Where to purchase a SFH for "house hacking" in Maryland?

22 Replies

Good Morning BPers, 

Looking for some thoughts / assistance with an upcoming move to Maryland.  My husband and I will be relocating to Maryland (he will be working in Severn/Odenton).   We are searching for a good investment to "house hack" within 30-45 minutes.  We have been having a difficult time understanding the best option between all the areas we have looked at: Ellicott City, Catonsville, Roland Park, Clarksville, Fulton, Silver Spring, University Park or Annapolis (any other suggestions also welcome).  We move somewhat frequently, every 2 years or so, so we always look to buy a cosmetic fixer with some room for sweat equity in areas that we do our best to research are going to maintain current value or (hopefully) appreciate due to trends, schools, walkability, incoming commercial investment and perceived desirability.  Our target acquisition cost would be 300-450K and looking to add between 25-50k (floor refinishing, painting, kitchen and/or bath updates) and resell to make minimum 50-75k in a couple of years.  We have been able to successfully do this our last three moves, which has given us the flexibility to continue following career options.   We also enjoy the process/work.  Any thoughts on which (if any) of the cities/neighborhoods in Maryland will lend themselves to this?  Hoping to land a 3-4 bedroom, 1-2 bath, approx 1600 sqft minimum (yard is unfortunately a requirement).   We do have children, so a safe area is a requirement as well.  Thanks in advance.  I would appreciate any insight/opinions.   

Hi Cate,

My strategy is buy and hold so a bit different than what you are describing but I was born and raised in Annapolis....still live there actually.  I would recommend also looking at Severna Park or other areas East of the Severn River as they have the best schools which helps for resale/appreciation.  Annapolis is a strong market but be sure to look at which school the home would register for.  Public schools are spotty in Annapolis unfortunately...residents are fairly wealthy and thus many have elected to send their children to private school which (in my opinion) has hurt the public school system.  The Severna Park and Broadneck school districts in Annapolis are best.  


For areas between Annapolis and DC, I would recommend also looking at Davidsonville or Crofton....very good school districts with lower prices than Annapolis.  Homes in those areas will also offer more land than you will find in Annapolis.  Resale should be good as well due to the strong employment opportunity in DC.

Sorry I can't give you a definitive answer on which area you should focus on...most submarkets in the DC region offer really strong appreciation and resale value.


Good luck!


Andrew

We lived in the area for 20 years. You might want to look for a  rancher in Ellicott City, something that you can update. Good schools in Howard County. You might also consider Savage...still in Howard County, schools arent as good, however I think it is an up and coming area. The Savage Mill is a wonderful old Mill that has some nice shops and The Rams Head Tavern. If we were going to move back, which we might, I think we would consider Savage. It has a lot of older homes that would be good projects. You might look at Glenelg and Glenwood however it might be very hard to find a home in your price range. There is a ton of growth going on in the North Laurel area. If you need a great Realtor I would highly recommend Greg Kinnear, he is amazing. I would also add that if you can find something in Western Howard County( might be hard given your budget) to fix up, you will have no trouble selling it. In my opinion Western Howard County( Clarksville, Dayton, West Friendship, Ellicott City, Glenelg, Glenwood, Fulton, Highland) is the best and safest area to live with some of the best schools in the Country. River Hill school district is highly sought after. Hope this helps!

Honestly your numbers are not realistic. You will not create $75k in value by putting in $25k at these price points in these areas.

Thanks for the input everyone @Russell Brazil - thanks for the feedback - I know every area is different, and I am not attempting to be unrealistic - those numbers had worked for us in other areas of the country - although I realize DC/MD is a very high cost area.  What numbers would you suggest targeting for the type/style of investment I am describing?  Purchase price, reno cost and out cost?  We move all over the country so we are aware each market has its own return structure/expectation.  We have in the past only moved to walkable, downtown areas (historic) and renovated those types of homes, but there seem to be very few towns  of that type within our desired purchase price (realistically, we need to stay below 500K) we have some flex with our renovation budget, we do quality updates and are usually very targeted on what will provide returns.  Branching more into a suburban environment would be fine, but we just dont have experience in Maryland or with that type of property or purchaser once we sell.

@Cate Mee Some of the areas you mentioned...take Ellicott City for instance...it is entirely possible to find a house that needs say $50k in work, an put that in, and the properties value might not move at all.  The more high demand areas, the price points will not vary because people want to buy into them regardless of condition.  They are buying the location and school district, and the actual property is secondary to that.

Clarksville and Fulton are also highly desirable, and there really probably isnt too much in those locations that drop down to that price point.  There are parts of Silver Spring you can add value, particularly if you find a house in say 20910 that has mold....you get a combo of people scared of mold in the high income areas, plus the desirability of the location. 

