Batimore Rentals - Where's Cash Flow?

Question

I am looking to invest in my first property. I see quite a few townhomes in Baltimore County under 70K, what are some great neighborhoods for rentals investments that have higher cash flow yields?

Account Closed · Answer

In Baltimore you can buy a house for under $10,000 and rent for $300-700, that's good cash flow, you may not want to invest in that area.

• Cash flow in my opinion is a function or your negotiating skills, your ability to use power prospecting methods and to create leads that make sense.
• You probably won't find a deal on the active MLS, they are usually over-price or priced at market.
• There are a number of ways you can create cash flow using some creative methods.
• Here is one we are working on now; seller wants out of his two unit houses in Hamilton, the mortgage payment is $1,300 includes PITI. The house is in perfect condition, the rents are $2,200 a month, but vacant. The house will rent with no problem.
• The seller will do a delayed settlement for 5 years subject to the existing mortgage.
• The seller will be relieved of the mortgage payment and the buyer (delayed settlement buyer with equity interest) will benefit from cash flow a reduction of the mortgage.
• So these deals are out there if you are looking and understand how to write the offer..
• There lots of vacant houses with high mortgages that could be rented on a option or lease option or a delayed settlement situation.
• You can also find these deals, control the property and sell your interest to a user (this user you are looking for can't get a mortgage due to job loss, illness or whatever, but they have money to pay you a fee). You can assign your interest to your assignee with release of liability from the legal owner. I have made up to $7,000 doing these deals.
• Is there a name for this process? Yes.
• I call it "Contract of sale with right of possession, subject to the existing mortgage with a delayed settlement".
• These deals are everywhere when you know where to look and have the contract ready with the special clauses

Call anytime, glad to share some information with you.

Charles

Russell Brazil · Answer

@Ned Carey, Gabriel G. all may have input on this.  I am very risk averse, so I do not invest in those areas. However the best way to mitigate risk is with market knowledge. What I view as very risky areas to invest in, those previously mentioned probably think are less risky...and they probably think the areas I invest in, and have a lot of market knowledge of are more risky.

Ned Carey · Answer

@Erica N.I don't know the county but I would guess some areas of Dundalk.

There are lots of areas in the city but I can't tell you. I can show you. That is because every neighborhood has booth good and bad areas. In some extreme cases we talk about the good end of the block vs the bad end of the block.  If you drive the neighborhood and actually see the difference you will understand what I mean.

An example would be BelAir Edison. This is considered a decent mid to low end rental area. The part  near Belair road is not as nice as the part closer to Sinclair ln. and Parkside. There is no secret to this you only have to drive the neighborhood to see the difference.

Account Closed · Answer

Title companies are suppose to represent you, they will do within the law what you request.

Account Closed · Answer

Contract of sale with right of possession, subject to the existing mortgage with a delayed settlement".

• Is this just a 'line/clause' you include in the purchase and sales contract? YES, THIS METHOD IS A LEVERAGE CASH FLOW SYSTEM that can be created without immediate ownership that has great benefits to you as the investor, the owner of a vacant house with payments and to your assignee who probably couldn't get a deal due to past credit history ---- a win for all! 
• It seems that it would definitely prevent the exercising of the due on sale clause. NO - HAS NOTHING TO DO WITH THE LENDER - IT IS BETWEEN YOU AND THE SELLER TO PAY THE SELLER THE AMOUNT OF THEIR MONTHLY PAYMENT. 
• But how does it give buyer interest in the property? THE INTEREST THEY HAVE IS ONLY AN "EQUIITABLE INTEREST", for more of a secured interest they can record their contract of sale.
• Strong enough interest that seller would not be able to recoup property after buyer has made significant upgrades and/or has property positively cash flowing. RECORD, RECORD! You can also have a deed signed over to you to be held until you close (in 1-5 years).

Charles - Baltimore

Eric H. · Answer

Charles Parrish

You can also have a deed signed over to you to be held until you close (in 1-5 years).

What kind/form of deed  (i.e. special warranty, general warranty, quit claim)? Please provide title company/closing attorney in Baltimore that is willing to close on these types of deals.

Thanks!!

Eric H. · Answer

Charles Parrish

"Contract of sale with right of possession, subject to the existing mortgage with a delayed settlement".

Is this just a 'line/clause' you include in the purchase and sales contract? It seems that it would definitely prevent the exercising of the due on sale clause. But how does it give buyer interest in the property? Strong enough interest that seller would not be able to recoup property after buyer has made significant upgrades and/or has property positively cash flowing.

Thanks in advance!

Sincerely,

Eric H.

Christina R. · Answer

Charles Parrish  I still don't know Baltimore City and County very well - learning something every day - but as you probably already know, there's good and bad in both and it can literally be a block apart.  I've found good ROI and properties that meet the 2% rule (search that here on BP and you'll find numerous threads on what that is, if you don't know already) but they are in risky neighborhoods. I would love to find the great neighborhoods that have as high a yield that are not class C or C---, lol, but those I believe are the true off market deals that you happen to snag at a buy price that makes it a no-brainer.

Let me know if I can help further,

Christina

Batimore Rentals - Where's Cash Flow?

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