Starting out, looking for first investment property

Starting Out
6yFollow

Starting out, looking for first investment property

Ryan Gandy
Real Estate Consultant · Cincinnati, OH · Member since 2020 · 28 posts · 8 votes

Hey all, I'm looking at purchasing my first investment property and have been pre-approved for $225k. I live in the DC suburbs in Maryland and would ideally like to find a property within this region, Baltimore or even Richmond, VA. However, I am open to other markets within driving distance. I'm seeking advice from others on whether you think Baltimore is a good market for a buy and hold, or other areas that might be good for a buy and hold. I haven't ruled out a fixer upper, but at my price point it's hard to find properties in the DC area so that is why I shifted focus to Baltimore or Richmond where properties can be had for under $200k and fixed up. I have also considered townhouses in my current area near Rockville and Gaithersburg, but I have read where most people don't like townhouses because of the HOA fees. I will not be living in the property. Any advice on where to look and what to be wary of when finding properties would be greatly appreciated.

0Reply
107 views

Most Popular Reply

Beck Joyner
Realtor · Harrisburg, PA · Member since 2017 · 43 posts · 43 votes
6y

You should look into the Harrisburg PA metro area; its a strong rental market (BRRRR in some areas and B&H in others) and for $200K you can expect to pick up 3-4 SFR rentals in a decent area that may require just a little cosmetic touch up if that. I like 3 bed (to max out rent) semi detached (tons of inventory) for that price and they will cash flow quite nicely.

5Reply
See this reply in the discussion

35 Replies

Jump to latestLatest
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Check out Harrisburg PA

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Id probably look at Frederick at that budget. Baltimore is not a market for newbies.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    4Reply
  • Jack Seiden
    Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
    6y

    Eastern Shore of md is a good area.

    1Reply
  • Beck Joyner
    Realtor · Harrisburg, PA · Member since 2017 · 43 posts · 43 votes
    6y

    You should look into the Harrisburg PA metro area; its a strong rental market (BRRRR in some areas and B&H in others) and for $200K you can expect to pick up 3-4 SFR rentals in a decent area that may require just a little cosmetic touch up if that. I like 3 bed (to max out rent) semi detached (tons of inventory) for that price and they will cash flow quite nicely.

    5Reply
  • Ryan Gandy
    OP
    Real Estate Consultant · Cincinnati, OH · Member since 2020 · 28 posts · 8 votes
    6y

    @Russell Brazil many thanks Russell

    1Reply
  • Ryan Gandy
    OP
    Real Estate Consultant · Cincinnati, OH · Member since 2020 · 28 posts · 8 votes
    6y

    @Becky Joyner & @Michael P. Thanks for the Harrisburg tip, I'll be looking into that area today. Any particular areas/neighborhoods you suggest?

    1Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    6y
    Originally posted by @Ryan Gandy:

    @Becky Joyner & @Michael P. Thanks for the Harrisburg tip, I'll be looking into that area today. Any particular areas/neighborhoods you suggest?

    Connect with @Mary K. she knows the area 

    0Reply
  • Beck Joyner
    Realtor · Harrisburg, PA · Member since 2017 · 43 posts · 43 votes
    6y

    I'd tour Harrisburg City and its various neighborhoods as well as towns such as Enola, New Cumberland, and Mechanicsburg on the west shore.  Take a look at Susquehanna Township and well.  If you know what neighborhood class you may be targeting, I can be more specific. But I'd start with getting a general lay of the land if I were you.

    4Reply
  • Ryan Gandy
    OP
    Real Estate Consultant · Cincinnati, OH · Member since 2020 · 28 posts · 8 votes
    6y

    @Becky Joyner thanks Becky, that's within a few hours from here and I'll be making a trip soon

    2Reply
  • Mimi Halloway
    Annapolis, MD · Member since 2020 · 4 posts · 0 votes
    6y

    @Russell Brazil I’m interested in your perspective. Why do you feel as if Baltimore is not a good market for new investors? I’m asking because I have been incredibly interested in purchasing a property in Baltimore for a buy and hold. I have been looking at places in highland town and neighborhoods closer to John Hopkins University.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Mimi Halloway:

    @Russell Brazil I’m interested in your perspective. Why do you feel as if Baltimore is not a good market for new investors? I’m asking because I have been incredibly interested in purchasing a property in Baltimore for a buy and hold. I have been looking at places in highland town and neighborhoods closer to John Hopkins University.

     Baltimore is amongst the highest risk markets in the country. Do not let its proximity to DC, which is one of the lowest risk markets in the entire country fool you.

    75 year declining population, housing stock in disrepair, stagnant incomes (which measured against inflation are then actually declining), crime, poverty, real estate taxes that are not only the highest in the state, but in the entire mid atlantic by almost double, sub par tenant base.

