Newbie Questions about Investing in Baltimore

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Newbie Questions about Investing in Baltimore

Seth Hochberg
Member since 2020 · 120 posts · 135 votes

Hello Baltimore community! As you can see, this is my first post on BiggerPockets and I have tons of enthusiasm for investing in real estate, but also tons of questions. I currently live in DC, but I recently moved here after living in Baltimore for 8 years. While Baltimore doesn't seem to be a hot investors market like Kansas City or Cleveland, I think investing where you know has a lot of value. Also, living in DC, I could make regular weekend trips over if need be (at least to start off). I've made a goal for myself to BRRR a single-family-home / duplex in 2021. If that goes well, I'd look to doubling that every year (but I don't want to get too ahead of myself). I'd be looking at an all-in price point of 100k, but that can go up if I look for more financing options (if it makes sense).

What neighborhoods are people investing in? While I'd love to go back 30 years in time and buy properties in Canton, Fells, and Fed Hill, where are those B, B+ neighborhoods in Baltimore that make sense to invest in? Where are places I can see a stable renters market and opportunities to BRRR? I know Baltimore is very block by block, but I'm still curious. These are areas I, someone with 0 investing experience, would guess make sense that are "up-and-coming". I'd be looking for properties that fit that 1% rule, and avoid chasing the 2% properties. Can anyone with experience give feedback on this list? Any obvious areas I'm missing or areas I've listed that are terrible ideas?

  • 3 block radius of Patterson Park
  • Remington
  • Bolton Hill
  • Upper Fells / Butcher's Hill
  • 2 block radius around Bayview Medical Center
  • Charles Village 
  • South of Hampden (Wyman Park?)
  • Highlandtown
  • Pigtown

Also, what do people think of surrounding county areas like Catonsville, Dundalk, etc.? They might be good markets, but then I lose the competitive advantage of knowing the areas as I rarely left the city. 

Also, I was thinking, later down the line, it would be interesting to pick up a few properties in Cherry Hill to play the appreciation game. I worked there for a few years and as morally conflicted as I feel about this happening, I feel it has potential for gentrification. It's the last area by the water to jump in home values (Canton, Fells, Fed Hill, Locust Point, etc.). Just an idea - feel free to shoot it down.

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    Alan C.
    Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
    5y

    My personal opinion is that if you want rentals in Baltimore (or most other places, for that matter), next year should be a buyers market. Many "accidental" and mom and pop landlords will be selling their holdings. The pandemic has stopped evictions and in a number of cases, tenants are no longer paying rent, but the owner still has to pay the mortgage, taxes, insurance, water, maintenance, etc. This will cause a lot of owners to get out of the business and look for cash. 

    I think there will be a lot of bargains next year, especially if you are good at creative dealmaking and can negotiate seller financing or "subject to" deals.

    Recently, I made an offer on a rental with a solid tenant and the numbers were good based on the advertised rent. However, I asked for a rent roll and found that the tenant was only paying 50% of the normal rent due to the pandemic. The seller still wanted the same price as if the tenant was paying 100%. I made an offer to pay a reduced sale price now with a note to make up some of the difference once the tenant was back to paying the full rent. My offer was rejected so the owner is now collecting less rent, but still has the same expenses. My guess is that there are a lot of landlords in this position and as time goes by, they will be more owners willing to work out a sale that is favorable to investor/buyers.

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    • James Wise
      Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
      5y
      Originally posted by @Seth Hochberg:

      Hello Baltimore community! As you can see, this is my first post on BiggerPockets and I have tons of enthusiasm for investing in real estate, but also tons of questions. I currently live in DC, but I recently moved here after living in Baltimore for 8 years. While Baltimore doesn't seem to be a hot investors market like Kansas City or Cleveland, I think investing where you know has a lot of value. Also, living in DC, I could make regular weekend trips over if need be (at least to start off). I've made a goal for myself to BRRR a single-family-home / duplex in 2021. If that goes well, I'd look to doubling that every year (but I don't want to get too ahead of myself). I'd be looking at an all-in price point of 100k, but that can go up if I look for more financing options (if it makes sense).

      What neighborhoods are people investing in? While I'd love to go back 30 years in time and buy properties in Canton, Fells, and Fed Hill, where are those B, B+ neighborhoods in Baltimore that make sense to invest in? Where are places I can see a stable renters market and opportunities to BRRR? I know Baltimore is very block by block, but I'm still curious. These are areas I, someone with 0 investing experience, would guess make sense that are "up-and-coming". I'd be looking for properties that fit that 1% rule, and avoid chasing the 2% properties. Can anyone with experience give feedback on this list? Any obvious areas I'm missing or areas I've listed that are terrible ideas?

      • 3 block radius of Patterson Park
      • Remington
      • Bolton Hill
      • Upper Fells / Butcher's Hill
      • 2 block radius around Bayview Medical Center
      • Charles Village 
      • South of Hampden (Wyman Park?)
      • Highlandtown
      • Pigtown

      Also, what do people think of surrounding county areas like Catonsville, Dundalk, etc.? They might be good markets, but then I lose the competitive advantage of knowing the areas as I rarely left the city. 

