Investing in Frederick MD
Flipper/Rehabber · Fair Lawn NJ · Member since 2016 · 382 posts · 87 votes
Investing in Frederick MD
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10yThanks for the tag @Ned Carey.
@Christian Sifuentes I would be focusing on downtown Frederick for flips. Not that is a very general area to focus, and it will change block by block. For instance the block of 7th Street east of Market Street, while that is downtown, I do not think that is a good block to flip. I think it would be an ok block for a buy and hold, but that block does not have the ...not sure how to say it...the beauty of some of the other blocks, thus will not draw the higher prices some of the other blocks will draw.
One thing though to be aware of is where the historical district boundaries are. Im not against flipping inside the boundaries, but just be aware if you are using hard money that inside those boundaries you could be stuck holding the property for longer if the exterior of the property needs work. You actually see a number of flips on the streets just north and south of the historical district boundaries as some people just do not want to deal with them.
The other thing to be aware of as well down there is to make sure you can properly comp the property. I saw one flipper who did two flips fairly recently...one Im almost positive they lost money, and the other they may have as well (or barely turned a profit) because they did not know how to properly determine their ARV. Just as an example on one of them...they way over improved the property for the price point, and they also did not factor in the fact that this property did not have a yard...and Frederick is a very dog friendly city...so not having that yard really brought down the value. Also be aware of the square footage of the properties, as there can be a pretty large variance...also be aware of the styles as for instance a victorian rowhouse will likely have a higher arv than a federal style row house.
There are other parts of Frederick you could probably flip in, but the smaller size of these downtown rowhouses really helps to cap your repair expenses since there is only so much you can spend in those small things. Once you move further away from downtown, the properties get much larger, and the inexperienced could easily under estimate the repair costs in those.
District Invest Group546 Reviews
29 Replies
- Keedysville, MD · Member since 2017 · 24 posts · 10 votes9y
@Russell Brazil I had a thought and wanted to run it by you. The price/rent ratio (at market value) seems a bit better on Stratford than Cimarron, but they also have different costs, right? Stratford condos have additional city taxes and higher HOA fee. With it being a true condo (not TH), I assume that some of a typical CapEx allowance could be accounted for in the HOA fee. I mean, you wouldn't have to pay for a roof, the main entrance to each unit is inside, unexposed to the weather, etc. Looking at the numbers though, city taxes are about 0.7%, right? so about $60/mo extra. And the HOA fee appears to be about $80-90/mo extra, but maybe reduce the CapEx by $40-50/mo? That's about $100/mo lower cost on the Cimarron TH, with market values being similar. Looks like Stratford might get an extra $50-100/mo in rent though. So even though the ratio might be a bit lower on Cimarron, the net cashflow might be about the same.
I know each deal would have to be analyzed on its own merits and not based on the entire community, but just something I was thinking about. Thoughts?
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes9y
Originally posted by @Shaun Sullivan:
@Russell Brazil I had a thought and wanted to run it by you. The price/rent ratio (at market value) seems a bit better on Stratford than Cimarron, but they also have different costs, right? Stratford condos have additional city taxes and higher HOA fee. With it being a true condo (not TH), I assume that some of a typical CapEx allowance could be accounted for in the HOA fee. I mean, you wouldn't have to pay for a roof, the main entrance to each unit is inside, unexposed to the weather, etc. Looking at the numbers though, city taxes are about 0.7%, right? so about $60/mo extra. And the HOA fee appears to be about $80-90/mo extra, but maybe reduce the CapEx by $40-50/mo? That's about $100/mo lower cost on the Cimarron TH, with market values being similar. Looks like Stratford might get an extra $50-100/mo in rent though. So even though the ratio might be a bit lower on Cimarron, the net cashflow might be about the same.
I know each deal would have to be analyzed on its own merits and not based on the entire community, but just something I was thinking about. Thoughts?
I don't know what the rents on Cimarron are off hand. But condos have certain pluses and minuses in general. They do have the higher monthly fee (and I wouldn't by a condo with an unreasonable fee), they don't go up in value as much as a single family, on poorly run ones (not stratford) you run the risk of a special assesment. But the pluses are the monthly fee essentially replaces your capex....you will have to replace your HVAC at.some point. Repairs tend to be very very low in condos. My condos are easier to fill as i can get people to move in anytime of the month, while my sfh and th people only move in on the first. You generally have lower maintenance tenants, and they are just easier to manage because of those things. I get calls from my Condo tenants maybe once a year, while a single family tenant I hear from every couple of months about something. Townhouses are kind of in between, but more towards the sfh part of the spectrum. I do own all 3 types of assets and like each for different reasons. I think having a mix is good.
District Invest Group546 Reviews - Keedysville, MD · Member since 2017 · 24 posts · 10 votes9y
@Russell Brazil again, thanks. A lot of great info packed into that one paragraph.
Looks like rents on Cimarron/Cypress are lower than Stratford for equivalent BR/BA, but market value is also lower. A 3BR/2.5BA/1264SF on Cimarron/Cypress seems to average around $1300, with a market value in the $120Ks. 2BR/2BA/1050SF on Stratford appears maybe a bit higher in rent, but with a similar market value in the $120Ks. Of course these are averages and depend on condition, finishes, etc... but I think it illustrates the point.
Some of that extra stuff you mentioned might slide the lever more towards the condos. Still though, seems that one tiny community at the edge of Ballenger Creek might be worth keeping an eye on.
- Investor · College Park, MD · Member since 2014 · 79 posts · 28 votes7y
Any wholesalers in Frederick? I've got 2 rentals in Walkersville (Glade not discovery) and closing on a flip at the end of next month in Mt Airy (if all goes well). I'm not interested in going to Washington County but I'd be open to Howard County and Anne Arundel. I'm looking for both buy and holds and flips. I've got a good relationship with NYMEO and recommend them if you live/work/worship in Frederick Md.
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