Already the second highest tax jurisdiction in the state they now want to double up taxes on RE investors.
All in the investing community should be aware of this corrupt city government
And the landlords will raise the rent and the tenants will pay the increase . I would be worried as a politician , if 60% of the properties in the city are rentals , and then the landlords raise the rent accordingly , thats going to be a lot of angry voters
Jr thanks for posting! I own property in Hagerstown, we pay the full take Bill. Unlike owner occupied that gets Homestead tax credit and a number of other credits.
Matthew, you'r right, rent will increase.
typical of a left wing city. People dont like the high taxes so then they move to a different city and vote for high taxes again
There is not much room for rent increases in this market. It is sad, but true. Similar policies have driven most major employers from the region. All of this is part of a city master plan to make it financially impossible to operate rentals in Hagerstown. When the properties are ultimately abandoned the city is able to take control of them and sell them at a profit.
It's probably going to take a civil rights lawsuit to put a stop to the city's illegal and unconstitutional practices. This is a city government run amok.
@JR T. this is curious thought process... how does the city get the properties.. is there a city ad valorum tax as well as a county one ? Cities can't just take property.. and property tax's are the possession of the State not the city and county unless there are city specific tax's like Memphis TN has... the county foreclose's on tax sale properties as an agent for the state.. at least in most states I deal in. ?
So why do you think the CITY would end up owning these if they are abandoned.. do you think they will literally buy them from the owners because they are the only buyer.. the owner has a vacant building and just takes the only offer they can get ???
Hopefully they don't marry these ideas with rent control !!!
@Jay Hinrichs In MD there are state and local (either county or city) real estate taxes. I think @JR T. means down the road, when taxes haven't been paid for years and the tax sale process is unsuccessful, etc., you can have gov't step in, condemn, take. My experience is that this does not result in a profitable sale. This occurs in Baltimore City and the city often has to abate years of liens in order to transfer properties to a new owner.
Gotta love the comments on that article.
Ive never seen a compelling reason to invest there.
Anybody have anything GOOD to say about Hagerstown?! As a beginning investor it is a rather enticing area...
@Jocelyn Borg Good about Hagerstown , prices are cheap on houses , rents are too . Jobs are scarce . Most people heading to Hagerstown are going to the Prison .
@Matthew Paul ...ouch. Not disagreeing with you.
I'm just trying to wrap my head around why this area is so divisive among investors. People seem to either love it or hate it.
I'd love to hear from someone who has rentals in both Hagerstown and say...Frederick (or anywhere else, for that matter) and briefly compare/contrast/break down the pros and cons of each.
I think I read in the article above that 60% of Hagerstown is rentals . In my opinion , I wouldnt want to buy somewhere with that much competition for tenants
There is a larger area of Hagerstown that is not within the City and as with anything the prices tend to move in relationship to the many factors. When a property is double taxed (both city and county) it would tend to be related in the sales price. Most of the multi family is concentrated in the city or closer to downtown. The more highly regarded properties are not in the city tax district and are on the outskirts in different school districts. People need affordable housing and the further you go East the less affordable housing becomes.. As you come West Hagerstown meets that sweet spot where prices makes sense in relationship to rents. The cheaper the property the more management it will take.. the more expensive the property your looking at negative cash flows. Hagerstown City can be a pain in the *** and its well documented BUT I bet Baltimore is very similar, I don't know, but I'm guessing.. Higher Taxes is bad business.. its been proven that it doesn't work in the long run..
As for Frederick vs Washington County.. Frederick County is 2x more expensive and not sure how you cash flow in a market like that.. Unless you are finding off market deal in Frederick County which are few and far between it doesn't make sense to purchase in that area.
In Washington county you need to purchase in the right spots and manage the hell out of it..
As with anything.. If it were easy everyone would be doing it.
@Bill Kenny thank you for your input. Are you saying that what these less expensive, inner city limits properties lack in initial cost, they make up for in taxes? In other words, the purchase price is cheaper but the trade off is that what you saved on purchase price you end up paying in taxes? That's definitely something to think about...especially if they increase property tax on rentals to 25% as discussed in the article.
