Baltimore Maryland - Yes or No?

32 Replies

So we all know that Baltimore City certain areas are cheap. I have a simple question, should I invest there? I was looking at a TH, 3br, 1 bath for $17k.

I was planning to rehab it and do a buy and hold with it. Try to get qualified with section 8 and give them a nice home to live in. I went on gosection8.com and there were 1000s of vacant homes looking for tenants.

Are there more rental properties than renters in Baltimore? I truly don’t want to invest in an area where it’s impossible to get a tenant. Please advise.

Thanks.

If your house is nice, "reasonably priced", and not in a nightmare area....youll rent it. plenter of renters...

There is a finite number of section 8 vouchers .  And lots of people trying to rent houses in the city . ( look on zillow) . 

Its all location .  

Location, location, location... My now wife had lived literally 'in the Hood'! Very nice rehabbed place (solid wood floors, upstairs, stainless steel appliances, etc). But she literally was advised by the young boys downstairs not to go up to the corner! There's also quite a bit of crime in Baltimore (on an overnight I watched them fish a body out of the water!)... having said that, if you're local and know the neighborhoods, you should find some opportunities. Best of luck!

@Lamont Marable - cut my teeth in Baltimore over 15 years ago after getting started in Capitol Heights. Best deal ever was $120,000 on one 3/2 townhouse near Hopkins Unuversity, also lost money too...

Here are my five rules for buy/hold in Baltimore (especially) if you’re coming from the DC market...

Rule #1 Baltimore is NOT D.C.

Rule #2 Don’t forget rule #1

Rule #3 Everything walking distance to the water is gold. Note actual walking. If you can see it, but are too afraid to walk through the neighborhood to get to it, it’s not “walking distance”

Rule #4 If it’s not walking distance to water, it needs to be walking distance to an anchoring institution.  In Baltimore City, the things that keep neighborhoods from falling apart are major employers like Hopkins (Hospital and Unjversity), MICA, Mercy, Stratford etc. they have sweetheart deals with the city, whereby they keep on expanding their footprint and improving the neighborhoods where they’re located.  These are the major employers and catalyst for positive change in their neighborhoods.

Rule #5 If you can’t be near the water, or near an anchoring institution... leave it alone.

Even with these five rules, basic real estate common sense still needs to be applied.

Sherman

P.s. I’m building a 22 unit apartment in Konestown and in negotiations to do a 120 room hotel downtown so I’m in Baltimore a couple of t8mes a week. Happy to show you around...

He wants to buy a house for 17K not 170K.

if somebody is considering to buy house for 17K, it means they have limited resources and willing to take a risk.

Should he take a risk or not?

I would take that risk but would make sure it should be the lest location that 17K can buy.

I like Sherman's rules, but please keep in mind that Proximity to an Anchor institution is NOT a sure sign of a healthy neighborhood.  There are plenty of blocks within walking distance to JHU, Hopkins Hospital, MICA, etc. that I wouldn't touch.  Do your homework and know your neighborhoods.

Good luck.

@Ozzy Sirimsi $17K Baltimore Houses are (often) "fools gold". They'll cost you $80K to rebuild in a neighborhood where ARV's are $60K to $70K. Investors (usually from DC and NYC) come to Baltimore frequently seeing these $17K "treasurers" and usually hear back home broken and defeated 6-12 months later.

Last point, for anyone looking at Baltimore, lead paint is a (very) real issue. The lead judge believes that Landlords should have unlimited liability in lead paint cases. Unless you have the money to remove (all) the lead paint from the house, you’re best staying away from buy/hold. 

Thank you all for the reply especially you @Sherman Ragland

If this is you really replying and not a member of your team...thank you again!!  

Fools gold is not what I'm seeking.  Real gold aka "pass income" is what my heart desires.  I'll follow those steps as well as the steps from your Youtube page to seek out a great rental property.  

