Baltimore Experts Help Please!!! Is this a good deal in Rognel Heights?

[Nicole Bryan]

Hello Team,

I have a property under contract in Rognel Heights Community of Baltimore (near Edmonson Village). It's under contract for $49,000. It's a 4 bedroom, 2 bathroom property and can rent for about $1100.

In terms of financing I am putting 25% down with interest rate of 4.75% with total including closing costs coming to around $18,000. 

The property needs some work that will be somewhere between $5,000 and $7,000 so I would be all in at around $25,000. My PITI payments would be around $450.

I'm not sure if I should move forward primarily because of the repair costs. My original intent was to be all in at no more than $20,000 to make this a good deal. 

Properties in the area have sold from anywhere from $50,000-$120,000 in the last year. There are a few fix and flips included. 

I have until tomorrow to make a decision or the deal will be nullified. Let me know your thoughts please. Thanks!

[Nancy Roth]

Rognel Heights is nothing like Sandtown/Winchester, it's actually a pretty nice neighborhood, although there are good and less-good blocks (typical in Baltimore). A 4/2 should probably get you more than 1100 in that neighborhood, I think. I get 1600+ for a 4/2/1 in a neighborhood not far from there, and so does a colleague of mine (our tenants are subsidized, but even market rent should be more than $1100).

I can't give you an evaluation based on the information you have provided. For instance, I don't know what the repairs are or how confident you are in the repair numbers (you sound like you have some doubts). Did a contractor go through and enumerate the costs or are you taking the seller's word for it? Does the $5-7K you mentioned include a little slack for surprises? All houses have surprises, you know.

Also $49K is not a horrible price for a house there, but it's not that great, either. I would like that price much better if the property were rent-ready. 

Long story short: the deal is not fabulous. Okay, maybe, but not that great.

So since you asked for help, I'm going to offer my stubborn, ornery little rule, borne of hard personal experience. If the seller is pressuring you to make a decision you are not prepared to make, walk the hell away! There will always be another house. Arm yourself with knowledge before you buy, so you go into it with some measure of confidence that you can succeed. 

Good luck,

Nancy Roth