Real Estate Novice.....Baltimore, MD. Where do I began?

14 Replies

I have NO EXPERIENCE in real estate investing, but am ready to take my first step. I want to start with a multi-unit property in the DMV (DC, MD, VA) area. What are some things I should first consider? Funding? Credit? Location? Agent?

Welcome to BP! I would suggest self educating through literature, and the internet . Also take advantage of the forum posts pertaining to multi unit properties, commercial loans, etc. Most importantly network, network, network. There's a plethora of knowledgable investors who only deal with multi units on this site. 

Start with the podcasts.  You can search for answers by putting question in "search the site" in the right corner above.  Also read The Beggiiner's Guide to get you headed in the right direction.  Welcome to BP.

Promotion
Contracoin
Bridging between Crypto and Real Estate
Get ready to buy your next property using Crypto
Using crypto to own property, leverage #CTCN in buying your next home and more
Time to buy property

@Sherrie Brown Hi and welcome to BP! In addition to the suggestions above, you can start looking on Zillow and Trulia, to at multi's to get an idea of what is available in your markets in the public (MLS) markets and look at rents as well. Then start to think about the rent to price ratios as you learn more about steps to take toward your first investment.

@Sherrie Brown  

Hi Sherrie, as a new investor, why Multi family?  and are you just looking to buy, flip and get out? or looking to hold it for rent?

Reason I ask is that until you really gain the experience you need, I would recommend starting with a SFR and getting a couple of flips under your belt. That way you get a better understanding of the processes and what is needed, added to the fact that whoever you use as your lender will be able to see your track record before investing their money in something larger like a multi. If on the other hand you were looking to invest, then hold and rent, then i'd absolutely suggest still starting with SFR's (unless your pockets are deep to deal with possible $$ issues with tenants). I'd always suggest making sure your bank account is over-flowing before taking on a multi..... but thats just me, good luck :)

Hi and welcome to BP, FYI.

Here are three of the most common “Dirty Tricks” Commercial Property Sellers can try to pull on you during the purchase process. And - here's the fun part - I will also tell you exactly how you can catch them in the act and turn the tables to your advantage.
===================  
Dirty Trick #1 “Stack It with Felons” 
  Some Sellers, typically those in desperate straits, will polish the performance numbers on their property by lowering their tenant screening standards. They fill the property with inappropriate tenants in the months preceding the sale. This is especially worrisome in multifamily properties AND it can happen in all types of properties. 
  In Office and Retail Properties, the Seller can sign inferior credit tenants or higher risk businesses. 
  On paper, this looks like they've been an excellent property manager with a profitable property. And you won't know any different until you get into your own Due Diligence. 
  Here is how you catch them … 
  When you and your Property Manager are doing the walk through and Lease Audit, make sure you review the Tenant Screening Procedures on each and every Tenant. If the Seller hasn't screened tenants adequately - you may notice that they have literally stacked the property with felons… the jig is up. Since you will be doing your Lease Audit in the early portion of Due Diligence you will be able to get out of the Contract and get your Earnest Money back. 
  ==================== 
  Dirty Trick #2 “The Contract Bonus” 
  Multi-year contracts for services such as laundry often involve a large signing bonus. Some sellers will sign a new laundry contract either just before putting a property on the market or even while you're under Contract. They honestly think they'll be able to keep that $15,000 bonus to themselves… and that you won't find out. 
  Even worse, they will often take as large an upfront bonus as possible and leave you with a much lower split of laundry income for the life of the contract. The larger the upfront bonus, the less you will receive in profit sharing. 
  Example: the Seller signs a new laundry contract and take $20k up front as a Bonus and agree to laundry income split 80% to the laundry company and 20% to the owner … instead of a more favorable split arrangement. 
  Here's how you catch them … 
  Make sure your Purchase Contract states that the Seller will provide you with all Vendor Contracts. Make sure you also have a solid “Pro-Rations” Clause as well. A Pro-Rations Clause will ensure that the Seller only gets that fraction of the signing bonus equal to their fraction of their time in ownership. 
  Example: If the Seller signs a three-year Laundry Contract with a $15,000 bonus 90 days before your purchase is complete and you have a solid Prorations Clause in your Purchase contract … they will only get to keep 8.2% of that bonus … because 90 days is 8.2% of three years. 
  ===================== 
Dirty Trick #3 “Let It Die” 
  It can be a long time between signing your original Purchase and Sale Contract and closing on the Property. 90 days is typical and even longer is not uncommon in today's market. 
  Often the Seller will simply stop maintaining the Property when it is under Contract. Tenants will put in work orders and the Seller will just ignore them. They just let the Property “Die”. 
  If you don't catch them, you may take over a Property where there are literally hundreds of active work orders on the day you take ownership. The tenants will be pissed and it will cost you a fortune to do all the repairs. 
  Here's how you catch them … 
  Make sure your Purchase Contract contains a clause stating the Seller will continue normal operations and maintenance activities during the Contract Period. And continue to review the Property Management reports from the Seller's Property Manager every week while you are under contract. 
  Stop in on the Property frequently while you are under Contract. 
  A well written Contract should give you rights to visit the property with 24 hours notice. Schedule a visit and review the Work Order Logs in person and verify the Seller is doing their job. 
  Keep them honest and hold them to the terms of your Contract. 
  ====================== 
  As you can see, a well written Contract is structured to decrease your risks if you're unfortunate enough to deal with an unscrupulous Seller. There are hundreds of other ways Sellers can try to sweep problems under the rug. These are the big three we have seen repeatedly. 
  And now you know exactly how to “Catch Them in the Act” and quickly turn the tables in your favor.