I have a few thousand that I've pulled from my equity and my 401k.  So if I were to lose this money on a bad deal, I wouldn't have any money for my lawyer's fee during the divorce process because that's where I'll be if this doesn't work.  You need to make a video about that called "How to get your spouse from the DMV on board with real estate."  I'll promote it on all of my social media outlets.

I would love to see your projects and take a tour around the city.  Let me know what day, time and price, as I can pay you for your time.

Last Question - Don't you think that the current state of Baltimore is like how DC was back in the 80's?  They simply need that one mayor to turn the city around.  Just give it another 10-15 years.

@Sherman Ragland 17k houses in anywhere is "Fools Gold" not just in Baltimore

Only difference, you can find a house in Baltimore for 17k and there is a chance you can turn a profit.

Would I do it?
No
On the second note;

People look into Baltimore as if it only has 30k houses but it has nice neighborhoods as well.

DC / NY / CA people cannot buy a house for 100k or even 200k and turn same amount of cash flow then comes to Baltimore and tries to buy a house for 30k which doesn't make sense. They should be ready to invest 100k-150k then they will have pretty good investment

@Ozzy Sirimsi - I say "Fools Gold" because despite the cheap price, the cost to fix up the property will exceed the values for the neighborhood.  Many investors who come from outside Baltimore make this mistake and (almost) always get burned.  One reason for this is the age of the housing stock.  In Capitol Heights, just outside D.C.,  I can get a house for $80,000, but only have to pay $35,000 to fix it up because the average age of the houses is 40-50 years, versus Baltimore where things are 100-120 years old and need everything to get back into a decent shape.  Being cheap doesn't work if you have to spend an average of $80,000 to $120,000 in repairs to get it working and remove the lead paint.

@Lamont Marable ,

I don't know Baltimore, but I do know low income very well. 

 Section 8 vouchers are much higher IMO than standard market rent, where I invest a 3 bedroom can get $1200/mo.. so there are A LOT of overpriced houses just waiting for their dream section 8 tenant to come, ..  a lot for $1000-$1200, just waiting.... and waiting... they've overpriced.... .... meanwhile, I renovate a 3/1 and advertise it for $800 and get the home filled normally within 2-3 weeks.       

Price will dictate a lot,and your if you price your home competitively--- it will get rented!    Just determine who your ideal tenant is,  be realistic, and give them what they want!  

I agree with @Sherman Ragland my fiance and I live in NY and have investments in Philly and Atlanta.  We have visited Baltimore many times.  We are looking at feasible opportunities.   Vacant houses (although extremely cheap) often need full a gut rehab which often cost approx $85,000 on average depending on the extent of the damage.

@Linda D. - Generally, I wholeheartedly agree, but there are two things (three really) that are unique to Baltimore (at least I think they are unique to Baltimore)...

1) Baltimore is very aggressive when it comes to historic preservation.  As a result, the average age of properties in Baltimore City is close to 80-100 years in age.  The cost to rehab is almost the same as building new from the ground up.  Not a problem, EXCEPT... cost to build is about $125/s.f. to $150/s.f.  With average home values well below $90K, you have to pick and choose wisely;

2) The vast majority of homes were built (and rebuilt) before 1978, which means lead paint, and often times DIP plumbing.  DIP plumbing is just expensive, especially when it fails in the street as the city is not going to repair it.  Lead paint, however is a significant problem as the Court system in Baltimore is very quick to go after Landlords who do not 100% remove the lead paint when a child in the city develops elevated lead levels.  Many investors outside of Baltimore do not have to deal with this issue;

3) As you know, Section 8 is a Federal program, but administered by the states and Cities (population over 50,000).  In order to provide for as many participants as possible, Baltimore City Routinely REDUCES the Section 8 Voucher payments, from year to year.  Further, Baltimore City Housing will withhold payments if the tenant complains. Problem with this is that a Landlord may not know if a tenant has complained until the check does not arrive.  It is not uncommon for Landlords to go for 2 months out of the year with no Section 8 Payment, or be forced to reduce what they charge by $50.00 to $100.00 a month if the City decides to (unilaterally) reduce your Section 8 voucher.  This can become a "cascading" effect if you have multiple tenants.  As soon as the reduce the rent on 1, they use the lower rent as justification to reduce the rents on future renewals.