    People are drawn to Baltimore because they see what looks like large cash flows on paper.  But people do not have even a 101 level education in investment or finance, so they do not understand that those high yields, are high risk premiums for taking on high risk. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    2Reply
  • Mimi Halloway
    Annapolis, MD · Member since 2020 · 4 posts · 0 votes
    6y

    @Russell Brazil Those are very good points. Thank you for your insight. The reason I’m so drawn to Baltimore is because of the low price point. Do you think that Baltimore county would be a safer investment environment? Or should I try looking in another part of the state? I have also been interested in the northern part of Montgomery county, such as Gaithersburg and Germantown. My main concern are the taxes are much higher and it seems that I would be limited to condos and townhouses in my price point.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Mimi Halloway:

    @Russell Brazil Those are very good points. Thank you for your insight. The reason I’m so drawn to Baltimore is because of the low price point. Do you think that Baltimore county would be a safer investment environment? Or should I try looking in another part of the state? I have also been interested in the northern part of Montgomery county, such as Gaithersburg and Germantown. My main concern are the taxes are much higher and it seems that I would be limited to condos and townhouses in my price point.

     Baltimore county is a big drop in risk from Baltimore city, but is still a very different market from MoCo, DC.

    Tax rate in Montgomery County is actually pretty low which is why I prefer MoCo to many counties. I actually live in the City of Gaithersburg, but dont like rentals in Gaithersburg due to the extra city tax.  Germantown though, is just straight MoCo taxes at 1-1.1%. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    1Reply
  • Keith C.
    Lender · Central Florida Markets · Member since 2017 · 137 posts · 135 votes
    6y

    @Russell Brazil Good luck , I have some flip properties- 30 minutes outside Orlando - solid rental community . Price are around $50k , rehab budget $30k rents are $1100

    PM if there is interest

    1Reply
  • Mimi Halloway
    Annapolis, MD · Member since 2020 · 4 posts · 0 votes
    6y

    @Russell Brazil oh wow that is very interesting. I did not know that. I always thought that MoCo and Howard county had the highest taxes in the state. I’m still learning and trying to make the best decision. It seems as if I have a lot more research to do. Thank you so much for your advice and sharing your knowledge.

    0Reply
  • Tim JacobPro Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 520 posts · 379 votes
    6y

    For 225k you can get a good rental in Baltimore.  The people who come up here and crash and burn are the people who try to nickel and dime everything starting with the property.  They buy D grade stuff for less than 30k and get bad tenants.  They dont understand they cant get voucher tenants in those areas.  Their expenses sky rocket.  They cant get a good pm bc most of us won't work there and they are unwilling to manage themselves.

    If you buy 1 place in a B grade area which you can for that price you will not have the same issues. You might be ok with 2 places though ideally an arv over 130k if you put in some sweat equity but definitely at least 100k. 

    You can really cut down on expenses with a room rental strategy for B and C grade housing.   

    Im not going to make the assumption that every new investor to Baltimore doesn't know how to weigh value and will always step over dollars for dimes by smoking too much hopium.   Thats the same Im sure for any cash flow market or really any market in general.  Get some experienced people to help you out with analysis if you know your not sure.  There was a thread recently here talking about how people with more buy and hold experience.  Pay them if you need to.

    Basically though if you know yourself and arent the sort of person who nickels and dimes things you should be fine with the right business plan no matter where you go.

    3Reply
  • Julius L Evans
    Investor · Rockville · Member since 2020 · 19 posts · 3 votes
    6y
    Originally posted by @Beck Joyner:

    You should look into the Harrisburg PA metro area; its a strong rental market (BRRRR in some areas and B&H in others) and for $200K you can expect to pick up 3-4 SFR rentals in a decent area that may require just a little cosmetic touch up if that. I like 3 bed (to max out rent) semi detached (tons of inventory) for that price and they will cash flow quite nicely.

    Ms. Joyner, good morning. So you're saying the Harrisburg, PA is a good rental market for single family homes, but what is your opinion on the multi-family homes (2, 3 and 4) and (6-16) units/buildings? When you say that $200K can purchase 3 - 4 SFR are you speaking of the down payment on each?

    0Reply
  • Joe Chirdon
    Real Estate Agent · Harrisburg, PA · Member since 2016 · 159 posts · 82 votes
    6y

    Check out the greater Harrisburg, PA area. 

    0Reply
  • Joe Chirdon
    Real Estate Agent · Harrisburg, PA · Member since 2016 · 159 posts · 82 votes
    6y

    I agree with Becky's comment, 

    "You should look into the Harrisburg PA metro area; its a strong rental market (BRRRR in some areas and B&H in others) and for $200K you can expect to pick up 3-4 SFR rentals in a decent area that may require just a little cosmetic touch up if that. I like 3 bed (to max out rent) semi detached (tons of inventory) for that price and they will cash flow quite nicely.

