Baltimore multi family

8 Replies

I would like to hear what everyone is thinking about Baltimore Maryland. I have been watching this market for a few years and I’ve gone back and forth with how I feel about investing there. I primarily look at 8-20 unit buildings in the downtown area. I can handle the building analysis, I’m more interested in what the locaL rules are, tenants, and predictions for the city’s culture and overall vibe are over the next few years. 

I see you are in DC. Do not let Baltimore's proximity to DC obscure the fact that they are polar opposite markets. Baltimore is a very high risk market, which is evident in the higher cap rates there, and DC a very low risk market as reflected in the low cap rates there.

Now there is nothing inherently good or bad about any degree of risk. But as I stated many years ago when I was on the BP Podcast, that the biggest mistake investors make is an inability to properly understand and measure risk, and thus they deploy their capital into assets that do not match their personal risk tolerance. 

In the same boat as you here.

My gut feeling tells me to stay away, though numbers in some cases seem to work, infact too good to be true at times. These “good” numbers must be compensating for some kind of pain that cannot be quantified on a spreadsheet.

I would summarize it this way: If you can take the pain, the gains will come.

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Baltimore has a certain degree of risk, especially to people out of state, who are just looking at numbers on the paper. However, I would say that risk is not distributed evenly among all of Baltimore. The 30k-50k SFH properties that might satisfy a 2-3% rule are going to carry a lot more risk than the A-neighborhoods that you seem to be considering. If you're looking to invest in downtown (Inner Harbor, Canton, Fed Hill, Fells Point, Harbor East, etc, then those neighborhoods definitely carry some of the least risk in the entire city.

And to vaguely answer your other question, Baltimore will not get you very much appreciation, it has had a declining population for the last 70 years, is extremely tenant friendly, and the Baltimore Orioles had the worst record in baseball this year (but the Ravens are doing well!) LOL. Baltimore's culture is quirky and it's called Charm City because it has a certain charm, but does not broadly appeal to everyone. I would classify Baltimore on the investor side of things the same way. It can be a really solid place to invest (I love it!) but it's not for everyone. 

What is the address?

Location matters in everywhere but it really matters in Baltimore. You tenant type changes, your neighborhood changes, and how you want to run your business should change as well.

Vacancy and eviction can hurt your analysis and it is very standard on some areas etc...

so if you can provide more info, we can give you better direction.

I appreciate everyones insight. I am primarily focused on inner harbor, fed hill, and within a ~2 block radius of the University of MD medical campus. If I come across a particularly interesting listing, I'll post it here to get more specific insight. I am running out of inventory in my main market which is why I am venturing into other cities. 

and to be clear - I am well aware of the risks associated with the market. I am mostly looking for any insight or optimism for the city's future that I haven't yet learned... or any bad news for the city's future that I don't know about. We can analyze a deal all day long, but I always find that local insight is extremely valuable. 

If anyone has any other MD markets that they like, id love to hear about that also.

Hey Edward, I’ve been paying attention to Baltimore’s development news over the past few years and I think there’s actually a lot of promising things going on - several new apartment buildings popped up in recent years, Top Golf coming in near M&T bank stadium, money going into improving the old indoor markets like Lexington Market, Port Covington finally being built, the possibility of Royal Farms arena being re-developed, etc. While there certainly is some risk with Baltimore I definitely see things continuing to improve