Baltimore Rental Property Investing

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Baltimore Rental Property Investing

Jerry Presmy
Rental Property Investor · Baltimore, MD · Member since 2018 · 1 post · 1 vote
Task: To buy and hold rental properties, likely also including the Section 8/ Housing Choice Voucher Program (HCVP), to creat a cash flowing portfolio in Baltimore, MD. Challenges: 1.) Finding a reliable real estate agent who’s familiar with the area and comfortable doing several cash deals within the following criteria... - Property acquisition ~$20k - Rehab ~$15k - Rents for $1,300+/month 2.) Finding a reliable contractor who’s familiar with what it takes to rehab a property and get it up to Section 8/ HCVP code. 3.) Finding banking institutions who will refinance a cash flowing rental property without needing to see six months of performance. Solutions: Let’s discuss it...
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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y

@Jerry Presmy Well you have some challenges . First we all would love to find a house for $20K and get it rehabbed for $15K and rent it for $1300 a month .    First problem I see is that $15K for renovations , that may cover materials , certainly not labor . A 20K house will need a WHOLE lot more than that . 

The contractor part , first as a contractor I wouldnt care what HCVP code is , I would only care what was necessary to pass the building inspector . You the owner tells me what work YOU want done , I price it and then do it . 

Now you are dealing with Baltimore city and Section 8 tenants . These tenants KNOW they are what landlords want , they wont accept dives , they want nice looking properties . There are over 1000 houses for rent in the city , thats 1000 landlords trying to lure in that good section 8 tenant . LOTs of competition . 

banks generally dont want to do loans on those cheap houses . 

To be blunt , I think you have set your sights just a bit high . 

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  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    7y

    @Jerry Presmy Well you have some challenges . First we all would love to find a house for $20K and get it rehabbed for $15K and rent it for $1300 a month .    First problem I see is that $15K for renovations , that may cover materials , certainly not labor . A 20K house will need a WHOLE lot more than that . 

    The contractor part , first as a contractor I wouldnt care what HCVP code is , I would only care what was necessary to pass the building inspector . You the owner tells me what work YOU want done , I price it and then do it . 

    Now you are dealing with Baltimore city and Section 8 tenants . These tenants KNOW they are what landlords want , they wont accept dives , they want nice looking properties . There are over 1000 houses for rent in the city , thats 1000 landlords trying to lure in that good section 8 tenant . LOTs of competition . 

    banks generally dont want to do loans on those cheap houses . 

    To be blunt , I think you have set your sights just a bit high . 

    5Reply
  • Jeffrey H.
    Baltimore, MD · Member since 2018 · 169 posts · 82 votes
    7y

    http://www.ajbillig.com/auctions/upcoming-auctions/residential/16-Baltimore-City-Propert-5100-Falls-Road-2018-11-13. Pay specific attention to the assisted living portfolio. Unlike section 8 tenants, these will never go vacant/have turnover. never have rent court, never have eviction, never get destroyed, never have hcvp bothering you. Rents are stronger then sec 8 and water paid by tenant.

    1Reply
  • Account Closed
    Rental Property Investor · Laurel, VA · Member since 2015 · 5 posts · 0 votes
    7y

    Welcome to BP brother, I'm in the area also. Lets connect!

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    I'm sick of Baltimore. I will never do another buy and hold there. I should sell what i have and invest in other areas.

    3Reply
  • Juan J.
    Specialist · Baltimore, MD · Member since 2016 · 11 posts · 3 votes
    7y

    Hello Jerry, My name is John (or Juan in Spanish). I am a General Contractor serving the Baltimore, DC, and Virginia areas. I think your numbers are a bit optimistic but I also believe optimism is good, in moderation :). I am bilingual in Spanish, (from Spain), so I have easier access to a larger pool of highly skilled and professional carpenters, electricians, plumbers, etc. I like your vision so if you need any help please contact me and I will be happy to see what I can do. thanks.

    JJ

    2Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    Every investor in Baltimore would love to hit those numbers every time. LOL 

    0Reply
  • KaTrina Jones
    Baltimore, MD · Member since 2016 · 19 posts · 5 votes
    7y

    Those numbers sound good but are they realistic? What area are you looking in. I find a house for 20K usually requires a lot more work... maybe 40K or more. Also if you did find a house for 20K that only needed 15K of work it doesn't seem like it would be in a neighborhood that would command 1300 in rent. Are you a new investor? I think most most banks that offer refis without tenant performance usually require a relationship being built. 

