First Time Investor Questions?

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First Time Investor Questions?

Jonathan Dawkins
Los Angeles, CA · Member since 2015 · 10 posts · 4 votes

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, 

1Reply
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Ozzy SirimsiBusiness Member
Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
8y
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.

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  • Tim Youse
    Rental Property Investor · Baltimore, MD · Member since 2016 · 153 posts · 158 votes
    8y

    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.

    1Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    Your price point is too low for a multi

    [email protected]301-893-4635Podcast Guest on Show #192
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    2Reply
  • Kyle Quaranta
    Real Estate Agent · Baltimore, MD · Member since 2017 · 31 posts · 8 votes
    8y
    Definitely get financing sorted out beforehand because you’ll need to be ready to act fast once you find a property.
    1Reply
  • Eric G.
    Honolulu, HI · Member since 2017 · 85 posts · 73 votes
    8y

    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

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y
    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.
    0Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    8y
    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.

    3Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    @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.

    [email protected]301-893-4635Podcast Guest on Show #192
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    1Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    8y
    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 :))))

    1Reply
  • Nicole B.
    Real Estate Agent · Baltimore, MD · Member since 2016 · 142 posts · 75 votes
    8y

    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!

    1Reply
  • Gina Birdsong
    San Angelo, TX · Member since 2017 · 21 posts · 5 votes
    8y

    @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.  

    0Reply
  • Jonathan Dawkins
    OP
    Los Angeles, CA · Member since 2015 · 10 posts · 4 votes
    8y
    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.

    0Reply
  • Jonathan Dawkins
    OP
    Los Angeles, CA · Member since 2015 · 10 posts · 4 votes
    8y
    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.

    0Reply
  • Jonathan Dawkins
    OP
    Los Angeles, CA · Member since 2015 · 10 posts · 4 votes
    8y
    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.

    0Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    8y

    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. 

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y

    @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.

    0Reply
  • Eric G.
    Honolulu, HI · Member since 2017 · 85 posts · 73 votes
    8y
    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.

    3Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    8y
    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 :)))

    0Reply
  • Paul Camuto
    Real Estate Coach · Robbinsville, NJ · Member since 2017 · 185 posts · 99 votes
    8y

    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?

    2Reply
  • Eric G.
    Honolulu, HI · Member since 2017 · 85 posts · 73 votes
    8y
    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.

    0Reply
  • William Pope
    Millburn, NJ · Member since 2017 · 25 posts · 9 votes
    8y

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

    0Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    8y
    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.

    0Reply
  • Janelle GroenhoutPro Member
    Investor · Williston, ND · Member since 2017 · 180 posts · 36 votes
    8y
    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.
    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    8y

    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!

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    8y
    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.

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    8y
    Originally posted by @Paul Camuto:

    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?

    I half-agree with this one. Starting with a multi-family certainly isn't, and shouldn't be, everyone's focus (as many people hear it should be). But I will say that starting in-state isn't necessarily an option for everyone either. I'm in LA and regardless of most things not being affordable, anything that even pretends to be affordable even within some hours' range of driving, won't cash flow. I definitely don't think it's worth it to stay in-state if the numbers aren't there, and in a lot of cases they won't be. Especially if you're on the west coast. Technically you're right- all states have areas you can invest in regardless of budget, but that doesn't mean those purchases would be smart ones.

    I do agree though that everyone should start simple. Start with something that lets you learn the basics- numbers, due diligence, management, etc. before going with something that involves crazy-advanced stuff. Long-distance rehabbing would certainly qualify as advanced (to the point about not going long-distance), but there are ways to invests out-of-state without the advanced stuff.

    1Reply
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