All Forum Posts by: Greg Parks

Anyone with knowledge of basement waterproofing in baltimore city rowhomes who cares to opine on whether they think this is a major red flag or not? The rowhome property I have under contract has a finished basement - however, no drainage tile was installed around the perimeter foundation walls. I probably couldn't afford to trench down and install the drains myself given the amount of demo and refinishing that would be involved. Scared this might be a major flooding/mold risk in the future. A standalone sump pump is installed but that appears to be it (according to the home inspector).

@Roy N. -- Thanks so much for the detailed response!! If I go ahead with the purchase, I'll certainly do my best to walk future tenants through some "toilet best practices" to help avoid costly plumbing bills.  Overall, your feedback has been very reassuring though.  I do have a few follow-up questions if you don't mind me asking: 

Were there any insurance premium implications that you encountered because of the bathroom's toilet type?

Do you know if there was a separate backflow preventer valve installed to serve just your macerating toilet's discharge line? 

Do any other plumbing fixtures feed through your macerating toilet? 

One concern I have is that the subject bathroom's sink AND shower discharge through the macerating toilet, and if a tenant is using the shower/sink/toilet on a daily basis, it will cause the maceration/pump system to deteriorate at a much quicker pace. If I have to replace the toilet every 4-5 years, I'm looking at an $800+ recurring expense, which will really hinder future returns for this property.  

Maybe there is an extended warranty or replacement plan that will help to offset these costs in the future?  

I'm currently considering purchasing a property with a basement unit.  The basement currently has a grinder toilet (macerating toilet) hooked up.   The full bathroom (sink, shower, and toilet--obviously) passes through the grinder apparatus before being discharged/pumped up towards grade and into the city's sanitary sewer line (Baltimore City utility).

Not sure what the additional risk/liability/maintenance costs (etc.) are that I should be taking into account.  I'm assuming because the unit is somewhat loud (and the basement bedroom is a bit undersized), I won't be able to attract full market rent... Are there any other precautions I should be weary of?

The system is currently connected to battery backup.  I'm debating if I should assume a full tear out of the basement bathroom will be necessary - in which case, I'd install a more "belt-and-suspenders" sewage ejection pump (may limit noise generation and risk of sewage back-ups) - and if this is the best path forward, than I'd have to negotiate a pretty substantial price-cut with the Seller.  

Last thing I'd want is for the existing system to fail, a sewage backup to occur, and have to worry about providing temporary housing for a tenant while a costly hazardous waste cleanup goes underway.  

Thanks for any help/advice the BP community can provide! 

Hi Ozzy

I'm definitely interested in attending, as I think this is a great idea.  I'd do my best to attend in-person, it's a quick drive to Canton from my house in Federal Hill.  

Any investors in the area with experience in dealing with Belair-Edison SFRs? The returns look promising on some of these homes; however, most of these properties appear to be geared towards Section 8 tenants (and by "most", I think nearly all of them are open to accepting vouchers).  Additionally, I'm also seeing that a significant number of available rentals are in the 30-60 DOM range, some rentals with even more.  While I like the potential returns, I don't have enough experience in the area to know if my base case vacancy rate of 10% is too thin given the market.  I also have my base case R&M and capex percentages set to 5% each, which may be insufficient given the class of tenant.  Any advice that can be offered would be much appreciated.  Some of these homes appear to be in turnkey condition and I like the forecasted ROIs ... I'm just having a hard time finding confidence in these numbers given my inexperience with the area and demographics.  

Thanks in advance for any help that can be offered! 

-Greg

@Account Closed

Really appreciate the sound advice, especially with regard to Capex budgeting and inspections. Also, if you any recommendations related to MEP techs for the work you described above (work that goes above-and-beyond typical home inspections), I'd certainly consider reaching out to them and making them aware of your referral!

Thanks,

Greg 

@Lisa Troxel

Thanks! I've had to update some of the spreadsheet formulas and inputs since I posted the above version. NOI wasn't calculated correctly as it included the P&I of my loan. Regarding the mortgage insurance, the loan assumptions in my spreadsheet contemplate lender paid insurance premiums (and thus, a higher interest rate over the amortization period). The downside to LPMI is that it can't be removed upon refinancing... so during future deal anlysis, I'll probably try to assume BPMI and include any upfront premiums as required.

