Rental Property Investor · New York, NY · Member since 2020 · 9 posts · 2 votes
looking for some advice on things to watch out for, or to avoid as a first time long distance real estate investor. Any/all advice, both specified for baltimore, md. or just in general, is welcome.
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
5y
@Michael Silverman it's a very long list. There are just so many dynamics to real estate investing that the newbies don't seem to get. So many watch HGTV or Youtube and believe this stuff is simple and basic. Investing in Baltimore has a very high failure rate. For one, it goes block by block. Yes, it's great to have a trusted realtor but still that motivation is to get the commission. I'ts very easy to look on paper, see a $10,000 property then believe you can put in $15,000 and clear $600 in cash flow. For one, that investment you picked may cost $100,000 to fix up and you don't know. It may not even be fixable where you lose everything. If you do fix it and it's drastically underwater you can end up with negative cash flow (very common). It could be an asset that is un-rentable in the first place. There are places that are so hostile that you cant get a quality renter. When you do, they last 3 months and you are putting $10,000 into repairs every few months. You can buy in a neighborhood where every time you put in a furnace, cabinets, appliances or anything they are stolen the next day and you are out thousands. You can buy a place for $60,000 and feel you are ready to roll and some crack head breaks in and steals cooper that can net them $20 but costs 3 thousand dollars in damage. Then you have all the govt bureaucracy that is anti landlord with the multiple and unnecessarily changing legislation. That is the tip of the iceberg. If you do decide to go this route I suggest you visit the area as much as you can. Read all these forums and study the horror stories. Talk to the experienced guys here and if you are ready to make that move and have the financing in place, make sure everyone you work with has tons of experience specifically in Baltimore. There are several places in the city where quality property managers wont even manage. One thing you have is this forum. There are tons of people who invest there with hundreds of years of collective experience. Study up and ask questions consistently. You may want to start off in Baltimore county as opposed to the city and may consider a turnkey investment.
Rental Property Investor · 75093 · Member since 2020 · 21 posts · 10 votes
5y
I am a newbie to this, but I have remote rentals. In my case, I found a realtor that I trust who also does property management. She has an outstanding reputation. I purchased thru her as a realtor, moved to the location as my primary residence for a year (I travel/work from home), then turned the unit over to her property management company/team after my first year enjoying the unit. Since then I have closed on another unit at an investment property and plan to turn the property over to her team to manage as a vacation rental (beach location).
My advice so far, find a property manager & realtor you trust. There seem to be a lot of horror stories about bad property managers out there. Especially in the Short Term/Vacation Rental market.
Baltimore can be difficult to invest in if you don't know the area. It's very neighborhood specific and even block specific. Having someone you trust and that is knowledgeable on the ground would be helpful.
Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
5y
@Michael Silverman In addition to other people's advice, know the neighborhood before you actually pull the trigger. It's about the location as much as the property. Don't get enticed by super cheap properties without fully understanding the pros and cons. And if you invest OOS, plan to scale. If you're looking to just buy one and be done with I wouldn't do it. Hope this helps.
Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
5y
1- Work with somebody who knows investing. There are investor/agents here in BP, you can talk to them.
2- Baltimore City housing inventory is old, so most likely you will need updates , so you will have to do some kind of an upgrade, so you need that local person.
3- Your budget dictates where you invest in Baltimore, lower the budget higher the profit but also higher the risk.
4- Reach out to people, ask questions from Baltimore, most of us really helpful.
Rental Property Investor · New York, NY · Member since 2020 · 9 posts · 2 votes
5y
@Leslie McIntosh thank you for the advice. And, yes I too have heard those horror stories, as well. I definitely don't want to become one the characters in that movie, so thanks again!
Rental Property Investor · New York, NY · Member since 2020 · 9 posts · 2 votes
5y
@Gayle Melnick I had begun to get this feeling after conducting some repetitive searches on trulia, and "google earthing" the entire neighborhood. Thank you so much for that tip, that was super helpful as a solid piece of Info rather than my own personal assumption.
Rental Property Investor · New York, NY · Member since 2020 · 9 posts · 2 votes
5y
@Jonathan Oh Absolutely! It definitely does! I plan on buying atleast 2-3 properties within the next 9 months to a year, all in the baltimore area. Now, not to sound ignorant, but what do you mean by, and what is your reasoning behind the "must scale" statement.
Rental Property Investor · New York, NY · Member since 2020 · 9 posts · 2 votes
5y
@Mark Cruse thanks for that, but why?
