Big Lessons Learned when Buying Real Estate in Maryland

Sometimes sharing what I learn with you isn’t always pleasant.  You’ve read about the many times properties have fallen out of escrow, the ovens stolen, the holdup’s with releasing funds and timing funds to appear when you need them to close on a property. Just when I thought I got this whole routine of buying properties down…I mean the process…I’m hit with another gotchya.  Maryland’s processes and procedures regarding deed recording.

Becoming more comfortable with my out of state investing activities in California, I saw an opportunity for a property right outside of Washington DC and I could get it at 40 cents on the dollar – and the contractor quote came in at a reasonable $16k.  So being happy and confident with the numbers, the people located in that area, my contractor that gave me the quote, I was already to go through my process of handling properties.

This is what happens in California:

• Get the property under contract
• Sign a boatload of papers
• Wait for them to tell me how much to wire to closing
• Give it one more day to record the deed with the county
• Begin the rehab

This latest property I bought is in Prince George’s County, Maryland.  While I normally try to wholesale prior to closing, this all happened during the holidays and it was difficult to get interest.  So I bought it myself and still tried to market it for resale to a rehabber.  (After all the other horror stories you can see why I might want to pass this property on to a local rehabber.)

My first surprise was the outrageous amounts in the closing costs.  The County charges almost $400 to record the deed, plus I had to pay taxes on the property through June.  This isn’t normally a concern, but that county has the property valued at $180k…and I got it for a fraction of that price.  Looking at a $4,000 closing statement, I realized I didn’t have the resale properly priced for this house.

I do have a cash buyer lined up wanting to purchase the property…but get this…we closed on 12/22/2011 and the deed didn’t get filed in the county until January 10, 2012!  And that information won’t be publicly available for several weeks! Welcome to Maryland.

This cash buyer needs to ensure that I actually own the property before he pays me any cash.  This is totally reasonable.  But at this point, there is no public record proving to my buyer that I have the right to transfer the property to him.  GEEZ!

So now I follow the trails of bureaucracy to find public documentation that the property I paid for is in fact under my control.  Wish me luck this happens soon, because I need that money for another property coming up soon.