First Time Investor Questions?

31 Replies

Good Afternoon BP, 

First of all thank you for all of the knowledge and information you guys post. With that being said, I am buying my first property in Baltimore, MD. I lived there for two years but due to work i am currently located in Los Angeles, CA. I have enough saved for a property under 110k with a 20-25 percent down payment.  I am only interested in multi-families. 

I look at properties on real estate sites like zillow, redfin, etc. 

I am at a point where I am stuck. Should I speak with banks first to see what I can get pre-approved for and then find a house . Or find the house then speak with banks? 


With being an out of state investor will I have to speak to banks in Maryland or will banks out of state be willing to invest? 

If there are any experience real estate agents that can guide me through the process please feel free to reach put. 

Thank you, 

You should get your financing in place first so you have a solid idea of your budget. If you wait til you find the deal, you may lose it while you're shopping around for financing.

Your price point is too low for a multi

Definitely get financing sorted out beforehand because you’ll need to be ready to act fast once you find a property.

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

@Jonathan Dawkins you don’t need a lender in the state. A lot of us out of state investors use the same few people who are licensed in several states. Just make sure you don’t go to a big bank who don’t know how to process a non owner occupied loan.

Originally posted by @Eric G. :

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

I am going to disagree with you guys.  

Location is the key on this, he can find a duplex for 110K in an okay neighborhood in Baltimore. 

They don't come everyday, but you can find it. 

We recently got 2 multi units under contract, one for 72K ( needs 25K work in it) and another for  85k ( needs 15K wok in it)  

When you see it you need to jump on it.

@Ozzy Sirimsi but if he has the down payment saved for under $110k purchase price, and that creating his ceiling, he likely doesnt have the the rehab money as well.

Originally posted by @Russell Brazil :

@Ozzy Sirimsi but if he has the down payment saved for under $110k purchase price, and that creating his ceiling, he likely doesnt have the the rehab money as well.

 Touche!!! I focused on the total amount, I guess he needs to save little bit more :))))

I agree with some of the other posters that you can find a 2 unit (I've even seen some 3 units) under 110k.  Definitely take care of your financing first and try to find the best rate.  Then, it's time to go shopping and you'll definitely want to plan a visit to see lots of properties in different neighborhoods, especially those you may have not visited while you were living here.

Happy new year!

@Jonathan Dawkins Hey Jonathan Congratulations on getting to the point where you are ready to make your first deal! I am new to investing and BiggerPockets. I am a Real Estate Agent in Texas and work with several investors out of state. I would say get preapproved first unless you are a cash buyer. Everyone will take you more seriously. I usually recommend my clients seek out a local lender they can speak to face to face.  

Thanks!

Originally posted by @Kyle Quaranta :

Definitely get financing sorted out beforehand because you’ll need to be ready to act fast once you find a property.

Thanks, and yes being a new investor , I am staying away from big banks. I found a few local credit unions that focus on small multi family lending.

Originally posted by @Lane Kawaoka :

Jonathan Dawkins you don’t need a lender in the state. A lot of us out of state investors use the same few people who are licensed in several states. Just make sure you don’t go to a big bank who don’t know how to process a non owner occupied loan.

Thanks. I lived in Canton for two years before moving to LA. I understand Baltimore is a block by block city. I honestly enjoy an area that is not the best. Some people stay away from areas in Baltimore and some dont. I am open to all areas honestly. Areas like Druid Hill, Brooklyn Park and even cherry hill. But for now with buying my first property its best to be on the safe side. When I have extra money to invest in those areas, I will. I see properties all the time under 100k but they are gone pretty quick. After seeing what the banks can do for me, I will be able to make a better decision.

Originally posted by @Ozzy Sirimsi :
Originally posted by @Eric G.:

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

I am going to disagree with you guys.  

Location is the key on this, he can find a duplex for 110K in an okay neighborhood in Baltimore. 

They don't come everyday, but you can find it. 

We recently got 2 multi units under contract, one for 72K ( needs 25K work in it) and another for  85k ( needs 15K wok in it)  

When you see it you need to jump on it.