I keep hearing that; how difficult it can be, even for locals. I love a challenge, but please shine the light for me if you think I might step in a ditch.
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
5y
@Michael Silverman it's a very long list. There are just so many dynamics to real estate investing that the newbies don't seem to get. So many watch HGTV or Youtube and believe this stuff is simple and basic. Investing in Baltimore has a very high failure rate. For one, it goes block by block. Yes, it's great to have a trusted realtor but still that motivation is to get the commission. I'ts very easy to look on paper, see a $10,000 property then believe you can put in $15,000 and clear $600 in cash flow. For one, that investment you picked may cost $100,000 to fix up and you don't know. It may not even be fixable where you lose everything. If you do fix it and it's drastically underwater you can end up with negative cash flow (very common). It could be an asset that is un-rentable in the first place. There are places that are so hostile that you cant get a quality renter. When you do, they last 3 months and you are putting $10,000 into repairs every few months. You can buy in a neighborhood where every time you put in a furnace, cabinets, appliances or anything they are stolen the next day and you are out thousands. You can buy a place for $60,000 and feel you are ready to roll and some crack head breaks in and steals cooper that can net them $20 but costs 3 thousand dollars in damage. Then you have all the govt bureaucracy that is anti landlord with the multiple and unnecessarily changing legislation. That is the tip of the iceberg. If you do decide to go this route I suggest you visit the area as much as you can. Read all these forums and study the horror stories. Talk to the experienced guys here and if you are ready to make that move and have the financing in place, make sure everyone you work with has tons of experience specifically in Baltimore. There are several places in the city where quality property managers wont even manage. One thing you have is this forum. There are tons of people who invest there with hundreds of years of collective experience. Study up and ask questions consistently. You may want to start off in Baltimore county as opposed to the city and may consider a turnkey investment.
Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
5y
@Gayle Melnick
That’s 100% true Baltimore is a unique area with Million dollars home sprinkled throughout and $10k homes a few blocks away. Tons of potential but do your due diligence
@Jonathan Oh Absolutely! It definitely does! I plan on buying atleast 2-3 properties within the next 9 months to a year, all in the baltimore area. Now, not to sound ignorant, but what do you mean by, and what is your reasoning behind the "must scale" statement.
By scaling I mean acquiring more and more properties. But seems likes it was in your intention anyways. Good luck!
Rental Property Investor · New York, NY · Member since 2020 · 9 posts · 2 votes
5y
@Mark Cruse thanks alot for the detailed and thought out response, i can see you have put your years into this business. This reply was super helpful and educational in multiple ways for me. i will definitely be completing alot more due diligence than i already have, thanks to you. A turnkey does sound like it could be a good starting point from what you have just told me. Hope to cross paths somewhere along this journey. Thanks again
Long distance management can be stressful and challenging. I am active duty military and owned a rental in Colorado Springs until this past summer. I moved all over the country and the last time I physically saw the property was in 2013. We went through a few property managers, one stole all of the tenant's security deposits, was taken to court and lost his licenses. We luckily got 50% of our tenants money back and had to pay out the difference. Lack of maintenance was the ultimate issue, we simply could not apply the attention the house needed. We ended up spending $30K to fix it up for a sale and it still needed an HVAC/AC. Luckily the CS market was so hot our equity was through the roof and the house almost doubled in value in a 10 year period, we killed it on the sale. Overall, we got lucky and I knew it, led me to pass up on keeping a house in Michigan as a rental when I moved to Alabama. I will sell my North Carolina home when I move next, no more long distance rentals for me! Best of luck if you go for it.
I was told that Baltimore City law is very pro-tenants. Good tenants tend to be picky about location. Bad tenants: eviction is a long dragged out court process.
Credit check all applicants, don't just take everyone just because they give you the entire year's rents in advance.
Mark Cruse speaks wisdom. What he says about Baltimore is true about many cities that are being promoted as the next great thing. With turnkey operators you will have a host of other issues, as you will will inevitably be dealing with a more knowledgeable and experienced seller than you can ever be as a remote buyer. In terms of negotiating a price and management contract, which side of the bet would you prefer to be on?
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
5y
@Huong T Nguyen with some I've had in the past, if any of them could have came up with a years worth of rent at one time I would have taken it. The vast majority couldn't get past the six month mark. LOL
Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes
5y
@Michael Silverman network and make connections with local contractors, real estate professionals if possible. I have properties 2 hours away and it’s nice to be able to call someone local when there’s issues. I did live there at one point so that’s what makes it somewhat easier for me.