    Becky Joyner, Real Estate Agent"

    0Reply
  • Beck Joyner
    Realtor · Harrisburg, PA · Member since 2017 · 43 posts · 43 votes
    6y

    Hi Julius - overall the Harrisburg area is good for all forms of rentals, whether that be SFR or multi fam. My general observation is that many "cheap" multi fam are in rougher areas and that they also need a ton of work to get them decent and livable. Any market rate multi fam by comparison may appear to be overpriced as a result. But decent multi fam in a decent area is in short supply and high demand.

    When I say that $200K can get your four units, I'm saying you should be able to find 4 rock solid decent semi detached/row homes for $50K each that are move in ready (probably without bells and whistles but that is OK) and will cash flow very nicely for you. Choose the best block you can so you attract quality tenants and if you can afford to invest in some cosmetic upgrades then all the better. 

    Best places to spend your budget IMO, though, to get that good tenant that will stay a few years - bite the bullet and upgrade from oil or electric heat to gas heat if your HVAC already needs replacing. Install central A/C if you can swing it. And kitchens will give you good ROI. If you need to rehab the kitchen, go ahead and fix any weird cabinet/appliance layouts. Again, its about getting and retaining a quality tenant to reduce your turnover.

    2Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    6y

    @Ryan Gandy

    As a Baltimore investor I second @Tim Jacob, and would like to go against Russell on this one.

    Baltimore is a good market specifically with your price point.

    I started in Baltimore as a new investor and it has been 15 years still investing.

    Main problem is not just Baltimore, also out-of-state investor who want to invest minimum but want to get maximum.

    Baltimore is a good market for 100k to 200k price points. Solid neighborhoods, mid income tenant base, okay credit, easy to get %1.

    Main think is you need to learn the city, or work

    with somebody who knows the city.

    3Reply
  • Alan C.
    Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
    6y

    I agree @Ozzy Sirimsi that you can do well in Baltimore, but you need to do a lot research first. As @Russell Brazil stated, Baltimore has lots of problems and is not landlord friendly. However, if you do your due diligence and get a handle on which areas are the safest and most stable, you can get some bargains. Especially from other out-of-town investors who didn't do their homework before investing in Baltimore City.  

    For your $225K you can get 2-3 turnkey rentals in decent areas that could generate $3600 or more in gross rental income. Be careful not to spend your entire line of credit on the purchases. Keep 6 months of reserves for all the things that could go wrong.

    I’m a full-time wholesaler in the Baltimore-DC area and president of MAREIA, a local investor association. Feel free to contact me for help in the Baltimore market.

    0Reply
  • Daniel Scott
    Orlando, FL · Member since 2020 · 34 posts · 10 votes
    6y

    @Keith C. I’m interested

    0Reply
  • Tyrone Marson
    Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
    6y
    Originally posted by @Russell Brazil:
    Originally posted by @Mimi Halloway:

    @Russell Brazil I’m interested in your perspective. Why do you feel as if Baltimore is not a good market for new investors? I’m asking because I have been incredibly interested in purchasing a property in Baltimore for a buy and hold. I have been looking at places in highland town and neighborhoods closer to John Hopkins University.

     Baltimore is amongst the highest risk markets in the country. Do not let its proximity to DC, which is one of the lowest risk markets in the entire country fool you.

    75 year declining population, housing stock in disrepair, stagnant incomes (which measured against inflation are then actually declining), crime, poverty, real estate taxes that are not only the highest in the state, but in the entire mid atlantic by almost double, sub par tenant base.

    People are drawn to Baltimore because they see what looks like large cash flows on paper.  But people do not have even a 101 level education in investment or finance, so they do not understand that those high yields, are high risk premiums for taking on high risk. 

    @ Russel great information here, so entry into the DC market begins at least at $500K starting point?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Tyrone Marson:
    Originally posted by @Russell Brazil:
    Originally posted by @Mimi Halloway:

    @Russell Brazil I’m interested in your perspective. Why do you feel as if Baltimore is not a good market for new investors? I’m asking because I have been incredibly interested in purchasing a property in Baltimore for a buy and hold. I have been looking at places in highland town and neighborhoods closer to John Hopkins University.

     Baltimore is amongst the highest risk markets in the country. Do not let its proximity to DC, which is one of the lowest risk markets in the entire country fool you.

    75 year declining population, housing stock in disrepair, stagnant incomes (which measured against inflation are then actually declining), crime, poverty, real estate taxes that are not only the highest in the state, but in the entire mid atlantic by almost double, sub par tenant base.

    People are drawn to Baltimore because they see what looks like large cash flows on paper.  But people do not have even a 101 level education in investment or finance, so they do not understand that those high yields, are high risk premiums for taking on high risk. 

    @ Russel great information here, so entry into the DC market begins at least at $500K starting point?

     You can be well below that number. You could be in a fixer upper in say Hyattsville for like $300k. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free