First Investment Property in Baltimore Near Hopkins!

32 Replies

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $110,000
Cash invested: $26,000

Hi everyone! Last year I set the goal to purchase my first investment property in the first quarter of 2019. I live and work in Washington, DC where I own my primary residence. So this was second home purchase and first investment property. I started looking at single family homes in fall 2018, submitted multiple offers, and got discouraged because nothing panned out. I submitted the offer on this house in February 2019 and it was accepted. I closed on the house in March 2019.

What made you interested in investing in this type of deal?

I had approx. $30k saved and I chose Baltimore because I'm somewhat familiar with the city, its driving distance and the cost to enter the market is significantly lower than DC. Initially, I was only interested in small (2-4 unit) multifamily properties, but demand is high and they are currently overpriced. I decided to focus on purchasing a single family home near one of the major universities in Baltimore City.

How did you find this deal and how did you negotiate it?

I was driving to Baltimore weekly to tour potential investment properties. However, I wasn't able to visit this property in person before submitting the offer. My realtor went to see it and sent me a video of the home and neighborhood. The home was listed for $114,900. I submitted an offer for $105k. The seller countered my offer with $110k and I accepted. I went to tour the property in person after my offer was accepted.

How did you finance this deal?

The standard down payment on an investment property is 25%. I found a lender that allows investors to put down 15%. I did traditional financing with 15% down. I paid for the down payment and closing costs with personal savings.

How did you add value to the deal?

Based on the inspection report I received a $3500 seller credit. I used these funds to complete the necessary (minor) roof repair and to fix a plumbing leak in the basement. I came out of pocket approximately $6k for cosmetic upgrades: installing granite counters in the kitchen, new kitchen backsplash, new refrigerator, changing the locks, new bathroom fixtures, hybrid smoke/co2 detectors, etc.

What was the outcome?

After closing on the house I had some analysis paralysis around selecting contractors to make minor repairs to the property. I closed in March and completed the renovations between March and July. I listed the property on Zillow, Craigslist and Cozy in July. Because I purchased in a desirable neighborhood (Ednor Gardens) the response was great. It took me 2 weeks to find a quality tenant. They submitted their background/credit check through Cozy and they signed the lease in late July 2019.

Lessons learned? Challenges?

My biggest lesson learned was to have contractors lined up and a plan of action/timeline for rehabbing the property before closing. It took me 4 months to complete relatively minor repairs and cosmetic renovations because I didn't know what I was doing and I was afraid of making mistakes. One thing I did right was having cash on hand to pay the mortgage for several months so the delay didn't hurt me financially.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My Baltimore-based real estate agent was awesome. Her name is Trish Ofori.

@Emily Howlett I wonder the same. I’m thinking he used hard money 12 month term fix and flip lender. Most of those Offer 85% to 90% LTC as long the Arv isn’t over 70%. If he held on long term he could just Refi Long term.

Congrats!  I came close to picking up 6 homes near Hopkins from an older investor back in 2003, he was downsizing his portfolio.  Hindsight, cashflow would have been great over the last 15+ years, although appreciation underwhelming.  Baltimore is an interesting market, block by block, best of luck with the property -- you should have a strong renter pool in that area.

@Jennifer Bryant congrats to you and awesome you were able to rent so fast! Took me over a month to find quality individuals for my property due to screening concerns. 

Was there lender specific charges regarding your closing to make it seem high to you? lenders i have dealt with in the past have been adamant about putting down at least 25% on investment properties.  I wonder if your lender required those extra charges do to the reduced down payment

Congrats!

Care to share how much were you able to get for rent for the property? I live close to Ednor Gardens and have noticed rents going up quite a bit there. 

If you are on facebook, I'd recommend joining the Baltimore Investors Network group. Its VERY active and you should have no problems finding vendors in the future or help with any facet of investing in the area.

@Solomon Morris yes, there were lender specific charges that made the closing costs high. The home was $110,000 and the closing costs were around $11,000 which I think is high. I had so many other things on my plate earlier this year that I didn’t really shop around for loans like I should have. 

@Tim Youse Thanks for that recommendation, this is my first time hearing about that group. 

This home is renting for $1,250. There was a character limit on my intial post, but its worth noting that this a 1000 sq ft 2 bedroom/1 bath house. So, its a bit smaller than some of the other homes in the neighborhood which can go for more. 

What were the prices like when you first moved there? 

@Jennifer Bryant There's a also a strong short-term and month-to-month furnished market there, might be something to explore when your tenant leaves.  Also some interesting ways to continue to legally rent for less then 30 days, despite the recent changes to the short-term rental rules in Baltimore.  How many bedrooms/bathrooms?  I know a 2/1 furnished month-to-month may net you around $2k per month, some details pending.

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