Again, I have done business in Baltimore City, Prince George's County, Howard County, and Washington DC and have never seen what happens in Baltimore happen outside of Baltimore.

Linda D. I just heard the SAME EXACT advise from fixfliprepeat

@Sherman Ragland wrote:

$17K Baltimore Houses are (often) "fools gold". They'll cost you $80K to rebuild in a neighborhood where ARV's are $60K to $70K.

I am with @Ozzy Sirimsi I respectfully disagree. You must be clairvoyant if you know what the neighborhood is worth when It hasn't been mentioned anywhere in the thread.  A $17K house ready to rent or already rented in a $40K neighborhood is an OK deal for many people. (not for everyone it is still a $40K neighborhood in Baltimore).. A $17K fixer upper in a $125 k neighborhood is a very viable rental in Baltimore. 

I recently acquired a property for LESS that $17K - only blocks from Johns Hopkins Hospital. It was rented section 8 for $900 and has a second unit that only needs modest repairs.  Baltimore has many very stable neighborhoods in the $125-175 range.

@Lamont Marable Despite what I said above Sherman and others are mostly right.  Find a real bargain deal and a $17k house can work. But most $17k houses are that price because that is all they are worth.  

You can get Section 8 tenants and get good rents in poor neighborhoods.  But that usually requires fixing to a high level. yes there are lots of people who want section 8 tenants. That is why you need either a better location or a better quality house - or both. 

Market tenants in poor neighborhoods can be very tough to collect. Low rents can look like good returns on paper, yet one major repair can devastate your income. Six hundred or 700 dollars a month rent gets eaten up real fast when you need a new roof or need to dig a new sewer line from the house to the street. 

It depends on the block. Every block rents, it is just a matter of what you can tolerate.

Wow, so much misinformation on this forum from everyone except people that actually live and work in real estate in Baltimore CITY.  First off, a majority of the rowhomes built in anywhere except South Baltimore, were built within the last 60 years.  Second off, people make money at every level, from low end to high end, its just a matter of your systems being set up and management in place to deal with different types of tenants.  The water comment by Sherman makes no sense, as my rentals do just fine(netting 12%-14% consistently year over year and none of them are near water).  I equate rentals with cars, if you buy a crappy car for little money, its gonna have maintenance issues, if you buy a new car and take care of it, you won't have maintenance issues.

Wow, great information or however you may perceive it. I appreciate it. I am starting to flip properties in Baltimore and have my eye on some rentals. Won’t repeat a lot of what has been said but since we have a good group here any feedback on the area around Morgan State university? It’s seem like they are building new structures all over the main road.

Thanks

@Christian Sifuentes I would say the area around Morgan state is pretty good generally.  Copin state is building a lot of structures too but I wouldn't be excited about that area.

Originally posted by @Lamont Marable :

Thank you all for the reply especially you @Sherman Ragland

If this is you really replying and not a member of your team...thank you again!!  

Fools gold is not what I'm seeking.  Real gold aka "pass income" is what my heart desires.  I'll follow those steps as well as the steps from your Youtube page to seek out a great rental property.  

I have a few thousand that I've pulled from my equity and my 401k.  So if I were to lose this money on a bad deal, I wouldn't have any money for my lawyer's fee during the divorce process because that's where I'll be if this doesn't work.  You need to make a video about that called "How to get your spouse from the DMV on board with real estate."  I'll promote it on all of my social media outlets.

I would love to see your projects and take a tour around the city.  Let me know what day, time and price, as I can pay you for your time.

Last Question - Don't you think that the current state of Baltimore is like how DC was back in the 80's?  They simply need that one mayor to turn the city around.  Just give it another 10-15 years.

 My father moved the family out of Baltimore city in 1972 . BEST move he ever made .  I have seen some ares of Baltimore get better . BUT I see more that got worse 

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