Is the Hamilton neighborhood in Baltimore a good area to invest in?

[Mabel Lee]

Hi,

Is the Hamilton part of Baltimore a good investment opportunity? It's a bit away from the urban parts of Baltimore, but I wanted to gauge the viability of the rental income there and if there is a lot of demand for renters.

Thanks!

[Jack Seiden]

Quote from @Mabel Lee:

Hi,

Is the Hamilton part of Baltimore a good investment opportunity? It's a bit away from the urban parts of Baltimore, but I wanted to gauge the viability of the rental income there and if there is a lot of demand for renters.

Thanks!

 It’s a pretty nice middle class area, however once you get into the mid 300’s in Baltimore in a single family, I’d rather just be in boco and have lower property taxes.

[Ozzy Sirimsi]

Hamilton is a nice area to buy but many houses are big and unless  you do room rental might not be a good investment if you are paying top dollar for them.

[Joe Norman]

Hamilton is a solid neighborhood with appreciating home values. I consider it more of a neighborhood for flips than for rentals though, because most of the homes are large single families where the purchase price/reno costs generally are too high compared to the rent you can command. 

When I'm helping clients find cash flow rentals in Baltimore I'm usually targeting neighborhoods that are mostly rowhomes - the price:rent ratio on them is generally much more favorable.

[Eric Fernwood]

Hello @Mabel Lee

I recommend starting with your goal and working backward to determine what you need to purchase in order to achieve it. For this post, I will assume that your goal is a passive income that meets the following requirements.

• Reliable - Your income continues even in difficult economic times.
• Inflation-Compensating - Rental income increases faster than inflation, compensating for rising prices.
• Persistent - Your income lasts; you or your spouse won't outlive it.

Location Selection

The location is the most important investment decision you will make, not the property. The investment location determines all long-term income characteristics including:

• Whether rents will keep pace with inflation
• How long your income stream will last
• How reliable your income stream will be
• How much of your rental income is lost to overhead
• Whether you or the government control your property

The process of selecting a reliable passive income location is simple. Begin by selecting a reasonable set of potential cities and then eliminate those that do not meet specific additional requirements.

• Start with cities with a metro population >1M. Smaller cities maybe be dependant upon one market segment or a limited number of large employers and they are unlikely to do well in times of economic distress. (Wikipedia). Baltimore’s population is >2M.
• Both state and metro populations are increasing. Do not buy anywhere if the state or metro populations are static or decreasing. (Wikipedia)According to the Census Bureau, the population of Baltimore has declined by 6.3% between 2010 and 2020. This tells you people are leaving the area, so prices and rents will rise slowly due to limited demand. This will not meet the goal of inflation compensation which requires prices and rents to keep pace with inflation.
• Low crime - High crime and long-term appreciation and rent growth are mutually exclusive. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities. Baltimore is number 18 on the crime list. High crime has multiple impacts. One is that major employers will not choose locations with high crime levels. So, new jobs will not be created that pay similar wages and requires similar skills to where the tenant segment is working today. The result is declining incomes, which leads to an increase in crime, which leads to more people leaving the metro area. This is a financial death spiral from which few cities have recovered.

Other selection factors to consider. DM me for a free copy of my guide on selecting a dependable passive income location.

Property Selection

The purpose of owning a property is to attract reliable tenants. A reliable tenant is someone who stays for many years, always pays rent on time, and takes care of the property. However, reliable tenants are the exception rather than the norm. Since you plan to hold the property for many years, you would need a reliable tenant each time the property goes vacant. The best way to achieve this goal is to buy a property that attracts a tenant segment with a high concentration of reliable tenants.

You can identify a segment with a high concentration of reliable tenants through property manager interviews. If you want more information, DM me for my free guide on selecting the right tenant segment.

Once you select a segment with a high centration of reliable tenants, determine what and where they are renting today. All you need to do is buy similar properties. These properties will attract people for the segment you want.

If you follow the approach outlined above, of working backward from your financial goals, there are only a few decisions to make and no dependence on luck or opinions.

Another important factor for success is having an experienced local investment team. An experienced local investment team already has all the necessary team members, processes, contacts, experience, and services you need. Additionally, working with an investment team costs no more than working with any other realtor.

Mabel, I hope this helped.