Washington, DC · Member since 2017 · 21 posts · 4 votes
Hello BP
Still on my RE journey and found a nice property in Belair Edison near Clifton Park Golf Course. The neighborhood seems really nice and the homes are well kept. Seems like a nice neighborhood for buy and hold if the numbers work out.
Are there any investors with experience in this neighborhood?
Thank you
JASMIN
Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
9y
@Jasmin Mcduffie I know and like Woodstock. I have one on Cardenas which is right around the corner. The problem is the price. As an Investor you are way off base. These houses you need to be in and ready to rent (including lead free) for no more than $70,000. I am glad I saw your post or you would have been off to a horrible start. I bought all of my houses for prices between $25K and $40K. I add CAC and make them lead free. You can find them. Feel free to PM me or call for more insight.
I have many rentals in the area. The majority of the streets are good but there are some blocks you should avoid. What street? What block are you looking at? What price? What condition?
Washington, DC · Member since 2017 · 21 posts · 4 votes
9y
I'm looking at a property on Woodstock. It's a block from Clifton GC. Cross street Erdman. THe asking price is 105,000. The current owners have been there for 30y. The property is in good condition but no recent cosmetic upgrades to upstairs bath. No central air and no dishwasher.
Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
9y
@Jasmin Mcduffie I know and like Woodstock. I have one on Cardenas which is right around the corner. The problem is the price. As an Investor you are way off base. These houses you need to be in and ready to rent (including lead free) for no more than $70,000. I am glad I saw your post or you would have been off to a horrible start. I bought all of my houses for prices between $25K and $40K. I add CAC and make them lead free. You can find them. Feel free to PM me or call for more insight.
Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
I'm glad you came in with your post, @Rich Baer because I was also thinking that $105K that @Jasmin Mcduffie said was high, but then again I'm not as familiar with this particular area.
I assume CAC= central air conditioning? How much does that typically cost? My units just have heat, but they also typically just have one vent rather than a vent in each room. Are your ductings set up this way as well? With heat, one vent seems to be sufficient, but I'm not sure if it'd be as sufficient with AC coming through just one vent. (Or how hard/impossible it'd be to add more ducting/vents.)
Washington, DC · Member since 2017 · 21 posts · 4 votes
9y
I called an HVAC contractor to get an idea of the cost to add central air. The house has a radiant heat system so it would be 12k-14k to add. This doesn't include the cost to enclose the ductwork in drywall. I asked him if it was even worth keeping the radiant system since adding the ducted system could accommodate both heating and cooling. He doesn't typically recommend getting rid of a radiant system but said he'd have to look to see if there's even space and then could provide a more specific recommendation.
I asked for the quote to use as a bargaining token when asking for a reduced price. I suspect the owners asking price is perhaps tied to their attachment with a property they have been in for the last 30 years. While it's in decent shape, one bath has the dated finishes and the kitchen has older appliances While they use the basement as a "family room" they only painted the foundation walls and left the wood floor joist and piping exposed...I don't consider that finished. There are other properties in the area that are more finished and updated for less money.
If they lower or we can negotiate a price if say 90k I could get about 10% Cash on cash return if it rents for $1250/mo which seemed conservative and appropriate for the decent but not new condition of the bath and basement and the nice location.
It would be great to buy a cheap property and rehab it for 40k, but I'm using a conventional loan and would have to buy a property that's in livable condition. Since this would be my first property, I don't want to take on too much rehab.
What are similar properties nearby selling for in that area though? Rich said he's getting his in that area for $25K-$40K before fixup (and all in at $70k after fixup and getting lead free). Comps are always your strongest bargaining chip. Then your next chip is the work it needs.
Since you want an essentially rent-ready/turnkey property, I don't think the one you're looking at for $105K fits the bill. It's overpriced AND needs work. Sounds like a skip on that one.
Washington, DC · Member since 2017 · 21 posts · 4 votes
9y
Thank you for the feedback and advice.
