All Forum Posts by: Nancy Roth

@Bob Craney

Wow, impressive! That's what's called creating value.

It looks like you consolidated two semi-detached houses--did you? Or had they been consolidated in the past? What made you choose this property? Are you comfortable describing how you figured the numbers? Also I'm very interested to know what most important things you learned about rehab as a result of the project. I'm just completing my first rehab for resale and learning tons of stuff. Some of which I wish I didn't have to learn!

My buy-and-hold approach so far has been to try to acquire properties without need for extreme rehab because, just as you found, you get all these uncertainties and pitfalls. Yet how great that it all paid off! This is a very encouraging story. Thanks for posting.

Best regards,

Nancy Roth

@Christina Ramirez I would appreciate seeing the link.

@Bradley Bogdan Thanks so much for the detailed explanation. 

@Garrett Fulton To answer your question about Baltimore in particular, I know a few landlords who have noticed that Housing Choice Voucher Program rental rates are decreasing compared to a few years ago. Last December in a meeting with landlords, the program director, Nicholas Calace, publicly acknowledged the lower rent valuations. As Bradley mentioned, there is not supposed to be a Section 8 premium. 

Your calculation of 10-15% decrease is consistent with what my landlord friends have told me. Once a tenant is in place, though, the rent does not decrease. The landlord can in fact request an increase up to a certain percentage each year, particularly if the landlord can show that costs have increased. 

I hear that some of the program case managers who approve the rental rates are gaining a reputation among landlords. Rumor has it that one landlord is refusing the applications of potential renters whose names begin with the last letters of the alphabet that are assigned to a particular case manager, because that case manager has become notorious amont landlords for approving rental rates consistently lower than those of her peers. 

Who knows how true any of this is, but even rumors reflect the frustration of landlords. 

OT request: May I ask all participants to spell out your acronyms, like PHA, MTW, DFW, FMR, SAFMR, etc. at least once in your post to accommodate dummies like me IYDMMA? Much of the time IDK what you are talking about. 

You don't have to spell out HUD though, thanks very much.

ADBB. LOL. 

Nancy Roth

Hi, @Alexis Soto,

Maybe research the proportion of homeowners vs. renters there are in the neighborhood. Go to www.city-data.com for that information. If it shows a high proportion of homeowners, you perhaps want to market to rehabbers for a retail-resell to new homeowners. If there are more renters, then you might want to market to buy and hold investors. 

You can also look up tax assessment records--NOT to find the value of a house (because in Baltimore City the tax assessments are driven by the city's need for revenue, not the market value)--but to see how many property owners actually live in the houses they own in that neighborhood. http://sdat.resiusa.org/RealProperty/Pages/default... Just enter the street name without a number and it will give you all the houses on that street. You just go down the list and see who owns what, and where they live.

Lots of vacancies in a neighborhood that is not well maintained might mean there are lot of houses available to sell, which is good for a wholesaler. On the other hand, a lot of vacant houses clustered in one neighborhood makes it a less desirable place to live, so rents will be lower, and it is often harder to obtain insurance, so a property there might not be a compelling acquisition to landlords. 

In any case there's no harm in trying. In fact trying something is a lot better than doing nothing. I hope you expect to make mistakes, everyone does. You wouldn't believe how many and how stupid my mistakes were. You'll learn from them and move forward a little stronger, and you'll know better what to do next time. 

I would also suggest that you start going to meetings where you can talk and listen to people who are doing what you want to do. Look up Baltimore REIA and BWI Meetup groups (which started a group in Tysons recently). Also the Real Deal. There are plenty in Northern Virginia as well, such as Capitol Investors Meetup in Falls Church.

Go for it!

Nancy

Hi, @Alexis Soto

People who invest in Baltimore and everywhere else are always looking for projects. If the numbers make sense the money will find it. 

So without revealing the neighborhood you like so well, are you willing to say what a "perfect neighborhood for wholesaling" looks like to you? 

Thanks, and good luck with your investing,

Nancy Roth

@Rochelle Wilkinson

You argued with them? About the late fee? For over an hour? How much is your time worth? You just threw away more money than the late fee in the time you spent arguing with them. 

