Baltimore Neighborhood Recommendations?

Question

Hello BP,

I am currently evaluating different neighborhoods in Baltimore to do a house hack -> hold. I came into this research thinking I knew the city but now I'm quickly discovering just how much there is to know! Recognizing that the city is completely different block-to-block, I've been making regular trips at different times of day to check out prospective areas.

Does anyone have recommendations about neighborhoods that I should start getting to know? I am looking to do either a 203k or simply buy with a conventional mortgage and move out after a year. I'm balancing finding an area where there is still room to cashflow that I will also feel comfortable living in for a year.

Any recommendations are appreciated!

Gayle Melnick · Answer

Hampden, Charles Village, Canton, Fells Point, Fed Hill, Locust Point. All desirable neighborhoods that people want to live in. These areas are more expensive than other parts of Baltimore but if you’re house hacking the numbers can work at a higher price point.

Gayle Melnick · Answer

@Brad Fallon

When I first bought my house in Hampden, I used my VA loan and I put nothing down at $305k. I also bought a house that was fully updated so no room for forced equity... this was before I knew anything about real estate. But, I house hacked. It's a 4 br/2.5 bath. At one point there were 5 of us living here. I brought in $2300 in rental income and my mortgage+taxes+insurance was $1900.

I only have one roommate now so my rental income for my primary residence is obviously a lot less. My point here is that you can buy something in the 300s in an A neighborhood with literally nothing down and still make money or at least come close to living for free with house hacking. It's not necessary to try to speculate on an up and coming neighborhood when you're house hacking.

If I were to do it again, I'd look for something in a neighborhood that I wanted to live in that's already set up as multiple separate units rather than renting out rooms. I'd also try to find something that I could force equity with and not something that's fully updated.

Good luck on your search!

Tim Jacob · Answer

I'd go for an A grade area you can get something for the mid to low 200s that has 3 or 4 bedrooms and atleast 2 full bathrooms.  Its only 5% down.  With closing you could be in it for a little over 20k.  You could have good coc if you rent by room once moving out.  If you rent the whole place the cash flow would be minimal but the irr would continue up.  Meanwhile you will live in a neighborhood you like.  If you are doing a brrr keep in mind there is probably 25% equity needed on the back end so it will be hard to keep all your money.  It can be done but will be managing a renovation as well.

Tim Jacob · Answer

I have experience owning 1 and managing a few for others in the city.  In the right parts of the city they work.  Most of the good or close by areas were mentioned.  Basically its the 83 corridor and the inner harbor neighborhoods.  It might work in parts of northeast as well though i would consider that more c grade.  In regards to Greektown/ Bayview they are building it up off Eastern Ave but Im sure those places will be a lot as they are new construction.  The other parts of it are not A grade.  They can be good rentals but not room rentals.  C grade at best there.

To max your cash flow I would go A grade and have 4 decent sized rooms with atleast 2 full bathrooms, one being a masterbath.  Problem there is a lot Baltimore places will have 3 rooms upstairs but one is a glorified office.  Even with 3 real spaces it can cash flow.  You will find some inventory with 4 decent rooms especially if you can go over 200k.

Gayle Melnick · Answer

@Brad Fallon

How are you running your analysis? If you're house hacking, you might not get positive cash flow. It's a win if you get the majority of your mortgage covered. Then, when you move out and find a tenant to replace you, that's when you should cash flow.

Seth Hochberg · Answer

Just to add a few in that realm ("A/A-"neighborhoods): Upper Fells, Butchers Hill, Remington, Bolton Hill, Woodberry, Roland Park, Brewer's Hill, and anything within a couple of blocks East, South, or West of Patterson Park is promising.

Ozzy Sirimsi · Answer

Where do you want to live and what is your budget though??

Brad Fallon · Answer

@Tim Jacob That makes sense. I had the day off today so spent a few hours driving through neighborhoods and it definitely seems like the Patterson Park area (Upper Fells, Butchers Hill, Highlandtown, etc) seem to be appealing for room rentals and young professionals. I thought that parts of Hampden were nice but 1) started to reach out of my price range and 2) seemed to cater to a different crowd that I am hoping to target with room rentals.

I'm going to continue learning that area at different times of day but now I just have to figure out whether I can actually make properties in that southeast area cashflow!

Brad Fallon · Answer

@Gayle Melnick that’s very helpful to know! Thank you for the advice.

Follow-up question: what do you think of Hampden as a whole? I’ve heard that blocks on the southern parts of the neighborhood can be less desirable than the northern parts but I don’t have a great feel for it yet.

Brad Fallon · Answer

@Gayle Melnick that’s how I’m assessing properties - my goal while living in the property is just to cut down on my cost of living

Baltimore Neighborhood Recommendations?

Most Popular Reply