Is Investing in Baltimore Worth It?

Question

I've been looking into getting into purchasing rental properties in Baltimore recently but have found that there are some hurdles special to Baltimore. I have seen on the BP forums that the lead paint inspections that the city forces are a real hassle. In addition, late payments seem to not only be more common but with being a tenant friendly city, evictions are much harder to accomplish. Lastly, larger economic trends show people are leaving the city which obviously makes me question if I will always be able to fill my rental properties. There seem to be some solid deals in the city that are in my pay range and I know some areas of the city already so I want to be positive and want this to work but want the advice of people in REI in Baltimore about the pro's and con's to see in the negatives are truly as large as I may fear. Thanks!

-Colin

Tim Robinson · Answer

I own a triplex in Baltimore (Bolton Hill) and I would say to certainly be wary of investing in Baltimore in general. I would start by being VERY specific about the neighborhood you choose to invest in as you know from living there that the crime rates truly vary form block to block. My initial analysis into neighborhoods left me with only a handful that I would be willing to invest in, Bolton Hill being the winner.

The property is now cashflowing steadily (despite the utilities being held for ransom as well as a couple of permits I am waiting on to come through) and the neighborhood has been great. The lead paint thing is an absolute racket as you have to have it done on every unit every single time there is tenant turnover and it really does seem like a scam. But as long as you know this going in and can incorporate the cost into your numbers, it will be fine. My main suggestion would be to find a property management company that knows the eccentricities of the city VERY well. They can be a life saver in helping you navigate the nonsense that comes from the local government, Another consideration is the taxes in Baltimore City. They are OUTRAGEOUS. I found that I couldn't make the numbers work on several duplexes I was looking at, but adding the additional unit on the triplex allowed me to make the deal.

Bottom line, find a great agent, a great property manger, keep the costs of incessant lead inspections in mind, know that property taxes there are absurd, screen your tenants very carefully, pick your neighborhood with great care, and you can make it work. Hope this helps.

Mark Cruse · Answer

I'm considering off loading my Baltimore portfolio. The money is there but the headache gets me at times.

Matthew Paul · Answer

Here is why I dont invest in Balto ( I stay in AA county )  Healthy Holly , building and permits are horrible , high water bills ( now being held for ransom ) , murder capital of the east coast , high insurance rates , lousy public schools , higher property tax rates , lower if any appreciation , declining population , higher car insurance , corruption in government .   I wont buy anything anywhere I wouldnt live . And I wont even drive thru most neighborhoods I grew up in in Balto city .

Ozzy Sirimsi · Answer

@Colin Kanuch

Main problem in Baltimore, people shoot for the unrealistic targets. Most want to buy dirt cheap, take a risk and when that risk doesn't pay off they are surprised.

Buy a house in a decent neighborhood, you will have limited eviction, limited vacancy, less headache etc...

but it means you pay more.

Ozzy Sirimsi · Answer

@Mark Cruse

Let us know!!!

Joe Norman · Answer

There are definitely some negatives to investing in Baltimore City, which I won't dwell on since they've mostly been aired out on this thread and many others.  Instead I'll point out a few positives: great potential for appreciation in some pockets, low purchase price, no shortage of tenants (either market or subsidized), low cost of living (especially as compared to the neighboring DMV metro area).

Can you make a killing in Baltimore City?  Absolutely!

Can the Baltimore City real estate investing market chew you up?  For Sure!

I suggest having a strong team in place (especially if you're investing long distance) and KNOW YOUR NEIGHBORHOODS AND BLOCKS - question any comps that aren't within 2 blocks of your subject (and even then they may not be valid).

EDIT: one more thing that some folks from out of state don't realize is that Baltimore City is completely separate from Baltimore County (it is referred to as an "Independent City", one of only 3 in the US outside of Virginia).  You can get a lot of the positives of investing in the Baltimore Metro market, without some of the negatives, by focusing on Baltimore County instead of Baltimore City.

Mark Cruse · Answer

All of my portfolio is low income. That is a headache but I know how to deal with it so it works. My headaches for Baltimore go way beyond that though. It's great for a newbie  because of the low entry point and you learn a lot. However, I have been at it for awhile. All the unnecessary

bureaucracy is annoying. The I'm sick of dealing with yearly registration, lead certs, unfriendly landlord mindsets, inspections, constantly changing mandates and now I have to keep updated on having a license. Time to move on to bigger, better and less annoying stuff.  Headache isn't worth the investment anymore.

Colin K. · Answer

Thank you all for the advice! @Matthew Paul @Tim Robinson @Courtney Rollins @Joe Norman

Courtney Rollins · Answer

I appreciate the question and the responses.   I am a newbie with very low capital starting out.  Although the working with the city and local government scares me from the stories I've heard from many seasoned investors, I feel if I can find the right property management team and secure a property that cash flows then I can at least get in the game and get on base.  This way I can take the lessons I learn and move forward more informed.  At this point for me it is definitely about gaining experience and education as oppose to simply equity.  I'm sticking around seasoned investors in Baltimore by going to REI meet ups in the area and learning from them.  Good luck!

Is Investing in Baltimore Worth It?

Is Investing in Baltimore Worth It?

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