    0Reply
  • Shoshana Shulman
    Investor · efrat, israel · Member since 2014 · 93 posts · 20 votes
    7y

    Hello, Mark Cruse,

    Can you explain why you are sick of Baltimore? I am looking at a property right now, and deciding whether or not to go for it. I'd love to hear your experiences.

    Thank you.

    0Reply
  • Ian Barnes
    Rental Property Investor · Baltimore, MD · Member since 2014 · 247 posts · 321 votes
    7y

    @Shoshana Shulman I do construction and own properties in Baltimore.  The problems are crime is not getting better, and if your a landlord your looked at as evil vs being good for the city.  Also taxes go up every year, and they just passed a law stating you have to get your property inspected ever 2 years no matter what.  Also, the voucher programs are paying a lot less than they used too. What part of the city are you trying to invest in? I can give you a head up of whether it makes sense or not?

    3Reply
  • Shoshana Shulman
    Investor · efrat, israel · Member since 2014 · 93 posts · 20 votes
    7y

    Thanks for responding. I do know how difficult Baltimore City is. I have both lived and taught there. I'm looking at a house in the Belair-Edison area. I heard that section 8/Baltimore City (not sure which) is requiring home inspections YEARLY, not every two years, as of now.

    I am also familiar with the ridiculous tax rate and the fact that landlords get billed directly for the water bills.

    Like I said, I'm still thinking it over.

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Shoshana Shulman:

    Hello, Mark Cruse,

    Can you explain why you are sick of Baltimore? I am looking at a property right now, and deciding whether or not to go for it. I'd love to hear your experiences.

    Thank you.

    In terms of the city, it’s too much bureaucracy and dozens of annoying ways for them to pick your pockets. All the fees, requirements, city codes, constantly changing mandates and a climate that’s hostile to landlords makes it not worthwhile in my book. In addition, most of the city is low income which is another host of problems and headaches. I’ve had nearly every problem known to landlords. I can handle it and have made money, but I have buy and holds all over the state of MD in other areas with a substantially decreased degree of annoying headaches. It’s a cool starting point for newbies who want to get their feet wet because you learn so much but I’m not picking up anymore in Baltimore no matter what.

    4Reply
  • Thomas Carroll
    Baltimore, MD · Member since 2016 · 14 posts · 6 votes
    7y

    Agreed with what @Mark Cruse had to say. Great place to start and I will continue to buy I Baltimore. I'm still a junior investor, but as I grow and have the time to build relationships elsewhere, I will eventually move away from Baltimore because of the crime and headache factors. 

    2Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Thomas Carroll:

    Agreed with what @Mark Cruse had to say. Great place to start and I will continue to buy I Baltimore. I'm still a junior investor, but as I grow and have the time to build relationships elsewhere, I will eventually move away from Baltimore because of the crime and headache factors. 

     Yes, the price point is great there and it can be very educational. You will be prepared for almost anything. LOL I spent all day in Baltimore. 

    1Reply
  • Jasmine Wilborne
    Baltimore, MD · Member since 2016 · 57 posts · 17 votes
    7y

    I owner occupy and rent to ladies my age. I can only imagine having to qualify for all of the non-owner occupant laws that exist in the city. Definitely has me second-guessing renting my home out when I want to move. The 1031 exchange is looking very promising. 

    0Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    7y

    @Jasmine Wilborne, If you're selling the house you live in you do not need to do a 1031 even if you have rented portions of it out - unless you have separated dedicated rental spaces outside the normal living areas.  You can sell and take the primary residence exclusion which is tax free and a much better deal.  