Hey @Sherrie Brown  welcome to the site! Definitely start jumping into the community here! Be sure to read through The Ultimate Beginner's Guide to Real Estate Investing to help you get started.

Have you read this post yet? You might enjoy it: How to Buy a Small MultiFamily Property: A Step by Step Case Study

Finally -be sure to setup some keyword alerts - especially for "Owings Mills" so you can jump into local conversations.

See you around the forums!

I am in Dc and Baltimore is a great area , as a new person I would try to educate myself as much as possible, send out a few friend request to a few people in your area that are doing the same thing you are  on the site. Listen to the pod cast. I would also go to the REA group in your area . You will get what you put out of it.This site has a lot of people who will give you alot of help and point you in the right direction with out trying to sale you a format for 1500 dollars. Stay on this site like you  would face book the only difference this site can make or save you  money. Also look at the deals in market place I look at them every day so you will start see a deal and who are some of the deal makers. Wish you the best and stick with your game plan Good luck to you Sherrie.

@Sherrie Brown.....
I'm also ready to invest in a multi-unit property in either B-more or in the county myself.  Much of what i've learned has come from the BiggerPockets website and various other sites.  But i'm looking for a group of multi-unit buyers/owners who are willing to educate (i.e., mentor to some degree) me on the in's and out's of the multi unit game.  If you hear of any (i'm in Lanham myself) please let me know.....and if i do, i will send you the info.  just inbox me and i will do the same.  My first focus was to be debit free by May 2016....but i look like i will reach that goal a little earlier..thank in part to my part time job with Uber.  Anyway, let me know. And for any Baltimore multi unit investor willing to educate, please let either of us know.  

THANK YOU....

Promotion
RentRedi
Smart Tech For The Smart Landlord
The Smart Way To Manage Your Rentals
Enjoy growing your portfolio without paying more for it. Unlimited units & easy-to-use apps.
Get Unlimited Units

hi @Sherrie Brown !

I am a fellow Owings Mills dweller who just purchased my first SFR. Besides all the great advice above, i suggest you join [or at least go to] the MAREIA in Owings Mills [90 Painters Mill Rd] ... great way to gain knowledge, meet other investors, ask questions ... and there are a few "MeetUps" for REI peeps nearby [I like the BWI meetup, and there's a couple others I have my eye on, but haven't been able to schedule in].

You need to read enough, listen and converse enough to get a feel for where you want to begin.  Then you need to determine how much you have available to use for your first investment.  As @Brandon Turner said - read thru The Ultimate Beginner's Guide... listen to the BiggerPockets podcasts.  Put a word in the search bar and and find out about THAT [whatever it is] maybe just one per day [so many articles, blogs, forums...]

Best of luck - see you in OM?!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you