Hey @Jonathan Dawkins David Greene has a book on Long Distance RE Investing (no affiliation). I think the book may be beneficial to you. 

Also, in terms of speaking to banks, I think you get that out of way and get a pre-approval. 

@Jonathan Dawkins just make sure you are working with an individual who has done many non owner occupied loans. Those guys are a dine a dozen and their clothing is always spiffy.

Originally posted by @Ozzy Sirimsi :
Originally posted by @Eric G.:

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

I am going to disagree with you guys.  

Location is the key on this, he can find a duplex for 110K in an okay neighborhood in Baltimore. 

They don't come everyday, but you can find it. 

We recently got 2 multi units under contract, one for 72K ( needs 25K work in it) and another for  85k ( needs 15K wok in it)  

When you see it you need to jump on it.

           If you found a multi-unit property for 72K, and 85K, you're in a terrible area. The only multi families even on the market near that price range right now are near York and Woodbourne which is easily one of the worst neighborhoods in Baltimore. Thats 521 Post in the Northern District which two years ago was the most violent post in the entire city. I'm not saying you can't find a DEAL but its very unlikely to make something work at that price point in an okay neighborhood in this market.

Originally posted by @Eric G. :
Originally posted by @Ozzy Sirimsi:
Originally posted by @Eric G.:

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

I am going to disagree with you guys.  

Location is the key on this, he can find a duplex for 110K in an okay neighborhood in Baltimore. 

They don't come everyday, but you can find it. 

We recently got 2 multi units under contract, one for 72K ( needs 25K work in it) and another for  85k ( needs 15K wok in it)  

When you see it you need to jump on it.

           If you found a multi-unit property for 72K, and 85K, you're in a terrible area. The only multi families even on the market near that price range right now are near York and Woodbourne which is easily one of the worst neighborhoods in Baltimore. Thats 521 Post in the Northern District which two years ago was the most violent post in the entire city. I'm not saying you can't find a DEAL but its very unlikely to make something work at that price point in an okay neighborhood in this market.

You dont even know the adress, you already called it terrible :)))

Why does everyone started out insist on starting with a multi family unit and then even out of state? Wouldn't it make sense to start with 1 unit and something in state. All states have areas you can invest in regardless of budget. Unless you have a lot of money and can afford the risk why not learn the industry and then build from there?

Originally posted by @Ozzy Sirimsi :
Originally posted by @Eric G.:
Originally posted by @Ozzy Sirimsi:
Originally posted by @Eric G.:

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

I am going to disagree with you guys.  

Location is the key on this, he can find a duplex for 110K in an okay neighborhood in Baltimore. 

They don't come everyday, but you can find it. 

We recently got 2 multi units under contract, one for 72K ( needs 25K work in it) and another for  85k ( needs 15K wok in it)  

When you see it you need to jump on it.

           If you found a multi-unit property for 72K, and 85K, you're in a terrible area. The only multi families even on the market near that price range right now are near York and Woodbourne which is easily one of the worst neighborhoods in Baltimore. Thats 521 Post in the Northern District which two years ago was the most violent post in the entire city. I'm not saying you can't find a DEAL but its very unlikely to make something work at that price point in an okay neighborhood in this market.

You dont even know the adress, you already called it terrible :)))

 Prove me wrong. If i'm wrong, Im wrong.

I need to find a home inspector in the Union, NJ area

Originally posted by @Eric G. :
Originally posted by @Ozzy Sirimsi:
Originally posted by @Eric G.:
Originally posted by @Ozzy Sirimsi:
Originally posted by @Eric G.:

Welcome @Jonathan Dawkins

        I am also a newer investor who is only interested in multi-family properties in Baltimore. I currently have a two unit property in the Southeast District of the City. First, I agree with everyone on this post who advises you to get your financing in order. I feel like it would be really hard/disappointing to put a lot of work into a potential deal to find out the bank won't finance it anyway. With that being said, yes, speak to your bank or financier first. Second, I think you might be a little low on the multi family price point as @Russell Brazil said. Most MFH at that price point are going to need a substantial amount of work. I'm no expert but I would think its accurate to say that a "turn key" MFH that needs no work will run you anywhere from 160-260 depending on the neighborhood. If you went into Canton or Federal Hill it can be substantially higher or even double that estimate. I have a list of MFH that are on the market right now, I would be happy to share that with you. (I'm not a realtor though)

Is there a specific reason you want to invest in Baltimore while living in LA? Also, are you planning to move back here because you could potentially occupy a MFH at a higher price by putting down less, just a thought to a potential strategy. Best of luck.

