All Forum Posts by: Joe Norman

Your experience working with affluent individuals would be a great benefit it IF you are willing to call them to ask for businesses and stay in touch with them after you leave your corporate job. If you go the path of becoming a Realtor than I strongly suggest starting off on a team that will help you leverage your contracts and create business opportunities. Good luck!

Be aware of local laws. For instance Maryland passed the Protection of Homeowners in Foreclosure Act many years ago which limits what you can/can not communicate to owners who are facing foreclosure. Good luck!

Best advice I have is KNOW YOUR COMPS. This applies anywhere, and in Baltimore especially.

The inflation, and interest rates, of the 1980s are a far cry from what we are seeing today. Goldman Sachs is predicting the Federal Reserve to raise the rate by *maybe* a full point, hardly comparable to your situation 40 years ago. If one is always "planning for the worst" (i.e., a dramatic market crash) then they will never ever buy real estate.

Can outside forces cause a market correction? Of course they can. That said the OP was asking about the Fed's announced interest rate hike, and IMO 1% bump in interest rates isn't going to devalue real estate.

No serious investor that I've spoken with thinks that real estate prices will drop. The interest rate hike may slow the rate of appreciation, but I promise you that the Fed isn't going to raise rates to the point that appreciation will be reversed. Its better to invest and wait then it is to wait to invest.

"The HOA for the development has assured me..."

I would confirm this for yourself as the salesman man not know the HOA rules in and out, or could just be telling you what you want to hear. Good luck!

Run away, this is not a deal.

First of all, I promise that if its in an "up and coming" area with multiple vacant houses on the block, including next door, then the ARV is not $200k. There may be "several recent good sales right around the corner", but that doesn't mean they are good comps for this house or this block.

Second, if a local HML won't fund the loan, trust his expertise that this is not a house worth investing in.

Don't be one of the dozens of DC investors who loose their shirt in Baltimore every year because they think every cheap property is a deal. If you PM me the address I'd be happy to give more property specific feedback.

I tried the reverse of this once. I said to investor client of mine, “hey, you’re making $500 a month cashflow on this purchase, how about giving me half”? Didn’t go over well.

Kidding, of course. I respect that my investor clients are in the businesses to make money, and reciprocate. Good luck finding a high quality agent who’s respected in their local market and also willing to give up half of their income to make your “deal” work. Sheesh.

I second what @Brooke said. Baltimore can be a great market for cash flow, and it can also be a great market to get burnt out in if you're not careful. Dealing with the city government sucks, the crime sucks, the courts suck - but the cashflow can be tremendous. Where there's risk, there's reward.

Just do your due diligence on the neighborhood/block you're investing in and make sure you know your sub market well. Good luck!

The two biggest things I would consider when weighing this decision are cashflow and capital gain taxes. As you may or may not know, you are generally not taxed on the gains from the sale of a primary residence. To qualify you have to have lived in the home 3 of the past 5 years and claimed it as your primary, so if you sell within 2 years of moving the gains are tax free. Probably not a big deal on a $20k gain, but if you hold on to the property for 10 years, payoff the note, capture some appreciation, etc you could reasonably be looking at a $150k gain and the capital gains taxes on that would be significant.

Compare that to the cashflow you'd expect to receive over the 10 years - is it enough to wish paying the capital gain taxes?

Of course you can always circumvent these by doing a 1099 exchange - but thats only if Congress hasn't revoked that program which very well may happen.

There are lots of factors to consider, but those are the two I would focus on. Good luck!