Real Estate Agent · Tarrytown, NY · Member since 2016 · 149 posts · 63 votes
Hey all,
I'd love to get your thoughts on this potential deal. looking to make an offer. How do these numbers look? I know it isn't hitting the 2%, but it is in a GREAT area and should be some decent appreciation each year. Around 5% hopefully.
Listed at 160K. Property is rent-ready. Fully updated. Might replace carpet, paint, and add washer/dryer. Slight chance roof needs repairs but it is a townhouse/row home, so roof isn't a huge deal.
Some of the numbers are estimates. Please let me now what you think, thanks!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
9y
At a leveraged 6% cash-on-cash return and essentially no equity (you'd lose money after your selling costs were factored), I don't see this being a good deal at all. If this is a row-home in Baltimore City, that makes the deal even worse, as you can get mediocre deals like this in MUCH better areas and on detached single family properties, which are much more desirable.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
9y
At a leveraged 6% cash-on-cash return and essentially no equity (you'd lose money after your selling costs were factored), I don't see this being a good deal at all. If this is a row-home in Baltimore City, that makes the deal even worse, as you can get mediocre deals like this in MUCH better areas and on detached single family properties, which are much more desirable.
Investor · Hyattsville, MD · Member since 2012 · 822 posts · 441 votes
9y
I see: 6% ROI on 36k investment, $2280 net cashflow per year, under 1% rule. That doesn't get me super excited for my own personal investment objectives. Yes you are buying a cashflow stream but its pretty paltry and prone to risks. Doesn't your insurance look super low at $20/month? who can get 240 annual landlord policy? how sure are you about the market rent? What if your PM is lazy and it takes an additional month of vacancy to fill? sure its competitive with the stock market returns, but its definitely much effort for something you can get with passive investment. avg appreciation for bmore has been 4% since 1990, so that should be your expectation. Define roof repairs? a replacement for a rowhouse roof can still be 2-4k. I seek minimum 10% return unleveraged, and higher than 10% return leveraged for my investments.
Real Estate Agent · Tarrytown, NY · Member since 2016 · 149 posts · 63 votes
9y
@J Scott Thanks for the response! The property is in Fed Hill. And may be able to get more rent if we can work out a deal for an off street parking spot behind the place.
Main reason we are looking at this place is b/c my cousin is currently living down there and renting, so we would go half on the deal and he would live there for a year or two, if that wasn't the case we would be looking at other areas.
Not sure if a 140k offer would be taken very serious, house is already a good deal for the area.
Do you see much appreciation in the area next 10 years? or have to find cash flow?
The purchase is ridiculous. You can buy 2 house for that amount in Baltimore County and rent them for $1100 per month. You can buy 3 houses in good working class neighborhoods of Baltimore City for that amount and receive $3300 per month in rent. Good thing you were unsure and sought advice.
The purchase is ridiculous. You can buy 2 house for that amount in Baltimore County and rent them for $1100 per month. You can buy 3 houses in good working class neighborhoods of Baltimore City for that amount and receive $3300 per month in rent. Good thing you were unsure and sought advice.
I agree with this. I own two townhouses in Reisterstown (Baltimore County) -- I'm all-in for right about $160K for the two, and they each generate $1450/month in rent.
Not saying that this makes your deal a bad one, but it does underscore that there are plenty better deals out there in that area.
@Rich Baer Thanks for the response guys! Great points. I guess i should have explained that the main reason for the purchase was that my cousin lives there and was looking in the nicer Fed hill, canton areas, and considering buying with the potential to rent out in a year or two. So not as much of a purely financial investment, but still want it to make sense.
Definitely appreciate the advice. Might be over eager to get started with this one.
Real Estate Agent · Tarrytown, NY · Member since 2016 · 149 posts · 63 votes
9y
@J Scott That definitely gives some perspective.... I think ARV could be in the 180ks in the better season and with some minor changes. And there is a lot on the market right now. I put 170k to keep it conservative, but still not a ton of equity there. Definitely think it has to be a cash flow deal, which like you guys mentioned it really isn't.
Investor · Hyattsville, MD · Member since 2012 · 822 posts · 441 votes
9y
Let your cousin buy the place on his own if he likes the area and plans to stay there long enough to make it worthwhile. The deal benefits him far more than it benefits you from a investment perspective. There is zero upside for you to invest in the deal with a partner or family member. Now you get half of the already paltry 2200 in annual cashflow? How is that a good deal? Don't conflate investing objectives with good living opportunities for friends/family. Plus you now have to be a landlord for a family member. That won't go well on so many fronts.
Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
9y
fed hill is a good investment on the appreciation/ quality of tenant/ quality of area in and of themselves. While cash flow and equity may be light, the eventual return of equity, plus new equity, may make the investment good from a long-term point of view, all other things being equal. Not ideal, but if you have the money to put to sleep for a while and don't care, you could do worse things with it.
Real Estate Agent · Tarrytown, NY · Member since 2016 · 149 posts · 63 votes
9y
@Andy Gross It's 2 blocks from Light st, pretty central. Address is 16 w west st if you have any adjustments I can make on the numbers.
Turns out is needs HVAC repairs and some windows. Seller is willing to give credit for repairs if I make them. Also, the office owner behind the property refuses to workout a deal for a parking spot or two. Not budging on that at all. Parking would have been huge.
@Account Closed I definitely agree with that... Looking for something a little more lucrative right now. Not a huge fan of tying up capital for appreciation only
Baltimore, MD · Member since 2014 · 145 posts · 65 votes
9y
@John Bucci I would factor in maintenance to be a bit higher because could have turnover on a yearly basis. You should be able to rent it out quickly, but you might be doing carpet and paint more often.
Reisterstown, MD · Member since 2016 · 13 posts · 1 vote
9y
I live in reisterstown right now and I would look into owings Mills first. It's right up the road and the rental rates are higher. More stable of a neighborhood. And for some reason the sale prices aren't moving. Building my house in randallstown and had to move a top floor condo and it only sold for 135k but the rental rate was 1400. I really didn't want to let it go but I had to for debt to income purposes. Hope this helps.