Insight on the Baltimore market?

Question

I've been coming across several posts that mention class A neighborhoods being located directly next to class F neighborhoods. My team has been looking into getting into the market, but I'm curious to hear the opinions of experienced investors. Seems like there is a lot of potential!

Jon K. · Answer

You've heard correctly. Neighborhoods in Baltimore City can be as small as a city block. In some areas you can have houses selling for 500k+ just two streets away from board-ups and broken glass. It is a tough market to master and overall the city has lost population every year for the past 20 years. It's not for me but I know people who invest heavily there and do well. I wholesale everything I get under contract in the city.My advice is if you're not from the area, you need experienced boots on the ground or you will be sad.

There are several large, active investor groups on Facebook for Baltimore. I'd also suggest you find and join them.

Tim Jacob · Answer

There is a lot of opportunity.  As has been said things can turn pretty quickly.

Some people buy the D or F grade stuff in hopes they can just sit on it until the A grade development comes to their area.  The city is cracking down on that as a lot of the homes are found to difficult to rent and abandoned and then become a vacant house inviting blight and crime which no one wants.  I would not suggest that route.  The city can take back your property for vacant violations which happens to investors after they give up on it being a long term rental as they can't get a good pm because it's not worth the pm's time and don't want to do it themselves.  From California it makes things impossible for that route to work.

Another thing I see on here is predatory turnkey providers buying just over the line between the A and D grade stuff.  They buy on the D grade side from another investor fleeing because they now know why D grade investing doesn't work.  They then do a cosmetic renovation or might even do a little more but because their point of entry is so low its profitable.  They then make sure to take great pics.  They bank on the pics selling the place and they present comps that don't tell the story.  The buyer then buys the rowhome for over 200k.  The comps show the A grade stuff just a few blocks away going for the mid 300s this is further backed by New construction closer to the harbor within a mile that might have an extra 700 square feet but is now going for over 700k.  The buyers see this and think they are getting a deal.  In reality they are buying a problem.  I see people on here complain after the fact about the turnkey provider and they never actually visited Baltimore when buying it.

I wouldn't go turnkey.  I would get an agent on here that you trust that has a level of transparency about things.   I would trust them in the buyer phase which could lead to them leasing a property.  I would go A or B grade not buying something that's a problem.  After they lease it maybe you can manage it remotely to avoid a pm charge.  I'd budget a minimum 200k on a 2 bed place that's fairly turnkey.  To confirm the area I would personally go the the property at least once probably during inspection and visit it in the day and night.

If you have reasonable expectations you can do well in Baltimore and eliminate risk with a solid plan.

Jesus Morales · Answer

Thank you for your insight Jon & Tim!