Charles Village Baltimore 10 unit multifamily investment

Professional · Atlanta, GA · Member since 2015 · 15 posts · 1 vote

I'm looking at doing my first real estate investment in Charles Village Baltimore. The property is a 7 unit 6,603 SF recently renovated brick 2-story. 100% leased with 5 1-brs, 1 2-br and 1 3-br. Annual rent at 80k. Gross expenses $24k. Asking price $570k.

Rent/unit seems to be at market currently and with the recent renovation I understand there's not a lot of potential "value add". However, I'm thinking with the recent riots, investors are a bit gun shy here and I might get a low ball offer accepted. Would a 10% cap be decent for this neighborhood? John Hopkins is right down the street.

Any feedback on your sentiments on Baltimore, return thresholds for this product type there or details around the Charles Village neighborhood much appreciated. Many thanks!

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Ned CareyPro Member

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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes

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@Haley Varner a 10 cap in Charles Village would be very good. But this property is not a 10 cap. The expenses quoted are low. During your due diligence period you should be able to ferret out the real expenses.

Also consider the age and condition of the systems in the building. Older systems are going to need more repairs and possible replacement soon.

Charles village is a good area of Baltimore. It is an area I would buy multi-families if I had the capital. I don't buy multi -families because the returns are not near as good as on SFHs here. On the surface this property seem s to be the exception.

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M Marie M.
Rental Property Investor · Washington, DC · Member since 2015 · 278 posts · 156 votes
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This seems like a question for @Ned_Carey (how does one get names to link?)
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
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@Haley Varner Certainly talk to @Ned Carey if you can, and @Gabriel G. actually lives not too far from there.
I do not think the riots have had any impact on real estate prices in Baltimore. In fact the memory of those riots is already fading. But be aware of where the property is for sure. There are some very rough areas right by John Hopkins, and some nice areas too if you are heading south into Charles Village. But it literally changes block by block in Baltimore. You can have a really nice neighborhood on one block, then the next block is all boarded up vacants. And that area is where there are some very drastic changes very quickly.
The other thing is I feel that the expenses you have listed of $24k are particularly low. I would think closer to $40k or more is much more realistic. You looking at $8k in property management, I doubt it is submetered for water. Common area electricity, insurance is going to be high. I know this may not come in the operating costs, but I bet the real estate taxes on this property are in excess of $15k and possibly more than $20k
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Haley Varner
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Professional · Atlanta, GA · Member since 2015 · 15 posts · 1 vote
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Thanks Russel and Marie. I've reached out to Gabriel and Ned.
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Ned CareyPro Member
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
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Originally posted by @M Marie M.:

This seems like a question for @Ned_Carey (how does one get names to link?)
Don't use the underscore. (Unless someone setup their profile name that way) Type the @ symbol and start typing the name. A list of possibilities should show up below the post. It may take a few seconds if the site is under heavy load.
If you want to reply to someone already in the thread, the type @? and a list of people in the thread shows up.
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Ned CareyPro Member
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
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@Haley Varner a 10 cap in Charles Village would be very good. But this property is not a 10 cap. The expenses quoted are low. During your due diligence period you should be able to ferret out the real expenses.
Also consider the age and condition of the systems in the building. Older systems are going to need more repairs and possible replacement soon.
Charles village is a good area of Baltimore. It is an area I would buy multi-families if I had the capital. I don't buy multi -families because the returns are not near as good as on SFHs here. On the surface this property seem s to be the exception.
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M Marie M.
Rental Property Investor · Washington, DC · Member since 2015 · 278 posts · 156 votes
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Thanks @Ned Carey. I will try that in the future. The underscore works on another platform but not here, got it.
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Gabriel G.
Real Estate Agent · Baltimore, MD · Member since 2014 · 215 posts · 123 votes
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@Haley Varner funny enough I know exactly which building you are talking about and I myself looked at that property too, It's actually right next to my triplex. When I did my due diligence I noticed a few things that stood out. 1) as @Ned Carey mentioned some of the expenses were very low and with a building that old, expenses are usually a lot higher. 2) with a more realistic projection of expenses you will see that the ROI and COC is not worth the effort. 3) the layout of the building is not the most appealing which in turn makes it less appealing to prospective tenants.
Not trying to sway you away from this deal but I think there are much better deals out there. Also, I think that if the building was a good deal, it would have sold already, I've saw this apartment building a few months ago. Sorry if I sound like a Debbie downer just my opinion. Wish you the best though and hope anything you decide to do works out! :)
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Haley Varner
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Professional · Atlanta, GA · Member since 2015 · 15 posts · 1 vote
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Gabriel - thanks for your comments. I saw that the property has been on the market a while, starting in high $600's. Now that list is reduced to $570 I was thinking of an offer of $515 which would pencil out even if you increase expenses. But I hear you on the layout, that's a big deterrent. Maybe I'll give you a call to pick your brain on your other investments and Baltimore neighborhoods more generally. Appreciate it!
P.S. Did you make it over to boat show this weekend? It was my first time attending and I loved it!
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