Please Help a Baltimore Investor Make Sense of This

8 Replies

Hello! I've been lurking on this site for quite sometime and finally signed up and decided to introduce myself. I work in IT and have a retail business that afford me some cash-flow but it's obvious that Real Estate is where it's at and that I need to get good at this. There is so much great advice on this platform that it's quite overwhelming to actually settle on the best way to begin. I challenged myself in June to buy one property this year and that hasn't happened so this is my public challenge to make it happen. 

I currently live in a 950sq ft, 3/1 house I purchased as a foreclosure about 4 years ago. It has no mortgage. The previous owner did a lot of renovations without pulling permits so it is actually listed as a 4/1. I did a lot of the renovations myself and learned a lot but I now know that this is not the best way to use my time. My family will grow in the next 6 months so my plan is to purchase a new property for myself and rent my current home out. I'm not sure this is a good plan because my searches have emotion behind it instead of just plain analyzing the numbers. 

I've signed up for a bunch of meetup groups and plan on attending a meeting tomorrow to network and hopefully learn from the pros. I'm also interested in connecting with fellow Baltimore/DMV investors and will be interested in volunteering my time/knowledge(however small) to a professional in exchange for guidance and a chance to learn. I'm a very fast learner, extra motivated and handy with my hands. If anyone in Baltimore needs some free help or wants to partner up on a deal, I'm down. 

Hi Michael,

Your post caught my eye since I've had some similar experiences. I am new to this as well, currently selling a home purchased as a foreclosure, with a lot of sweat equity put into it, then rented for one year after we moved. We decided to sell because we realized it didn't make sense as a rental for a number of reasons--the layout, the maintenance on a three story 140 year old home, the size of the yard, etc. So we're turning the forced equity/appreciation into funds we can invest more intentionally into real estate. I also previously owned one other home that I renovated myself and briefly rented before realizing it wasn't a good fit.

I can offer this: it can be really hard to detach emotionally from something that was your home and that you put a lot of work into, and turn it over to renters. It's good you're recognizing this. But from what I've learned here and other places, you absolutely need to turn off that emotional attachment, and if you can't maybe consider other options for the property. I'd start by looking at whether it is a viable rental--what is the rental market like in the neighborhood, are the mechanicals new/in good shape to avoid a major expense in the first few years, etc (lots of more experience people here can add to this list), what is needed to pass the Baltimore City rental inspection, would you pass lead inspection. Also, can you refi to pull out equity to use toward another property? Look at it as an investor, not as a homeowner. And if you do make it a rental, screen tenants well (I totally failed at this my first go), create policies and systems, and make it a business, not a home. The fact that you own it free and clear is an amazing start.

I will be at the BWI meetup tomorrow, perhaps I'll see you there! And congrats on the pending arrival of your little one! I have two littles myself which is a huge handful but a real motivator for my husband and I to achieve FI.

Chrissa
Chrissa

Thanks @Chrissa Carlson for your thoughtful reply. I agree with you about removing emotions from my analyses and looking at this from a numbers point of view only. Would a reasonable first step be to engage an investor-friendly RE Agent who could advise on selling vs renting? I'm also thinking it would be wise to do the Baltimore city rental inspection as well to see what, if any work is needed to bring it up to rental standards. 

Do you have a recommendation for an inspector or agent? 

Also the meeting I was planning to attend has location TBD and it's hosted by the DMV-Real Estate Investors Meet Up group. I'm not sure it's the same as your BWI group but it would be nice if it was. At least I'd "know" one person. I also found a meeting which is 5 minutes from my office around lunch time tomorrow so I may head out to that too. 

Hi Michael,

I'll send you a DM re: a realtor--I think realtors aren't supposed to self-promote on forums, not sure if recommendations are allowed.

Re the rental inspection, here is the form so you can self-assess what work would need to be done. It's a little general--for instance, the requirements that outlets are GFCI in areas where "water is generally present" leaves a little room for interpretation. I think 6' is the standard, though my guess is inspectors probably eye ball it differently.

We used George Gavin for our rental inspection. He's on this list. He was pretty thorough. But they are all independent contractors and I think their thoroughness varies wildly. We had a friend living in a rental when it was inspected for registration--the inspector took one look, saw they had a cat, and said he wasn't coming in because he was allergic and fudged the inspection!

I assumed you were talking about the BWI meetup as that one seems really popular. Tomorrow will be my first time attending. I was confused and assumed it was held near the airport, but it's in pikesville. Here is the meetup page: 

https://www.meetup.com/BwiMeetup/


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Hi @Michael Kissi

Good luck with your real estate goals

I think you should be little specific on what you can help with, how much time you can devote etc...

Somebody who is successful will not have time to discover your skills or knowledge while you are trying to "help" him/her around.

be specific and somebody might take that offer.

@Michael Kissi welcome to BP. There are a ton of local investors here to help.  Yes it can seem like drinking from a fire hose sometimes but keep reading and listening and gradually it will start to become more clear. 

Before you do anything I highly recommend you sit down and think about your goals. Do you have a certain number of properties or a cash flow number you are working towards? Once you get those things out of the way I recommend you start looking at the MLS and start to run your numbers. Get in some practice before you start making offers. See what rents go for in your area or whether it even makes sense to buy property X because rents are only X.

Sometimes it helps to get a 2nd set of eyes to look at something.  When you do find a deal.  Post on here and we can help you analyze it.

It's always tough when emotions get attached to a property you put sweat equity into.  Having a property that is paid for and ready to rent is huge.  I would say it looks like you are on track.  

@Michael Kissi Have you tried using the rental calculator to see what your returns would be (I think you get 5 free calculations as a non-pro member)? It's a good way to help divorce yourself from the emotion. I'm not sure what your situation is, but I'd personally look into buying a home where the mortgage would be paid for from your rental property if that's at all possible. 

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