    The 1031 Investor5137 Reviews
    WebsiteView Page
    1Reply
  • Ian Barnes
    Rental Property Investor · Baltimore, MD · Member since 2014 · 247 posts · 321 votes
    7y

    @Mark Cruse what other parts of maryland are you investing in besides Baltimore city? Thanks

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    I've had investments in Greenbelt and Clinton which were fix and flips. I have buy and holds currently in Hagerstown, St Mary's county in addition to Baltimore.  From the bottom to the top of MD. LOL

    0Reply
  • Kevin Brenner
    Rental Property Investor · Washington, DC · Member since 2018 · 64 posts · 21 votes
    7y

    I'm moving to the DC area next month. I'm interested in purchasing small MFH (2-4 units) and small commercial properties (6-10 units) in the Baltimore market. I'm getting the vibe that it may be more trouble than its worth? Anyone had any success with small MFH in Baltimore, Maryland, or VA?

    2Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Kevin Brenner "More trouble than its worth"  depends on the person.  Baltimore has some of the best cash flow in the nation but partly because of the hassles, it keeps some competition away. 

    I have always worked in Baltimore and I am used to the hassles. It is just part of the business. I haven't found it over burdensome. It is just like any investment, higher returns come with more risk and effort. 

    You may find that multi units as you describe do not provide as  good of a return as SFHs in Baltimore and other areas in the region. Demand for investment properties has driven up prices and returns down. 

    3Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Kevin Brenner:

    I'm moving to the DC area next month. I'm interested in purchasing small MFH (2-4 units) and small commercial properties (6-10 units) in the Baltimore market. I'm getting the vibe that it may be more trouble than its worth? Anyone had any success with small MFH in Baltimore, Maryland, or VA?

     Yes, it just depends on what you wish to deal with. Great cashflow but nearly zero appreciation. As a younger investor it was worthwhile to me, but it's not balanced out in my opinion. You can get so much more in many forms in other areas while dumping a massive degree of headaches. I'm not picking up anything else in the city and may sell what I have eventually to put the money in other places. 

    0Reply
  • James Herbold
    Flipper/Rehabber · MD · Member since 2018 · 16 posts · 3 votes
    7y

    @Mark Cruse.  What have you found in Hagerstown and St. Mary's County.  I am looking to get into buy and rent in Frederick and Hagerstown.  Are in you downtown Hagerstown or in surrounding areas?

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @James Herbold:

    @Mark Cruse.  What have you found in Hagerstown and St. Mary's County.  I am looking to get into buy and rent in Frederick and Hagerstown.  Are in you downtown Hagerstown or in surrounding areas?

     I have a 4 unit in downtown Hagerstown. Downtown is trash right now but if it ever turns nice like Frederick, all I can say is wow. Either way, I'm satisfied so far. 

    1Reply
  • Jade N.
    Bowie, MD · Member since 2017 · 48 posts · 14 votes
    7y

    @Mark Cruse Hello, I'm new to investing and trying to get started this upcoming year. I am a bit concerned about Baltimore, but am not sure where else would be affordable. For the buy and holds outside of Baltimore, how do you know its a good place to gain renters? St. Mary's county seems like the country. How did you know where to start and why didn't you hold in Greenbelt and Clinton?

    0Reply
  • Jade N.
    Bowie, MD · Member since 2017 · 48 posts · 14 votes
    7y

    @Ned Carey Is Baltimore a good place for a newbie to start? From what I've read you have to know street by street. I search online regularly but still am not sure I truly know the area. How would you suggest I start? It seems pretty daunting when looking and I can't afford  to make too many [major] mistakes. Any guidance is appreciated. 

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Jade N.:

    @Mark Cruse Hello, I'm new to investing and trying to get started this upcoming year. I am a bit concerned about Baltimore, but am not sure where else would be affordable. For the buy and holds outside of Baltimore, how do you know its a good place to gain renters? St. Mary's county seems like the country. How did you know where to start and why didn't you hold in Greenbelt and Clinton?

     Yes, Baltimore can be challenging for a newbie for multiple reasons but it's doable. If you go that route I would sincerely suggest you find a competent property manager and do tons of research on where you will buy. In terms of St Mary's being country, anywhere 50 miles outside of DC or Baltimore will be country no matter what. Hagerstown has affordable stuff. St Mary's has a military base and pockets that are decent for rentals.  I just feel that Baltimore has great opportunity but too many headaches in my book. It's a great training ground for a newbie though. LOL. In terms of Greenbelt and Clinton, they would have been cool rentals but the exit strategy was fix and flip. I'm working on one and DC right now that could be a good rental but I'm flipping that as well. 

    0Reply
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