Greetings BP Community,

I'm currently on the hunt for a fully renovated rowhome in Federal Hill, a neighborhood that is well established in South Baltimore. My girlfriend and I both work in downtown B'more (we both walk to our respective jobs), and we really enjoy renting in the Federal Hill location with its proximity to restaurants and the other perks of city life. With that said, Federal Hill properties are not exactly cheap relative to other areas of the city, and from what I can tell so far (since I began my search over the past few months), very few fully-renovated properties meet even the 1% rule at their advertised pricing. However, with renovated rowhomes bordering the western edge of the neighborhood (closer to train tracks and lower cost-of-living sections of the city), asking prices drop slightly and based on my spreadsheet (see link below), just barely cash-flow with the right offer.  Since both my girlfriend and I are certain we want to remain in Federal Hill and house-hack (live together in one bedroom while renting out the remaining bedrooms), I'm definitely willing to accept the marginal cash-flow (barely any) that the property is able to produce.  I'll also be the first to admit that some of the input assumptions I've applied are not as conservative as I'd prefer (I'm fairly risk averse); however, I think my assumptions and fee estimates are still justifiable.  The area surrounding this target property is in the midst of a huge wave of development, and my initial thinking is that this would be a great area to own in for years to come.  Any experienced investors, especially those local to the Baltimore area, who are willing to take a gander at my analysis and post their two-cents will have my deepest gratitude

https://www.dropbox.com/s/swvr53e8rxluu3e/SFR%20An...

Summary:

My spreadsheet contemplates a 3BR 3.5BA fully renovated rowhome in Federal Hill that will require few if any immediate landlord costs (aside from a washer and dryer that I've estimated at $1,500 in Year 1 of the hold). The property features 2 above grade stories and 1 below grade (finished basement with full bedroom and bath). The property also has a brand new rooftop deck to add some marketing appeal. Unfortunately only street parking is available at the location. Aside from the lack of furniture, the rowhome appears to be fully move-in ready. Closing costs and loan assumptions have been copied from my mortgage consultant's Assumed Loan Cost Illustration (ALCI) that he provided me earlier this week (contemplates a 30-year fixed conventional loan with 5% down and lender paid mortgage insurance). The property is located somewhat close to train tracks but the tracks only serve as a temporary storage line for CSX and the neighbors rarely notice any noise disturbances. I've assumed each bedroom (with modernized dedicated full baths) can attract $900 per room. I've also assumed utilities will be covered as a tenant expense. My final assumption, based on conversations with my mortgage consultant, was to include a 3% Seller Credit, which is not guaranteed, but will certainly be a condition of closing should they accept my offer (already lower than what is listed on the MLS). The offer is a long shot, but if I hypothetically tie up the home, I'll need to know my spreadsheet model is accurate!!

Look forward to any feedback the community has to offer!  Thank you so much in advance for lending me your time and opinions!

Greg  

Thanks all for the feedback!  Very helpful insights and some great suggestions.

@Julie Hassett - congrats on your recent investment!  I'm currently renting in Fed Hill while working in downtown B'more and the walkability of my commute and everyday life has really grown on me.  I'll likely continue to search for house-hacking opportunities in the City, but for future investments, the areas you listed sound fantastic.  A good friend of mine just moved into a rental over in Eastwood and I've been meaning to check it out (as a New Jersey transplant, I haven't explored much outside of central B'more neighborhoods).   Just did a preliminary search in the 21214 area, ran some potential numbers and the ROIs do look much nicer.  I'll be keeping an ear to the ground for any good deals and will be happy to share any future findings!  

I've been running the numbers on various properties in the City of Baltimore, as I'm looking to start out as a house-hacker once I've tied-up the right property.  For the safe bet neighborhoods in B'more (Canton, Fed Hill, Fells Point, and to a lesser extent Ridgley's Delight) few, if any, properties support even the 1% rule.  Should I avoid purchasing an investment property in any of these neighborhoods until rents improve/property values decline?