Investor · Bowie, MD · Member since 2017 · 47 posts · 8 votes
Hello. I am new to BP. I am here to gather all the insight and information I can, find new friends, and most importantly, learn how to reach my goal of purchasing 10 properties in the next 2-3 years for cash flow. I am looking at purchasing in Florida and Washington. I think most homes in Maryland may be out of my price range. I have $50,000 to start investing.
Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
Unless you are purchasing a home via FHA (which means it'll be owner occupied/primary residence), I'm not sure what lenders anywhere will offer less than 20% down.
What specific towns were you looking at? If you're looking in expensive places such as Columbia, Bethesda, and the like, $200K doesn't get you far. Same if you're looking only at places such as Fells Point or the Inner Harbor in Baltimore.
Let me share one of my properties. It is probably rated as a C class neighborhood, but you said you're looking for cash flow, so obviously we will have a tough time finding cash flow in A or even B neighborhoods.
Here's my monthly costs, not including vacancies and repairs:
$586 mortgage & interest $166 taxes $34 water $46 insurance -------------------------------- $832 total bills per month
$1,650 total rental income per month *$818 total gross cash flow per month (before any possible vacancies and/or repairs)
Purchase price of $98,000 (which looking back, I could have got for less but this was my first property and wasn't quite as good at negotiating). This property came with tenants in place and no renovation immediately needed.
This is an example and this property is located in Dundalk, MD.
I purchased another property in Dundalk for $70K and it was my first one needing work. I put $10K into it to get it rent ready AND to make it lead free.
I don't know a *whole* lot about the Tampa area but have been slowly researching it as I too would like to one day pick up some properties there. Tampa almost seems like another version of the DMV. There are tons of expensive places there, but there are also very affordable pockets.
Also, regarding closing costs, make your offers slightly higher but ask the seller to pay all closing costs. Estimate the closing costs will be roughly 5% of the purchase/listing price, so offer a little more on top of the property price number, and that the seller cover all closing costs. In the end, it washed out and is less money out of pocket.
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Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
@Remus Phillips When you say Washington do you mean the state or DC? With $50,000 you are in a good starting point to afford down payment on possibly a couple of properties!
Baltimore area is quite affordable. For example, in Dundalk (Baltimore County), there are plenty of properties for around $100K. Even in Laurel, there are a few townhomes for the low $100s if you're looking. I would recommend that you get to know the MD area since you were not aware that there are indeed affordable properties here. Best of luck and let me know if you have further questions!
Investor · Bowie, MD · Member since 2017 · 47 posts · 8 votes
9y
@Trevor Sie-Duke cool! How has investing been for you? Do you focus on Maryland or outside of the DMV? I would really like to focus on outside, just because I think MD has pretty much maxed out of all the affordable properties.
Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
@Remus Phillips Can you give us more info on what kind of properties you're looking for? And what price range are you searching? Do you want to buy in full with your cash or use your cash as down payments for multiple properties? I'm trying to understand why you feel the entire state of MD doesn't have affordable properties.
I am looking to use the $40k as a down payment on one or more properties. From what I see so far, in order to purchase a property that will yield about $500+ in positive cash flow, I will need a property less than $200k but that can rent for more than $1000/mth. In the DMV, at least from what I have seen, the properties under $200k need at least $50k to make it inhabitable. I do not have the money to put down on a home plus make massive improvements. I've come across some homes in Tampa and Cape Coral that are under $200K (closer to $100k) which can rent for $1200-1500 easily, with little to no improvements. I just don't think I can find that in the DMV, but I could be wrong.
Then there is the financing issue. I have great income and my credit scores are on the lower end of average, but getting financing from a bank in the DMV is difficult because, in part, there is no way I can convince a bank that this is a second home, whereas in out of state places (Florida and Washington) I can say it is a second home, since I am planning on being barred there and one day moving there. So in Maryland, I am looking to put down at least 20%, or the entire $40k just for the down payment leaving me with nothing for closing and fixing up.
I'm new to all of this so I may be TOTALLY off base, but that is my reasoning behind looking outside of the DMV area: it's more expensive to buy and more expensive to fix-up.
Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
9y
Unless you are purchasing a home via FHA (which means it'll be owner occupied/primary residence), I'm not sure what lenders anywhere will offer less than 20% down.
What specific towns were you looking at? If you're looking in expensive places such as Columbia, Bethesda, and the like, $200K doesn't get you far. Same if you're looking only at places such as Fells Point or the Inner Harbor in Baltimore.
Let me share one of my properties. It is probably rated as a C class neighborhood, but you said you're looking for cash flow, so obviously we will have a tough time finding cash flow in A or even B neighborhoods.
Here's my monthly costs, not including vacancies and repairs:
$586 mortgage & interest $166 taxes $34 water $46 insurance -------------------------------- $832 total bills per month
$1,650 total rental income per month *$818 total gross cash flow per month (before any possible vacancies and/or repairs)
Purchase price of $98,000 (which looking back, I could have got for less but this was my first property and wasn't quite as good at negotiating). This property came with tenants in place and no renovation immediately needed.
This is an example and this property is located in Dundalk, MD.
