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...
@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 .
Folks who are considering investing in Baltimore should check out podcast episode #54 with @Lisa Phillips. She has some good tips on investing in the city.
@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.
There is no secret to Baltimore. Yes it is block by block. But if you drive from one block to the next you can see why there is a difference. I suggest you check out Belair Edison. It is a middle of the road Baltimore neighborhood. Lots of homeowners and many landlords like it.
The reason I say to learn it is because it is a standard by which you can judge. If you say I want a neighborhood a little better than Belair Edison any agent or wholesaler will know what you mean.
@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.
Yes Baltimore can vary on block to the next. But there is no secret to it, if you drive from one block to the next you will see the difference. I suggest you go by avg price range of a neighborhood then once you have narrowed it down do a drive by. The lower end the neighborhood the more careful you have to be. Generally when you are in $125k+ neighborhoods you are in a relatively consistent area.
I live 1/2 hour from the city and I learned it from scratch.
Oops I see I answered twice. At least my answers were pretty consistent.
Thank you for the suggestion @Ned Carey! I can definitely drive around there since its a focused area. Definitely a good start! So I guess trying to buy the extremely cheap real estate in Baltimore is no bueno? I would still need to stay close to $100k? I turned to Baltimore because of limited start up funds. Would $75k (with rehab) be reasonable to get decent real estate in Baltimore?
@Jade N. I wouldn't rule out totally cheap properties but you have to be particularly picky. In the past I have sold some properties that met your original criteria and would make fine rentals. Admittedly they are a little hardier to find today but deals are out there.
I think $75k is a reasonable number but it is all about the deal. One tough part of the city is it is tough to find small loans. You may be able to find a pretty nice property that you can be all in at $75k but it might be hard to find a $75k loan. (or even a $56k loan for a 75% LTV)
@Jade N. baltimore is a place where money can be made, just dont fool yourself into thinking that work isnt involved to get it. Many do and learn the hard way. "Would 75k be reasonable?"
-I just auctioned 4 licensed assisted living rowhome rentals paying 1362.50 each, almost no taxes, tenant pays water,...each for under 75k.