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, 

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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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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    8y

    @Jonathan Dawkins There is no one right answer. In general you should have some idea of what kind of financing you can get and what that lenders criteria are.  Other wise you may try to move forward on a deal that has no chance because you have made a bad assumption about what kind of terms you can get. 

    An experienced agent like @Russell Brazil would only need about two minutes to figure out you don't really have a clue where the money will come from. There are a LOT more variables for an investor loan then a homeowner loan. Most importantly will you title the property in your own name or in an LLC or other entity.

    On the other hand, don't wait until you have absolute surety where the money will come from, because you need to be looking at properties if only to learn the market. 

    I have to agree with @Ali Boone on this one. Why do you want a multi-family? I think many investors somehow assume it is a better investment. Maybe in general they are but that would be way to general a statement to assume for a given deal. It is my feeling that in many markets, multi-family properties are not as good an investment as SFH. That is certainly true in Baltimore. Demand is high right now which has pushed prices up. I believe larger multi-family properties to have a very high risk factor that few investors recognize..

    @Eric G.

    As Ozzy says you can find deals in that price range. I acquired both of my two unit properties at well below that price. I have also sold small multi family properties to other investors at well below that price range. You certainly are not going to get a top neighborhood at that price but relative to Baltimore standards it does not have to be a "terrible neighborhood" either.  I would not consider York and Woodbourne any where close to one of the worst neighborhoods in Baltimore.

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  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y
    Jonathan Dawkins you should talk to a bank first. You might not have the debt to income levels needed. Let me know if you need a few good lenders.
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  • Eric G.
    Honolulu, HI · Member since 2017 · 85 posts · 73 votes
    8y

    @Eric G.

    As Ozzy says you can find deals in that price range. I acquired both of my two unit properties at well below that price. I have also sold small multi family properties to other investors at well below that price range. You certainly are not going to get a top neighborhood at that price but relative to Baltimore standards it does not have to be a "terrible neighborhood" either.  I would not consider York and Woudbourne any where close to one of the worst neighborhoods in Baltimore.

     @Ned Carey, if you're saying you've made deals at that price point, great I would love to find some well below that price range in the future. Right now, that's not what the market currently reflects but you have more experience in that so you're probably right. 

             When it comes to the neighborhood issue, you might want to "reconsider". York and Woodbourne isn't actually a "neighborhood". Were talking Woodbourne-McCabe and Winston-Goans/Richnor Springs. I used to work this area on a daily basis when I was with the Northern District (City Police). If you don't think so, I would highly encourage you going on a ride along with BPD on that post. Without getting into excessive crime stats, lets just acknowledge the fact there was a murder on 500 Richwood two days ago. Not to mention the double murder on the same block in late august. The York rd corridor in that area itself has seen over 2 murders in that neighborhood. If you don't consider that to be "anywhere close" to one of the worst neighborhoods in Baltimore then more power to you.

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  • Shalante Davis
    Fort Washington, MD · Member since 2016 · 41 posts · 7 votes
    8y

    What is your Exit Plan on this property (buy and hold or fix and flip)? In some parts of Baltimore particularly in the city turn-key rentals may be ideal. 

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    8y

    @Eric G. I presume you are or were a police officer. Thank you for your service. I think cops in this city have unfairly gotten a bad rap and do not get the respect they deserve.  Not just from citizens but also from higher ups and politicians. 

    I did not say that was a  'Neighborhood" You did.

    You said Woodbourne. Richwood is seven blocks south. The southern direction definitely gets worse. Yet six blocks North is Belvedere Square, clearly a very nice area.  In fact only 1 -2 block west of the 500 Blk of Richwood is a pretty nice area. If you had said Richwood I probably wouldn't have commented.  

    I could have been more clear. I should have said "close to Being one of the worst neighborhoods" vs simply "Close to"  What I wrote could imply it was not physically close to a bad area. It is. However many very nice areas are even closer. Most of one block to the west of York avenue is very nice, whereas much of one block to the east of York Ave is very bad.

    1Reply
  • Logan AllecBusiness Member
    Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
    8y

    @Jonathan Dawkins, make sure you understand the tax implications of investing in MD from CA.  Good luck!

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