      Also, I was thinking, later down the line, it would be interesting to pick up a few properties in Cherry Hill to play the appreciation game. I worked there for a few years and as morally conflicted as I feel about this happening, I feel it has potential for gentrification. It's the last area by the water to jump in home values (Canton, Fells, Fed Hill, Locust Point, etc.). Just an idea - feel free to shoot it down.

         I imagine Baltimore is very similar to Cleveland and KC. Most of the Midwest is all very similar. So if I were you, living in DC, Baltimore would be the place I invested.

        1Reply
      • Ozzy SirimsiBusiness Member
        Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
        5y

        One thing you should know, Baltimore is a very hot market for investors especially last 3-4 years.

        Price point might be low, but there are ton of investors in 50K-120K price points, so the house you will be making an offer, or will be trying to low ball, you will have another 6-7 investors on it.

        Out of your list of areas, Highland Town, Pigtown, may be bayview would have 100K houses, rest is already passed that point.

        Hampden is the new Canton canton :D))

        so you need to spend time in Baltimore, and learn pocket blocks otherwise it would not be as easy as you think.

        2Reply
      • Seth Hochberg
        OP
        Member since 2020 · 120 posts · 135 votes
        5y

        @Ozzy Sirimsi Thanks for the reply! Hypothetically, if we were to ignore the price range, would you agree those neighborhoods have a strong (and stable) renter's market? 

        Also, as a real estate agent familiar with the area, what neighborhoods are buyers looking to buy (the hot markets)? Are there any neighborhoods that scream at you (or anyone else) to be a good area to invest (ignoring price point, for now)? I totally understand putting in the work to find and analyzing deals/markets - just asking for a nudge in the "right" direction.

        0Reply
      • Jeremie Torres
        Rental Property Investor · Baltimore, MD · Member since 2020 · 53 posts · 48 votes
        5y

        Hey @Seth Hochberg I'm a newbie as well and I can't agree more with @Ozzy Sirimsi's take about how the price range for 100k properties is starting to get really saturated. Both me and you looks to have the same plan for 2021, targeting the same price range, same type of property, same strategy etc etc. And just like you I'm also preparing really hard for next year: saving, learning. We won't know how the market is gonna turn in Bmore but I know there'll be deals to be had just a matter of finding them first. That's probably where direct mailing comes in. If it's in public listings, it's gonna to be a race against time and a challenge to offer against others. However, there is one area that I don't see a lot of people are talking about and I've driven all over that area (I drive for UberEats) and they are nice. Looking into apps they look to be very affordable. Lol don't mean to make a suspense but you're more than welcome to PM me about it. I just don't wanna be liable if someone were to decide on my words. 

        1Reply
      • Alex Olson
        Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
        5y

        @Seth Hochberg Yes, investing where you know is the first step in successful investing. It is not a for sure thing but helps a lot! Especially for out of state investors. 

        1Reply
      • Gayle Melnick
        Member since 2020 · 80 posts · 66 votes
        5y

        @Seth Hochberg

        I'm a newbie investor but Baltimore local. I own my primary residence in Hampden. I'd like to buy another in Hampden as a buy and hold but the market is pretty hot, most houses getting multiple offers. 

        I bought my first buy and hold rental in Charles Village. I'm under contract for my second in Remington.

        I'm wary of PIgtown, Fells, Canton, all the other more popular neighborhoods that are desirable to live in. When you look at zillow and trulia, there are always tons of properties listed for rent. The competition seems to be pretty steep.

        When I look for places to rent in Remington, Charles Village, Hampden, there aren't usually that many properties available, never as many as the other neighborhoods I mentioned. I'd rather not have as much competition. That's just my personal observation, not sure if other people on here with more experience have a different point of view.

        1Reply
      • Alan C.
        Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
        5y

        My personal opinion is that if you want rentals in Baltimore (or most other places, for that matter), next year should be a buyers market. Many "accidental" and mom and pop landlords will be selling their holdings. The pandemic has stopped evictions and in a number of cases, tenants are no longer paying rent, but the owner still has to pay the mortgage, taxes, insurance, water, maintenance, etc. This will cause a lot of owners to get out of the business and look for cash. 

        I think there will be a lot of bargains next year, especially if you are good at creative dealmaking and can negotiate seller financing or "subject to" deals.

        Recently, I made an offer on a rental with a solid tenant and the numbers were good based on the advertised rent. However, I asked for a rent roll and found that the tenant was only paying 50% of the normal rent due to the pandemic. The seller still wanted the same price as if the tenant was paying 100%. I made an offer to pay a reduced sale price now with a note to make up some of the difference once the tenant was back to paying the full rent. My offer was rejected so the owner is now collecting less rent, but still has the same expenses. My guess is that there are a lot of landlords in this position and as time goes by, they will be more owners willing to work out a sale that is favorable to investor/buyers.

        2Reply
      • Seth Hochberg
        OP
        Member since 2020 · 120 posts · 135 votes
        5y

        @Alan C.