Speaking in the broadest terms though value add opportunities exist in the gentrifying locations. This is also where most of the appreciation comes from in the area.  But gentrification can also come with greater risk.  Take Prince Georges County along the DC border.  Lots of value add opportunities, but not necessarily the nicest place to live, and prices going up is strong.  But with a weaker general income in the area, you are more susceptible to price swings as the economy swings.

Areas of high desirability such as Ellicott City, Silver Spring...lets just say in broad terms Howard County and Montgomery County, have pretty strong appreciation...but not as strong as a gentrifying area, but with less downside risk.

Hi @Cate Mee ! I agree with the others that it will be almost impossible to make profits in this area. However, I can otherwise give you my thoughts on various towns near Severn. As mentioned, Howard County in general is a great county and close to work. Columbia has grown a lot recently but is highly sought after. Same for Ellicott City. Laurel is kinda mixed, and I believe spans both Howard County and Prince George's (PG) County. I would not recommend PG County for living. In addition, places like Jessup and Glen Burnie are okay, but not really great. Oh, the Hanover area has had lots of growth lately. That is also close to work.

A 3 or 4 bedroom/ 2+ bath SFH in the Columbia area will run you on average in the low to mid $400s. You could get a townhome for less. And some good deals on condos, but don't forget those high monthly condo fees.

These homes may not make great "flips", however, if/when you move in a few years, you could decide to keep it and rent it out possibly for close to your PITI, or at least sell it and probably not lose money. We have had our home in Columbia since 2009 and when we move, we will likely be renting it out.

Another option could be renting out a portion of your home such as the basement or an extra room. A few years ago, we were renting out an extra room for $700/month plus utilities.

If anything, you will want to live close to work. If you go further out to places like Bowie, Pasadena, College Park or even Severna Park and Annapolis, you can expect your commute to easily be 45-60 minutes with just light traffic hiccups. I'm not sure I'd recommend the first three places I just mentioned anyways. They might be less expensive, but they're definitely not as sought after. It's a balancing act, I suppose. Severna Park and Annapolis are nice, but perhaps even more expensive than Columbia/Ellicott City, and you'll have a longer commute.

I agree that unless you are doing a fully rehab $50-$75k. You are probably not going to make $75k in profit in 2 years.     There would need to be some sacrifices.  Either you would be living in a not so ideal location and making more money or living in a better location and making less.    Depening on the age of your kids Bowie may be a good comprise.  Its a great safe place to live with great anmenites. But the schools can be iffy.  Certain sections such as whitehall , rockledge , chapel forge and medowbrook have really good elementary schools. Other sections not so good.  And most of the Junior school are mediocre at best.  The high schools are not good anywhere in Bowie.   Crofton 5 minutes from Bowie.. Has great schools great, standard of living best there are less deals there. And you would pay $100k more for the exact same house as you would in Bowie.   Crofton's only downside is 1/2 of Crofton gets bused to South River high school which is so so and far away but Crofton is building a new high shcool which will boost values.

Cate,

Mr. Brazil's and others advice should be heeded. You are trying to move into what is one of the most desireable areas of Maryland. If you are serious about trying to get a property and make a profit you should start thinking outside of the box. The average consumer is going to be your competition for any of the ideas that you have presented so far.

I think to do what you are hoping to do, you need to not be hung up on a traditional mortgage purchase but to start looking for hard money funding or other alternatives and start looking through auctions or properties that will take more than $25,000 to rehab as this will greatly shrink your pool of competition. Once the acquisition and rehab are complete then go the route of refinance into a traditional mortgage.  Pinpoint an area that you find acceptable based on your personal family needs and start hunting in that area exclusively.

If you can handle more rural areas and less suburban, look south of Annapolis down MD Route 2, there are potential opportunities there  just outside of Davidsonville and father south  and  east  of Annapolis.

Thank you all for the input.  Its been very helpful.  One last request for advice - if my absolute ceiling on purchase price is 500K and my ceiling on renovations is 100k, from Roland Park (Baltimore) to the northern DC suburbs south and Annapolis east, where would you all suggest as the best bet with those financial limitations?  Again my only requirements are: yard with property and relative safety for my kids.  I know everyone has a different definition of the term safety - I have lived in cities all over the US from Denver to Houston to San Antonio for context.

Montgomery County is landing the new mega Amazon HQ2 headquarters soon so buy near the white flint area and sell +50% appreciation in 5 years.

Originally posted by @Cate Mee :

Thank you all for the input.  Its been very helpful.  One last request for advice - if my absolute ceiling on purchase price is 500K and my ceiling on renovations is 100k, from Roland Park (Baltimore) to the northern DC suburbs south and Annapolis east, where would you all suggest as the best bet with those financial limitations?  Again my only requirements are: yard with property and relative safety for my kids.  I know everyone has a different definition of the term safety - I have lived in cities all over the US from Denver to Houston to San Antonio for context.

