First Investment Property in Baltimore Near Hopkins!
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.