I purchased another property in Dundalk for $70K and it was my first one needing work. I put $10K into it to get it rent ready AND to make it lead free.
I don't know a *whole* lot about the Tampa area but have been slowly researching it as I too would like to one day pick up some properties there. Tampa almost seems like another version of the DMV. There are tons of expensive places there, but there are also very affordable pockets.
Also, regarding closing costs, make your offers slightly higher but ask the seller to pay all closing costs. Estimate the closing costs will be roughly 5% of the purchase/listing price, so offer a little more on top of the property price number, and that the seller cover all closing costs. In the end, it washed out and is less money out of pocket.
Annapolis, MD · Member since 2016 · 12 posts · 4 votes
9y
Interesting discussion. I'm also a newbie in Maryland (Annapolis), I was also thinking of investing in Florida as well, where I'm originally from, because I am having a hard time making the numbers work for properties I've seen in Maryland.
Here is a property located in Millersville I was analyzing today.
Rent $1650. I researched rents nearby for similar homes and this was the average.
Expenses
Mortg & Interest: $751
Taxes: $217
Insurance: $83
PM 10% : $165
Maint. Reserves: $42
CapEx 10%: $165
Total Expenses: $777
Net Cash Flow $121
CoCR 4%
ROI 10%
List price was $199K, I would purchase it at $160K just to get to the above numbers. I am also assuming about $15K in repairs. I have analyzed properties closer to $150K but they need a lot more renovations and the numbers aren't working either.
I am searching in Upper Marlboro, College Park, Pasadena, Severna Park, Crofton, Annapolis, Edgewater, Deale and am starting looking in other areas to see if I can find more affordable properties.
Are my numbers way off? Or perhaps the areas I am searching in are not strong rental markets?
Real Estate Agent · Pasadena, MD · Member since 2016 · 4 posts · 3 votes
9y
Yes, those are hard numbers to hit there. Most of those areas you have listed have schools that are in pretty high demand with low inventory making them more expensive. Perhaps try Severn, Glen Burnie, Laurel or Ft Meade.
Rental Property Investor · Paramus NJ · Member since 2016 · 76 posts · 27 votes
9y
@Remus Phillips Welcome to BP, Hope you hit your target of 10 rental properties in the next 3 years.
I will suggest looking into multi family. With $40K you can find a 4 plex in central Florida that cash flows better than a single family. One door versus 4 might be something to consider. Good Luck
Investor · Bowie, MD · Member since 2017 · 47 posts · 8 votes
9y
@Colleen Ross it's basically what I have found as well. I found some cheaper properties in Westminster (ugh), but they all need A LOT of work.
I really like Florida and can see myself retiring there one day. And the houses are much cheaper but the rental market seems to be strong and rising. Idk....
Investor · Bowie, MD · Member since 2017 · 47 posts · 8 votes
9y
@Nicole A. that seems like an excellent buy. $98k with $818 cash flow is exactly what I am looking for. I'll check out the Dundalk area. Never heard of it, honestly.
Real Estate Broker · Palm Bay, FL · Member since 2017 · 175 posts · 89 votes
9y
Hello guys, I am a realtor / investor in Florida. I live in Brevard County (Palm Bay / Melbourne area) and have a home up in the Florida Panhandle and one in North Carolina. There are MANY turn key homes that you could buy in that price range here that would meet your requirements. There are even potential homes that you could likely have build brand new. Let me know if you have any interest in this area or if I could be of help.
Hello. I am new to BP. I am here to gather all the insight and information I can, find new friends, and most importantly, learn how to reach my goal of purchasing 10 properties in the next 2-3 years for cash flow. I am looking at purchasing in Florida and Washington. I think most homes in Maryland may be out of my price range. I have $50,000 to start investing.
Hope to hear from fellow investors soon!
Hello and welcome!
This is a great place to learn more about investing. If you are investing out of state this is a great place to make connections! Best of luck to you.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
@Remus Phillips As Nichole says there are lots of properties you can get well below $200K. I have never spent even 1/2 that much, even after repairs, on any of my rentals. In Baltimore city you can easily buy turn Key rentals for under $100K. Baltimore county and Prince Georges county also have affordable rentals.
Yes, and to follow up on Ariel's post, the properties I gave examples on in Dundalk, MD are all 2-unit properties.
How many properties do you have in Dundalk?
I never really invested in those areas, but I feel like I can try to do some BRRRR, do you recommend? with your numbers it seems like quite profitable.
I've never done the BRRR method, but I imagine it could work. Just start by poking around properties via Zillow or something and then take a drive out to Dundalk some time to see the area for yourself. I'd say that a majority of Dundalk is a C class type of area with some neighborhoods probably being more around C+/B-. I currently have three 2-unit properties there.
Investor · North Bethesda, MD · Member since 2014 · 11 posts · 5 votes
9y
I also invest in Dundalk and Essex similar to @Nicole A. I've been purchasing 3 bedroom single family rowhouses under $125K with rents between $1600-$1700 - Section 8. I have a lender who will lend at 10%-15% down (I've been doing 15%). I am also about to close on a duplex in Brooklyn, MD for about half that price that brings $1450 in rent. It's still possible to find cash flow in MD, though my higher-end Owings Mills property brings nowhere near those returns.