Do I Need a Business License for a Rental Property?

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Rental properties are an amazing business opportunity. They give landlords the option to boost their investment portfolio while keeping the control they want over these properties. However, what many property owners fail to recognize is that they are required to both register their properties and obtain specific business licensing for their rentals. 

One aspect of these business licenses that makes things complicated for property owners is that they are not a one-size-fits-all model. Mainly because the business license requirements often vary state by state. If you are considering renting out your property in either Washington, D.C., Virginia, or Maryland, this blog is for you. This post will detail which of these states require a business license and how this can impact your renting abilities.

Washington, DC 

In Washington, D.C., you need a basic business license to rent properties within the District. This business license is required for each location you plan to rent. No matter if it is a four-unit apartment rental or even a basement that you are planning to rent out to a local college student. You still need to obtain a business license. 

Even though the process is slightly different depending on how many units you are renting out. The necessary steps are the same. To obtain this license, landlords need first to check the zoning map and make sure they are compliant with zoning regulations and do not owe more than $100 to the District. Once those aspects are cleared up, these landlords can begin the process of obtaining their business license. This undertaking includes the following guidelines:

  1. You will need to obtain a Certificate of Occupancy from the D.C. Department of Consumer and Regulatory Affairs (DCRA).
  2. Register the business with the Office of Tax and Revenue.
  3. Fill out the Basic Business License application online. 
  4. Register to get a housing inspection, which makes sure your building is up to code. Without this inspection, your Basic Business License may be revoked. 
  5. File with the Department of Housing and Community Development (DCHCD), to register as a rent-controlled unit or ask for an exemption.
  6. Wait for forms to get approved and inspection to be complete.

Navigating the DCRA and these other various offices to obtain your basic business license can be a tedious and overwhelming process for anyone. Plus, one mistake on a form can result in costly denials or delays. If you are looking for assistance with this procedure, consider hiring an experienced real estate property management team that can help walk you through this undertaking and ensure the job is done correctly.

Virginia

There is no state-wide statute in Virginia for business licenses. Yet, local cities and counties may still have regulations and requirements that ask you to obtain these business licenses before you can rent out your properties. If you are planning on renting out a unit, an apartment, or even a private dwelling, check your specific local ordinances to see if there is a basic business license required.

However, there are two regulations that landlords in Virginia need to abide by. They include The Virginia Residential Landlord and Tenant Act, and The Virginia Uniform Statewide Building Code.

  • The Virginia Residential Landlord and Tenant Act applies to landlords who are renting out more than two residential units. This Act establishes the obligations and rights of landlords and tenants. 
  • The Virginia Uniform Statewide Building Code applies to all rental units that a landlord wants to rent out. This Code contains the building regulations and standards that a building must comply with.
Businesswoman signing over a rental property after receiving a business license.

Maryland

Maryland does not require you to have a business license. However, individual cities and counties may have this requirement. For instance, Ocean City right now does require a business license if you want to rent out your properties. According, to their ordinance, any person who engages in any business, activity, or occupation in the Town of Ocean City, Maryland, must first obtain a license for that business. 

If you are considering renting out any of your properties in Maryland, make sure that you check your local area if a business license is required. Failing to do so can leave you subject to violations. Which ultimately can have you facing stiff fines and penalties. 

Why Are Business Licenses Required? 

Many landlords only see these business license requirements as a tedious process requiring additional funds from them. Yet, attaining this license can protect these landlords. Especially if issues arise. These licenses can shield your property, tenants, and personal assets.

Being a landlord can provide you with financial freedom. However, it is crucial to set yourself up to reach this success from the beginning. This means having the necessary permits and licenses complete. Otherwise, you are putting your assets and the safety of your tenants in jeopardy.  If you want to ensure that all the necessary documents are correct and finalized. But, you do not have the time to research these various laws and requirements. Working with a real estate property management company may be the answer you need. 

If You Want to Rent a Property, Work With the Experts

So do you need a business license for your rental property? Unfortunately, the answer is it depends. Not only do these regulations vary by state and city, but the process is not always the same. 

Regardless, if you are planning on renting a property in Washington, D.C., Virginia, or Maryland, you should consider obtaining the assistance of an experienced real estate property management company you can count on. These rental property laws are complicated to understand. And one wrong move can leave you facing hefty penalties, long delays, and even expensive denials.If you would like to get a better handle on these business license laws or want assistance with navigating any other aspects of your rental property, talk to a property manager that can help you through this process from start to finish. Before you decide to rent out your properties, contact Nomadic Real Estate. Let us provide you with the help you need, the resources you can trust, and the expertise that you can count on.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.