@Jocelyn Borg That is what I am saying. You should know how taxes and insurance will impact your monthly ownership cost. Along with all the other costs associated with owning a property. It's always important to look at the total cost of owning a rental property. I think most people in the beginning don't plan for Cap Ex and management costs. I know I didn't on my first few deals. I think the BP planning calculators have those things built in that you should consider when buying investment real estate.
Thank you @Bill Kenny , that’s super helpful.
@Jocelyn Borg I currently have 4 properties in Hagerstown in multiple different locations. Although the Hagerstown market has low household income, a mixed of mild and high crime rates, city inspections , rental license fee and additional city tax. I am still buying in Hagerstown due to these two reasons:
Demand of rentals, Over 57% of the household units in Hagerstown are tenant occupied! In my opinion this is a great because there are always tenants active looking for a place to live. I can certainly confirm this as I have advertised multiple rentals in Hagerstown and received a lot of attention from potential tenants. They all might not be the ideal tenant so you have to do your homework with tenant placement.
Low Initial investment capital, In my opinion, one of the advantages of investing in Hagerstown is the fact that you can buy properties as low as $35,000 that will generate about $800 dollars in rent. You can also buy multi-family apartment buildings for as low as $30,000 per unit that will generate about $650 per unit in average. In fact, I bought a very small single family in north mulberry for $32,000 and it produces me $750 a month, about 19% ROI.
Bottom line, In my opinion investing in Hagerstown makes it easy for a beginner to start buying and holding because of the sales-price and the demand of rentals. I think all the risks that come with investing in Hagerstown can be minimized tremendously by understanding the market and having a an efficient tenant placement system in place. I believe that the reward is worth the risk as it has been paying off for me and others actively investing in Hagerstown.
I hope this helps you and feel free to reach out.
Thanks for the feedback, @Cristhian Huamani , I really appreciate your thorough response! It's super helpful.
Would you mind sharing what other streets your properties are on and how long you've owned them for? Were they purchased as turnkey properties or did you have to fix them up before you placed tenants in them? Did the one on Mulberry need much work?
Thanks in advance!
@Jocelyn Borg not a problem,
I own apartment buildings in summit ave, north mulberry and Maryland ave. The properties were in rent-able conditions. I did not rehabbed them, mostly cosmetic work as most of them were occupied and I inherited tenants (This is good and bad, you must do your due diligence) . The one in mulberry needed about 3,000 worth of work.
Feel free to message me with any specific questions.
Thanks @Cristhian Huamani !
This is why I focus on anything outside of city limits. The taxes and other fees in city limits are too high and they attract a lower quality pool of tenants. But many are successful owning in the city, as some have already mentioned.
I found this site if anyone is interested in opposing the two-tiered tax: http://savehagerstown.org/
thanks to all of you guys for your input very helpful
@Jocelyn Borg , @Cristhian Huamani thian Huamani, @Bill Kenny , @Beth L. , @Emmanuel Taylor I've been reading the thread and I wonder if anyone would be interested in providing an update to where they are in their investment journey.
I just started in REI and I have found that, well, let's just say that this has been interesting. But I am not discouraged. I have two deals in the making. Once I get my contractor bid/estimate, I will be able to negotiate a fair price on my first multi-family deal. It will require rehab, but I hope to have tenants in a nice, newly rehabbed building of which they will be proud to call home. My second property, I have local building inspector providing me with a comprehensive report which will help me decide if I am going to purchase the duplex or not. The first property is also a duplex.
I would like to ask the group if you wouldn't mind contacting me if you can refer a trusted general contractor. I don't know that I will stay with the one I have and I just want to have a back-up plan in place. My goal was to have one duplex in my brand new portfolio by the end of the year. It looks like I may have two, but I am proceeding methodically. As @Cristhian Huamani has said, it is critical to do your due diligence.