The comps range from 89K - 120k. Some have CAC, new kitchen/bath and some don't. The price seems more related to location than amenities. While all of the comps are in the same area the actual street the home is on seems to be making the biggest difference.
The house is definitely rent ready. The work (with exception of CAC) is cosmetic. Ive seen a lot of homes and some have CAC and some don't. The cost of adding it may not pay back for some time and may not be worth it until the current system need major repair or replacement.
I'll need to look into the lead. My realtor said if you don't have the lead free certificate you have to get a test done before you rent the property and each time there is a change in tenant. I doubt the property has the certificate.
Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
Yes, that is if you get "lead safe" (and I think one called "limited lead free"). When you get the initial lead test, I recommend if there's not a whole lot to make it "lead FREE" that you go that route.
If you are lead free, you never have to do a re-inspection again. I used LeadTec Services in Baltimore, and recommend them.
Still, ask the seller if there is any sort of lead cert. I always ask the sellers when I'm looking at a property.
You will also need to purchase a rental license for your property once you purchase.
Rental Property Investor · Baltimore, MD · Member since 2016 · 153 posts · 158 votes
9y
Listen to Rich. $100k for that area is WAY too high considering you can get them for under $40k off the MLS - sometimes less. These are for properties that need rehab of course.
If you're looking for turnkey rentals in the $100k range, you can get ones with CAC already installed for less. This house does not seem like a deal for this area if you are expecting decent cash flow.
Ask your lender if they have rehab loans or find a lender that does.
Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
I agree. The comps quoted of $89k - $120k sounds overpriced. Remember Baltimore City can have drastic changes in value just block by block. Hopefully your Realtor knows this.
Take it from people who actually invest in Baltimore, and especially when they tell you they invest in the very area you're looking. They'll give it to you straight while many realtors might have less specific/more general/generic knowledge.
Rental Property Investor · Baltimore, MD · Member since 2014 · 247 posts · 321 votes
9y
12K-14K not including ductwork?Are you serious?Should cost no more than 7K-8K for all ductwork and the furnace/HVAC I have several rentals in the belair edison area. The most I'm into one for a rental is 75K and that's brand new everything inside. I'm buying most of my properties there for between 25k-40K and putting 30k-40k into the rehab. You can do the rehab cheaper, but I like to put out a quality product.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
9y
There is a lead inspection company in Balto called "lead probe" , Neil is his name , he has a hard money company called Block M investments . he took a property back and has it up for $ 25K and its pretty much done .
Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
9y
What is everyone not reading here?
Shes using a conventional loan, ...house needs to be done. A done house (needs little to nothing to pass a u and o) in this area runs around 100k (her comps are accurate) and more location dependent than anything. Flip quality done= 125+
Whats it worth to not have to mess around with lost time, contractors, city inspections, is there a value to this??? Of course.
P.s. I have a duplex on mayfield that is rented for around 2k a month. 2x 2 bed 1 ba.....with CAC!!! How much should i sell that for, I might be looking to move it.
Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
9y
I just look at the houses sold in the neighborhood last 12 months.
%70 of them sold under 40k.
There are houses (only 4) sold for 120 range which are nicely done, seems like full renovation.
I hope this helps!!!
Washington, DC · Member since 2017 · 21 posts · 4 votes
9y
Thank you all for the feedback. I've spent the last few days researching alternative financing options. Wells Fargo has a purchase + rehab loan that can be used for investment properties. The rates are a bit higher than a conventional loan but the potential savings of controlling the rehab and buying below market value should be worth it.
I'll start looking at properties with this new strategy.
I did look at that property (google maps) from the hard money lender. The area looks a bit rough (online). It may be different in person and I may give him a call to see if he has any other properties.
I really appreciate the the feedback. It inspired me to look at this a bit differently and really explore my options.
Do any of you use a General contractor in Baltimore that you trust. If all goes well I'll need one soon
Thanks
JASMIN
Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
9y
Jasmin Mcduffie The best think you can do is to drive around and look at the neighborhoods.
That could the best think to do in your situation.
Baltimore is tricky, but profitable as long as you learn it.
Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
9y
If you know nothing about contracting, consider using your first strategy. On houses at this price point, a mistake or miscalculation can turn your "i saved money" into a "i should've bought rent ready because i just spent the same money"
Hiring contractors can be tricky as Seth pointed out. One strategy is to get multiple contractors to bid on the entire project and have a scope of work completed for what exactly will be done and how much it will cost. However I meet a lot of people that didn't do their due diligence on the front end such as knowing how to structure contracts or having attorneys look over contracts with contractors or having dishonest contractors and paid them upfront (SMH) and have loosed tens of thousands of dollars and are back to square one. It may be wise to do a lot more investigating as far as having a knowledge of cost and other aspects of rehabs before you dive in to the deep end without a life preserver.
Washington, DC · Member since 2017 · 21 posts · 4 votes
9y
Definitely agree with getting multiple bids. Very good point. I'm familiar with commercial /institutional construction projects (I'm an architect in DC). Since I like Baltimore as an investment market I'll be getting my license in MD soon. I'm comfortable with establishing the scope of work but not familiar with residential/smaller GC companies and would not sign a contract without an attorney reviewing it.
I was talking with my realtor. I told her if the property I was interested were a lot less expensive I may be interested. She suggested we submit a letter of intent (non binding) to gage their interest in the lower number before submitting an offer.
I lowered the price 17K and asked for closing cost. This gave me a cash on cash return of 17% with an 8% cap rate (87500 offer)
I used a rent rate of 1250. Even if I could only rent it for 1200/mo the Cash on cash return would be 14% and 8% cap rate. Both figures include reserves for maintenance, cap ex, vacancy and PM.
This seems like a good return.
If I bought a property and rehabbed it for a total 75K-80K. I would need to be able to ask more a month for it to give me a better return since my interest rate on that loan would be higher.
I agree with Seth that the turn key would be far less work and there is value to that. Since this would be my first project, having the property basically ready for rent is appealing. I will need to get the lead certificate/ testing done and I would probably paint...but that it's barring anything that would come up in the inspection.
What would be good to know is how much more rent you could get with central air in that part of town for the same home. Many of the house ads I look at have comparable homes but they aren't exactly the same. What sells? Is the higher rent due to central air or the extra full bath or the newer kitchen. There is no formula I know.
I understand Rich's point about buying below market and adding value as well.
p.s when the agent sent the letter of intent they asked for a formal offer...
Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
9y
You're wasting your time with a letter of intent. If you want i will give you a letter of intent to give you a million dollars. Now hold your breath and wait. Make an offer or don't make an offer. Having your agent ask the seller if your offer is a waste of time before making it makes sense. However, the only way to find out is to do it.
Saying that, rental numbers arent as scientific as you might want them to be. If the house is nice and reasonably priced, youll rent it. Baltimore is a city littered with renters. Does ac help? Yes...how much more can you ask? Maybe zero, maybe a little, maybe who knows. Look at the comparable rents for similar houses,ask around the same, make sure your place is nice, youll rent it. The key is to understand the tenants options because they are doing the same exact thing.
Baltimore, MD · Member since 2016 · 51 posts · 28 votes
9y
I used LeadProbe to get a limited lead-free cert for my property in Belair-Edison. Super easy, and they were great and very flexible. We had to paint over a few areas, but otherwise good.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
9y
Originally posted by @Account Closed:
What is everyone not reading here?
Shes using a conventional loan, ...house needs to be done. A done house (needs little to nothing to pass a u and o) in this area runs around 100k (her comps are accurate) and more location dependent than anything. Flip quality done= 125+
Whats it worth to not have to mess around with lost time, contractors, city inspections, is there a value to this??? Of course.
P.s. I have a duplex on mayfield that is rented for around 2k a month. 2x 2 bed 1 ba.....with CAC!!! How much should i sell that for, I might be looking to move it.
I grew up in Mayfield , It was a nice area when I was there , Parents moved us in 1972 to AA county . I was on Pelham and Crossland . I drove thru there 2 years ago . Its still nice but the nice area is much smaller