-Eric

I am going to disagree with you guys.  

Location is the key on this, he can find a duplex for 110K in an okay neighborhood in Baltimore. 

They don't come everyday, but you can find it. 

We recently got 2 multi units under contract, one for 72K ( needs 25K work in it) and another for  85k ( needs 15K wok in it)  

When you see it you need to jump on it.

           If you found a multi-unit property for 72K, and 85K, you're in a terrible area. The only multi families even on the market near that price range right now are near York and Woodbourne which is easily one of the worst neighborhoods in Baltimore. Thats 521 Post in the Northern District which two years ago was the most violent post in the entire city. I'm not saying you can't find a DEAL but its very unlikely to make something work at that price point in an okay neighborhood in this market.

You dont even know the adress, you already called it terrible :)))

 Prove me wrong. If i'm wrong, Im wrong.

 Both of them are in Lake Walker area, over northern parkway.

Get your financing in order before shopping, then you will have a realistic budget and will be ready to jump on the right deal when it presents itself.

You do not have to use a lender in the area of the property, it's all about finding a lender who's lending area covers where you want to buy.

Personally when we used a local lender for buying our personal home I hated the experience and having to also go to their office when it was good for them. For our first rental property we bought we started with Quicken and then ended up using Wells Fargo (Really wanted to use Quicken but had issues with us wanting to Quit Claim the property). Either way loved both of them and how everything could be done online or over the phone. My husband and I both work a lot and it's very difficult getting us both in the same room especially during normal business hours. So I now recommend people think about financing through somewhere that's not your typical brick and mortar bank. Funny thing is I am a banker and work in lending for a traditional bank.

Hey Jonathan! So...financing...you have to use a lender that is licensed to loan in the state in which you are buying. With that said though, I would first focus more on the properties. Wait until you have a pretty solid handle on what or where you are going to buy before dealing with the lender. Reason being, what if you don't end up buying in Balti for some reason and then you've just gone through the lending side (which is an annoying side) for potentially no reason. Now if you need to ensure you are qualified for some particular number, that may be a different story as you need to know what you definitely qualify for. But if that isn't in question, I'd focus on properties first.

The thing with the properties too is that they require more research and time (in my opinion). If you are just shopping on Zillow and Redfin and those, that can be dangerous. I grew up in Atlanta and spent a lot of my adulthood there as well, and I remember one time I searched for properties on one of those sites, and even some on the MLS, and found some that looked fantastic on paper. Then I went to visit them and they were terrible. The location was dangerous, the properties weren't in half as nice condition as the listings suggested, and I would have put myself in a real pickle had I gone for them. And I'm freakishly familiar with Atlanta, and I still didn't know those roads. So you have to be extremely careful in what you buy. If you do the long-distance thing and outside of turnkey companies, I wouldn't make a single move on a property until you've seen it in person and gotten more information. So all of that is kind of intensive, long before financing comes into play.

Just my two cents!

Originally posted by @Tim Youse :

You should get your financing in place first so you have a solid idea of your budget. If you wait til you find the deal, you may lose it while you're shopping around for financing.

Actually this is a good point too though, contrary to what I said. If Baltimore is a solid focus, knowing who you will use for financing and having that relationship started may be beneficial for grabbing the property fast. So with this side of it in mind, I tweak my answer to-- find a good balance between researching the lenders and finding the properties. Don't spend an inordinate amount of time on the lenders preemptively, but maybe have at least a couple lined up and on standby while you property hunt.

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