        For sure that's what I've heard as well. Just starting out, my goal is to have my finances lined up and an agent I like by the end of this year. If the housing market becomes a buyer's market soon - now seems like a perfect time to getting into the game.

        0Reply
      • Seth Hochberg
        OP
        Member since 2020 · 120 posts · 135 votes
        5y

        @Gayle Melnick

        Charles Village. I actually went to Hopkins for undergrad. What's your experience there - have you been renting primarily to college students? If so what has that experience been like.

        0Reply
      • Sam Lewis
        Real Estate Agent · Baltimore, MD · Member since 2018 · 283 posts · 228 votes
        5y
        Originally posted by @Seth Hochberg:

        @Alan C.

        For sure that's what I've heard as well. Just starting out, my goal is to have my finances lined up and an agent I like by the end of this year. If the housing market becomes a buyer's market soon - now seems like a perfect time to getting into the game.

        I would not rely on an agent, if I were you I would be building rapport with wholesalers

        0Reply
      • Seth Hochberg
        OP
        Member since 2020 · 120 posts · 135 votes
        5y

        @Sam Lewis

        That's interesting! Spoken from a real estate agent, I'm curious why you say that's so. I think wholesalers can make a lot of sense if good deals are hard to find (or if it's a competitive market). Would it be fair to say wholesalers are riskier for a first time investor?

        0Reply
      • Sam Lewis
        Real Estate Agent · Baltimore, MD · Member since 2018 · 283 posts · 228 votes
        5y
        Originally posted by @Seth Hochberg:

        @Sam Lewis

        That's interesting! Spoken from a real estate agent, I'm curious why you say that's so. I think wholesalers can make a lot of sense if good deals are hard to find (or if it's a competitive market). Would it be fair to say wholesalers are riskier for a first time investor?

        You bring up a good point - if you aren't too familiar with a specific area I would utilize an agent to vet deals but not necessarily bring the deals to you. Of course you'd want to make sure it was a win win for the agent as well

        0Reply
      • Alan C.
        Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
        5y

        I reread your original post and would offer a word of warning about Cherry Hill. Right now, it's one of the more crime-ridden areas. Under Armour is supposed to be building a mini-city/headquarters at Port Covington, a short distance away. In order to get  the city tax funding, they said that they'd put money into Cherry Hill. 

        However, Under Armour recently was in the news about accounting problems. Add in the work-from-home situation and the Port Covington project may never materialize the way that was laid out in the initial plans.

        The same thing happened to Westport. The billion-dollar project was given the green light in 2007 and was supposed to build up the last waterfront area in Baltimore and I think even Trump had some plans for a high rise. But then the 2008 recession happened and the developer lost everything as his project was auctioned off at pennies on the dollar. And nothing has happened since that time.

        So I would be careful of counting on future appreciation. You can look up my other posts and see that I recommend that you "make your money when you buy." Which simply means that you never count on appreciation. If you get it, consider yourself fortunate for the extra profit. And if you don't, you should still have a decent return on your investment.

        2Reply
      • Seth Hochberg
        OP
        Member since 2020 · 120 posts · 135 votes
        5y

        @Alan C.

        That's really interesting insight. I think I feel an emotional attachment to the neighborhood having worked there for a few years and wanting to see it turn around. But its not an idea I had researched yet, so thanks for providing that insight

        0Reply
      • Ozzy SirimsiBusiness Member
        Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
        5y
        Originally posted by @Seth Hochberg:

        @Ozzy Sirimsi Thanks for the reply! Hypothetically, if we were to ignore the price range, would you agree those neighborhoods have a strong (and stable) renter's market? 

        Also, as a real estate agent familiar with the area, what neighborhoods are buyers looking to buy (the hot markets)? Are there any neighborhoods that scream at you (or anyone else) to be a good area to invest (ignoring price point, for now)? I totally understand putting in the work to find and analyzing deals/markets - just asking for a nudge in the "right" direction.

         I personally invest in Charles Village, Fells, Homeland, Hampden etc... I like the location and less trouble with tenant, but I invest in earlier, right now a Charles Village house would be 300K and those houses are old. You would still make money, but dont expect much of an appreciation, same thing in most of the neighborhood you mentioned, prices are high.

        0Reply
      • Alan C.
        Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
        5y

        I just saw an update about Westport, so that area may see a real jump in prices. 

        Here's the link

        https://www.baltimoresun.com/b...

        The problem is that now everyone knows about this so there won't be much in the way of bargains as homeowners and absentee landlords hold out for top dollar.

        0Reply
      • Alan C.
        Investor · Baltimore, MD · Member since 2015 · 155 posts · 166 votes
        5y

        One other thought--You say you have an emotional attachment to the area. 

        However, this business is about numbers--either they work or they don't

        As they say on airplanes, when the oxygen masks come down, put yours on first. You can't help anyone else if you pass out due to lack of oxygen. The same philosophy applies in life. 

        Once you are wealthy enough with passive income to cover your lifestyle, you can start a foundation or other non-profit to help people less well-off than you are.

        1Reply
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