If schools are not a concern....I would suggest the Riggs Park/Ft Totten neighborhood in DC with your criteria. Purchase price point of $350-$400kish, rehab costs in the $50-$70k range, ARV in the $525k range, and strong appreciation. I would also strongly consider Hyattsville and College Park...more varied types of property in those areas, so no exact formula. Howard and Montgomery County are likely to offer the best quality of life, but much harder to find a property to force value on since they sell based on schools more so than property, but it can be done. I just sold a property in Silver Spring to a flipper, and the numbers on that should be about $400k purchase, $100-$125k rehab, and ARV $600-$625k

Account Closed  If only you could know that...

Originally posted by Account Closed:

Montgomery County is landing the new mega Amazon HQ2 headquarters soon so buy near the white flint area and sell +50% appreciation in 5 years.

 Yes it is very possible Amazon HQ2 lands there, or one of the other 2 proposed sites in the county......and if it does, it will only have a marginal effect on values.

Originally posted by @Cate Mee :

Thank you all for the input.  Its been very helpful.  One last request for advice - if my absolute ceiling on purchase price is 500K and my ceiling on renovations is 100k, from Roland Park (Baltimore) to the northern DC suburbs south and Annapolis east, where would you all suggest as the best bet with those financial limitations?  Again my only requirements are: yard with property and relative safety for my kids.  I know everyone has a different definition of the term safety - I have lived in cities all over the US from Denver to Houston to San Antonio for context.

If you plan to send your kids to public school, I would not suggest Baltimore City - you mention Roland Park - which is probably as good as you're gonna get school-wise in the city, but property taxes there are probably going to run you at least $10k annually. Private schools in that area are plentiful, but also expensive - around $15k-$25k+ a year per child.

Originally posted by @Tim Youse :

If you plan to send your kids to public school, I would not suggest Baltimore City - you mention Roland Park - which is probably as good as you're gonna get school-wise in the city, but property taxes there are probably going to run you at least $10k annually. Private schools in that area are plentiful, but also expensive - around $15k-$25k+ a year per child.

      I absolutely love Roland Park, it is a shame that taxes are ridiculous in the city. 

Originally posted by @Ozzy Sirimsi :
Originally posted by @Tim Youse:

If you plan to send your kids to public school, I would not suggest Baltimore City - you mention Roland Park - which is probably as good as you're gonna get school-wise in the city, but property taxes there are probably going to run you at least $10k annually. Private schools in that area are plentiful, but also expensive - around $15k-$25k+ a year per child.

      I absolutely love Roland Park, it is a shame that taxes are ridiculous in the city. 

Absolutely agree - but for someone that is open to other areas outside of town, you can get more house and land elsewhere than Roland Park, and save money on taxes and schooling.

There are a lot of great suggestions in the DC Suburbs, but besides Roland Park no one has given Baltimore any love!  I suggest checking out Catonsville, Mount Washington, or Pikesville.  If you are okay with a city-living Rowhouse then Federal Hill/Riverside offers easy access to I-95 for commuting.

@Russell Brazil  I am curious as to why you are saying if the Amazon HQ2 lands in Montgomery County the impact on housing prices will be marginal.  I live in Silver Spring and am considering selling in a few years.

Originally posted by @Beth H. :

@Russell Brazil  I am curious as to why you are saying if the Amazon HQ2 lands in Montgomery County the impact on housing prices will be marginal.  I live in Silver Spring and am considering selling in a few years.

 We just lost Discovery Communications, a fortune 500 company and what, 5 to 10,000 employees over night, and what effect has that had? Zero.

The DC area has a population of 6 million. Its home to 10 of the 20 richest counties in america, and that doesnt even count DC proper.  How would amazon have an effect? If Amazon doesnt move to the white flint location, its not like the site going to sit vacant. Its still going to be developed. The ancillary jobs of construction and service still come into being no matter who develops the site. Amazon is planning on 50,000 jobs. Lets say half of those are hired from the existing population, and have from migration. Spread that out over 17 years (thats what state, county, governor and legislature are planning on) and at best you are talking about a negligible impact.

High earning Amazon employees will be targeting good school districts not Silver Spring

@Cate Mee I'm also a recent transplant to the Baltimore Metro area, I'm very interested to see what you decide on . Please let us BPers know! :) 


Originally posted by Account Closed:

Montgomery County is landing the new mega Amazon HQ2 headquarters soon so buy near the white flint area and sell +50% appreciation in 5 years.

Account Closed

With the direction Montgomery County is going, it can no longer be considered one of the great places to purchase a home in Maryland (considering all the other great choices).  The schools are in decline, crime is increasing and the taxes are incredibly high.  Hitching your wagon to Amazon putting a new headquarters in White Flint is extremely risky.

Stephanie

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