4. Monthly expenses
| Item | Monthly |
|---|---|
| Mortgage principal & interest ($142,500 @ 7.5%, 30-yr) | ~$996 |
| Property taxes (Baltimore County ~1.1% of assessment ÷ 12) | ~$175 |
| Insurance (landlord policy) | ~$110 |
| Vacancy reserve (5%) | ~$110 |
| Maintenance reserve (8%) | ~$176 |
| Property management (10% of rent — optional) | ~$220 |
| CapEx reserve (5% — long-life replacements) | ~$110 |
| Total monthly expenses | ~$1,897 (self-managed: ~$1,677) |
5. The Baltimore City rental license stack
This example is in Baltimore County (Dundalk), which has lighter regulation than Baltimore City. But if your rental is in Baltimore City, you face an additional regulatory load you need to budget for [2]:
- Property registration — required annually, January through December. New owners must register within 10 days of transfer [2].
- Rental license — required for all non-owner-occupied rentals. Now a flat two-year term (the prior tiered system was eliminated) [2].
- Inspection — required by a Maryland-licensed home inspector registered with Baltimore City DHCD. Inspection reports must be submitted within 90 days of inspection [2].
- 2026 Strengthening Renters' Safety Act — effective January 1, 2026, increased oversight of properties with safety or habitability issues, including "priority dwellings" classification for problem buildings with 20+ units [3].
Annual license + inspection costs typically run $200–$500 depending on property size and renewal schedule. Budget it.
6. Bottom line: cap rate & cash-on-cash
| Metric | Self-managed | Property-managed |
|---|---|---|
| Monthly rent | $2,200 | $2,200 |
| Monthly expenses | ~$1,677 | ~$1,897 |
| Monthly cash flow | ~$523 | ~$303 |
| Annual cash flow | ~$6,276 | ~$3,636 |
| Cash-on-cash return | ~11.0% | ~6.4% |
| Cap rate (NOI ÷ purchase price) | ~6.5% (using NOI before financing) | |
Plus three additional returns the cash-flow number doesn't show:
- Principal pay-down by the tenant — equity building over time.
- Tax depreciation — 27.5-year straight-line on the building basis, reducing taxable income.
- Appreciation (not guaranteed) — Greater Baltimore appreciated 5.9% YoY in the most recent monthly report [4].
Looking at a specific potential rental?
Send me the address and I'll run this same pro forma on it.
Get a Pro Forma →7. Common first-rental mistakes
- Underestimating CapEx. Roofs, HVACs, water heaters die. Reserve 5–10% of rent.
- Skipping the rental license. Operating without one in Baltimore City can mean fines and inability to evict.
- DIY tenant screening with no process. Background, credit, employment verification, eviction history. Maryland landlord-tenant law gives you tools — use them upfront.
- Underwriting on best-case rent. Use the FMR or below, not the optimistic "I think I can get" number.
- No reserve fund. 3–6 months of expenses in cash for vacancy and emergency repairs.
Sources
- "2024 Fair Market Rent in Baltimore-Columbia-Towson MD MSA" — RentData.org (HUD FMR data) — https://www.rentdata.org/baltimore-columbia-towson-md-msa/2024 (accessed 2026-06-15)
- "Property Registration and Rental Licensing" — Baltimore City Department of Housing & Community Development — https://www.baltimorecity.gov/dhcd/our-work/permit-inspections/property-registration (accessed 2026-06-15)
- "2026 Rental License Changes: Renters Safety Act" — Ben Frederick Realty — https://benfrederick.com/renterssafetyact/ (accessed 2026-06-15)
- "Greater Baltimore Housing Market Update — March 2026" — Shop Baltimore Homes (Bright MLS data) — https://www.shopbaltimorehomes.com/blog/greater-baltimore-housing-market-update-march-2026/ (accessed 2026-06-15)
- HUD User Fair Market Rents Dataset — https://www.huduser.gov/portal/datasets/fmr.html (accessed 2026-06-15)
This guide presents illustrative numbers based on a real recent comparable transaction and publicly published HUD FMR data. Actual cash flow depends heavily on the specific property, financing rate at the time of purchase, condition, tenant quality, and local rules. This is not investment, tax, or legal advice — consult a CPA, attorney, and licensed mortgage lender for your specific situation. Evan Kundrat is a Maryland-licensed real estate salesperson (Lic. #5003434) at Keller Williams Flagship of Maryland (Designated Broker: Barry Hess, Lic. #517943). Equal Housing Opportunity.