All Forum Posts by: Nancy Roth

I don't know how you arrived at your rehab estimate, but I wonder if you have built in extra for surprises that almost always come up in construction. Be conservative when estimating the cost. Your buyers will appreciate it. 

I think the owner is living in fantasy land with that $140K price tag, considering what he's selling, even in Federal Hill. The numbers have to work, or nothing works.

Cardinal rule in online forums: Don't feed the troll. 

I would decide about whether to expose the floor based on the condition of the carpet. If you can have it steam cleaned so it looks nice I would let it be. Also, here on the East Coast a tiled living room floor would look a little strange, unlike in, say, the Southwest. So in my hometown I'd consider using a high-grade laminate floor (not Pergo) that will stand up to a lot of wear and tear. Buy 10 percent more than you need bc if you must replace one piece later on you'll never be able to match it. Nancy

Oh, please. 

I can't tell you how to find the right house and the right deal for you, Tiesha, but I can tell you this: DON'T DO WHAT I DID. I trusted a slime-ball realtor, and thereby bought a terrible first rental house. 

What I would do differently today:

--Learn how to do the investment math, so you can do your due diligence. 

--Set some specific financial goals and don't ever forget them when considering a deal.

--Talk to a lot of people at real estate investor meetings, which I know you are doing. 

--Look for ways to be of help to someone who knows more than you.

One opportunity, if you are looking to buy in Baltimore, is to volunteer to help Ned Carey in the spring after the Baltimore tax lien auction list is released. He drives around for a couple of months looking at prospective bids. He could use help recording his bid estimates on the computer as he drives. What you get in exchange is his priceless observations on neighborhoods and investments in Baltimore. I don't know where you'll get a better on-the-ground education.

Buy and hold is where it's at for me.

Yes, rehab-resell is quite profitable, but there are sooooo many pitfalls, so many potentially unpleasant surprises. I have never felt comfortable with that level of risk, though I have all the respect in the world for people who do it.

To me construction is always about fighting: for financing, for time, for inches of space, for quality workmanship and for the best materials at the price you can pay. While I'm sure people develop skills in selecting projects where risk is minimized, something can happen in the market--or even in the house next door-- that is completely beyond your control, and it can lose you everything you put into that project. 

Also I've found that it means a lot to me to take a vacant property and bring it back into productive use, even if it needs a moderate upgrade. I work with trustworthy who are accountable for their work and will use the help of a placement professional if necessary to be sure I get the right tenant.

For some reason making the property a safe, comfortable (and hopefully permanent) home for that person or family feels like a better way to direct my energy. 

And of course, there is the cash flow.

I forgot to respond to the original poster. Tunji, you haven't said in which county in Maryland the five-bedroom house is located. Is it in Anne Arundel near the water? Baltimore County? Howard? That really matters, both to the ARV and to the likelihood of obtaining financing.

Hi, Ned. By traditional lenders I assume you mean institutional lenders, but I understand they are not all alike.

For example, I have been advised that it's kinda pointless for an individual to approach the big national banks like Bank of America and Wells Fargo for a single residential construction loan.

But regional banks, such as SunTrust and Chesapeake Bank of Maryland advertise construction loans at low interest rates, and representatives of both banks have personally told me about their programs. Also I hear mortgage lenders are open to lending for rehab projects. And I know of some rehabbers that have been able to secure a line of credit from institutional lenders or their projects. 

Can you please expand upon your statement? Were you talking strictly about financing for Baltimore City projects? Personally I'd really like to find a construction loan that after project completion would morph into a mortgage loan for a rental. Am I dreaming?

I agree strongly with Tyrus. Why would you go invest there, if you have such contempt for the neighborhoods and people? I don't see how you could take your obligations as landlord seriously with an attitude like that. If you are careless and neglectful, guess how your tenants will react. 

Erin take your time and get to know investors who are turning neighborhoods around. It can be done profitably and without shortcuts. It is not nothing to provide people with decent affordable housing that is safe and healthy for them and their families. It takes skill and judgment, which you gain as you learn more. Start with the BWI Meetup. You can find them online.

Hi, Kimberly, you are lucky to be located in an area that has many RE investor networking groups, including the Real Deal meetup, the Baltimore-Washington Investor meetup, Baltimore REIA, MAREIA, and various others. Google them, you will find them. Talk, talk, and talk some more to the folks you meet there. Take people to coffee and pick their brains. Focus on building your relationships in the community.

And absolutely do shop around for your realtor. Don't be in a hurry, and don't get discouraged. You are correct that many cut corners and do not work very hard. I've noticed this often and marveled at it.

But as a licensee myself, I can also tell you that nothing in the training or education most realtors get exposes them to the needs of the investor buyer/seller. The profession and its regulators are heavily tilted toward the needs of the owner-occupant. So you have to expect to do a lot of filtering. 

If you meet any realtors attending the REI groups, chances are they are more attuned to your investment needs.

I wish you the best of luck in realizing your goals.

I don't see why you have to leave DC. Many of the rehabbed houses in town include separately metered rental units in the basement. It's a popular feature for buyers, who then are able to offset part of their mortgage with the rental income. My Petworth rowhouse has one, and it's not at all unusual.