All Forum Posts by: Ray Slack

Agree with Michael P..  Baltimore has MUCH better cap rates than all the areas you mentioned.  But it's going to be C or D areas for the best returns.. If I was buying multi family I would definitely pick Baltimore over any of those areas.  Just my 2 cents since someone else mentioned it.

The areas you are looking in are very high end desirable places to live outside of DC. I would say they are all A/B areas not B/C. I would say that your probably going to be looking at a low cap rate to buy in those areas and having it more of a speculation play. What is the Min. cap rate you are willing to accept?

Just purchased a rental property where the backyard on one side has a steep slope.  The prior owners installed retaining logs and a fence at the bottom and planted rose bushes. It's about a 8ft sloping drop and wouldn't be a concern if the new tenants moving in didn't have kids but they do..  I showed it to them and they didn't really seemed phased by it.  They later asked it I could fill it in which is not possible as the dirt would just wash away down the hill.  I offered to fence it off and they declined saying let's just wait and see if it's an issue.  I really don't think it's going to be a problem but how do I protect myself? Have them sign a release of liability? I'm at a loss on this one.

Any help?

Thanks

I agree that unless you are doing a fully rehab $50-$75k. You are probably not going to make $75k in profit in 2 years.     There would need to be some sacrifices.  Either you would be living in a not so ideal location and making more money or living in a better location and making less.    Depening on the age of your kids Bowie may be a good comprise.  Its a great safe place to live with great anmenites. But the schools can be iffy.  Certain sections such as whitehall , rockledge , chapel forge and medowbrook have really good elementary schools. Other sections not so good.  And most of the Junior school are mediocre at best.  The high schools are not good anywhere in Bowie.   Crofton 5 minutes from Bowie.. Has great schools great, standard of living best there are less deals there. And you would pay $100k more for the exact same house as you would in Bowie.   Crofton's only downside is 1/2 of Crofton gets bused to South River high school which is so so and far away but Crofton is building a new high shcool which will boost values.

I always use Jennifer Alter her information is below. Can post her number but you can google her.

Ray

Jennifer L. Alter, Esq.

Eagle Premier Title Group, LLC
1118-C Light Street
Baltimore MD 21230

I always calculate a cap rate and that determines if I buy the property but I would never use it on a residental single family purchase to justify to the seller my offer.  Here is by quick workup on the last place I bought in May for anyone interested.  Link to Zillow    https://www.zillow.com/homedetails/2525-E-Chase-St...  

Mostly in the D to C  section 8 neighborhoods.. I don't buy anything unless it's over 20% there.  Bought 6 in the last year.  Mostly Belair Edison , Berea , Biddle Street.      I'm getting 20-25% in Belair Edison and 30% in the other areas.

If you are trying to justify the price to the Seller you need to know the cap rate for the market and usually this is only for investment properties.  The market cap can vary greatly.  I work in 2 markets Baltimore MD and Miami Beach FL .. The Going cap rate in Miami Beach is about 3% and in Baltimore City it's about 15%. 

As long as you are "Justifying" the purchase price to yourself and not trying to justify it to the Seller. 

 The Seller could care less about the cap rate you are wanting to achieve. 

Good Luck

It  reallly depends on the condo and the numbers.. I do invest in Condos but with the condo fee you included in your expenses you need to buy them cheap.  I generally need to get a 9% return after expenses.  Therefore when quickly looking at properties I use the 1% rule.  Meaning I should be able to rent out a property for 1% of what I'm paying for it monthly.  Meaning if I am paying $150k for a property it needs to rent for $1,500 per month.  When buying a condo I add the condo fee to the rental to quickly evaluate.    Meaning in the above example.  If I'm paying $150k for a condo with a $180 a month condo fee it would need to rent for at least $1,680 a month (1% of $150k + $180 condo fee) 

Another issue is special assessments and foreclosures of other units in the building/project.   If other people in the complex don't pay their condo fees the burden gets spread among. 

Also if too many people get behind banks won't loan money on any on the condos anymore dropping the values like a rock. 

Good Luck