This is a business, Rochelle. It's not your family. 

Are they on a month-to-month lease? Then you need to give them notice (by mail) and get them out. They are professional tenants and will make your life miserable. 

When they violate the terms of the lease, don't engage with them. File your complaint in rent court and show up on the date of the hearing. Bring the signed lease with you. Let them complain, let them rant, and let them tell it to the judge.

Educate yourself about the law. Your tenants probably know more about the law than you do and are manipulating you because they've figured that out. Landlords get fined and rent-escrowed by the state, and if they've been really negligent they get prosecuted, but generally they don't go to jail.

Go to BREIA landlord meetings the last Monday of each month. It's coming up next week. Look it up on BREIA's website.

I don't say this often, but a mentor might be helpful to you, because you inherited the property and from you are telling us here, you didn't get much training for it, and here you are throwing yourself into it doing something you've never done before.

Also, don't forget to hire a lawyer. 

Look for posts from @Seth Sherman and @Mark Owens about landlording in Baltimore.

Good luck to you,

Nancy Roth

@Kyle Gregg

I referred one person to Nora and she sounded very encouraging, but then suddenly disappeared on him. Just vanished. I later sent him to Donna. The deal didn't work out but she was ready to get him what he needed. 

I'm not pleased you had a bad experience, but let's just say it confirms what I've seen.

Glad you are getting out! Where's your house?

Best,

Nancy

@Tiesha Mobley

How ya doing? 

Donna Rouse does 203K and other kinds of loans.

410-777-5386

443-726-0527 (office) (I think)

[email protected]

Caveat: I have not obtained a loan from her but would consider looking her up, having talked to her many times at investor meetings and finding her reasonably knowledgeable of the world of mortgage loans. It's worth a call. Please pass along my regards.

Good luck,

Nancy

@Roy N.

Your contributions were helpful to me as well, especially about the windows and doors, and of course a buyer would want to do all the due diligence you mentioned. 

Speaking as someone who has tramped through a ton of kitchens in Baltimore, though, I'd like to add FWIW that this is by no means the worst kitchen I've seen. Many Baltimore rentals would run profitably for years with kitchens like this one, that is, functional and basic, though not stylish. That's true even in the nicer neighborhoods, including this one.

Many thanks for your thoughts,

Nancy Roth

@Kyle Scholnick

I think you are getting sound advice from the previous posters who advised you to count on appreciation as much as, or more than, rental income in this area. All the people I know who are generating rental income in DC/Montgomery/Howard area bought a long time ago. Their units were generally in distressed condition and they had to put some investment in so as to rent them, and they had to keep them a long time to recover their initial investment. 

Your best model might be to buy a house where you can live, and perhaps rehab as you live there, while renting to a basement tenant or roommate to offset your mortgage. I'm doing something similar in my townhouse in midtown DC, which I bought at the market's low point in 2010, and which has seen a great deal of appreciation since then. 

Good luck to you.

Nancy Roth

@Shaniqua Dupree

Help me understand why this is obviously too high for the area. That is in a very nice neighborhood, did you drive by? 

In any case you are going at this backwards. What do YOU want? What do YOU need? What would you need to do to make money on this? How much money could you put in, how much could you finance, what do you need to get from it?

A rule of thumb some people use is to aim for a monthly rent that is roughly 2% in of what you pay for the unit. So if you are paying 75K/unit you'd want to aim for a rent of roughly $1500 per unit/month. 

How much rent are the tenants currently paying? Are these market tenants? Voucher tenants? How regularly and promptly have they paid their rent? Will the seller show you a rent roll? Have you looked up what the units would fetch on the Go Section 8 Baltimore website? What are the property taxes on these units? How much will insurance cost you? 

The answer to what makes a good deal is found in the answers to questions like these. If the tenants are paying the right amount of rent and have a history of on-time payment this may be a good deal, even if you can't afford it.

I would like to encourage you to start going to some landlord meetings so you can learn how to work out problems like this. I strongly recommend the Baltimore REIA landlord group the last Monday of each month at the Dockside Restaurant in Canton. Also the Savvy Women's investment group on the first Wednesday of each month. Go to the BREIA website for the calendar.

Good luck,

Nancy Roth