All Forum Posts by: Nancy Roth

Out Reisterstown Road past the beltway going in direction of Owings Mills.

Weighing two potential condo acquisitions. 

Condo A is proximate to large army base (Fort Meade, in Anne Arundel County, MD). It is a 3/2, 1,032 sf.

Condo B is in a middle-class suburb in Baltimore County, MD. It is a 2/1, 961 sf.

Both have voucher tenants (different kinds of vouchers). Both condos have monthly fees of just under $200. Both tenants would like to stay.

The Condo B tenant voucher pays $1475/month and the listed price is $119.9K.

The Condo A tenant voucher is $1400/month and the listed price is $129K. 

At present, Condo B is clearly a better buy, going strictly by the numbers. But how do I evaluate for the long term? Specifically, the cash-flow and liquidity of each investment? Being able to achieve maximum and stable cash flow, or being able to cash out quickly over the long term is really important to me.

I believe Condo A in the long run will benefit from being very close to the army base, a key employer in the area, and will always have a built-in pool of potential tenants and/or buyers.  

Am I exaggerating the value of this location? Does the advantage of owning a 3/2 near Fort Meade make Condo A the better value though it costs more?

Having owned rentals since 2012, I know how to work through each scenario strictly by the numbers as each currently stands. 

But I would be grateful for counsel on how to compare the longterm cash-flow and liquidity of these alternate investments. I have access to the multiple listing service. 

Thanks for your time.   

Nancy E. Roth

Washington, DC

@Matt R. thanks. Back East (in DC and MD at least) the number is 2 per bedroom plus one--and it doesn't matter where they sleep. Two parents and a baby can sleep in the one bedroom, or they can arrange themselves however they want, but the number of people in the unit overall is limited by that formula. Similarly a 2 bedroom unit can host a maximum of 5, again 2 per bedroom plus 1. It's a fire code thing. Too many in a unit pose a safety hazard.

But no regs that I know of say where people must sleep. Friends of mine went through a phase of putting their baby to sleep in the laundry room b/c the dryer soothed her to sleep. Why not? 

@Matt R. Yes it would be discriminating on familial status, if the property could legally accommodate another person. But we are at the legal limit. The max a 3-bedroom home can legally house is 7 residents, 2 per bedroom plus one more. 

So we tell them, we are at the maximum number of people this unit can legally house, and if you add anyone we are breaking the law to house them here. If you have another baby, you need to find a bigger house or someone in the home has to move out. 

Don't you think that would work?

@Jason K. Thank you. What we have in Maryland and I think in DC is "provisional" licenses explicitly for what I'd call non-legal (not "illegal") residents. Maybe they've been here a very long time, own property and business, have had kids (citizens) here and are in line to become citizens. Or maybe they are very newly arrived. Whatever. Their residential status is unresolved, so they can't get licenses, but the state believes they will drive if they have to, and it's better to make them learn the rules and pass a drivers test, so it gives them this provisional license. It's controversial, with a lot of people protesting that nonlegal residents shouldn't get any kind of license or accommodation at all. 

I'm ignorant of all the specifics but I do know what that provisional license is for. And in Maryland at least, although the provisional doesn't reveal where they are in the messed up system we have, it does indicate they are not legal residents. 

I agree with everyone here, including yourself, that if they are good tenants their status shouldn't matter. I do have to think of it as an additional risk for my investment, though. Especially if they act like fools and upset the neighbors. 

It also sounds like a lot of LLs on this forum are ambivalent about hearing from the neighbors, and I can understand why. But to me they are important allies, and it makes a lot of difference to me that their eyes and ears are on my property. They get my respect, and they haven't ever abused it.  

@Matthew Olszak Yep. I hate to, honestly, I really need the support, but it doesn't seem to be forthcoming. Soooo frustrating. 

Really appreciate your thoughts, thanks for writing.

@Matt Paris @Robert C. You both made great points. I'm really torn about it. 

The timing makes it hard to empty the unit at this point. We're at the end of summer, once school starts and the weather turns, the rental prospects thin out a lot in Baltimore. Not impossible to get a tenant, but it gets a lot harder. So if I start an eviction now it could be well into fall before we're ready for the next tenant, and it's quite possible I'd be looking at several more vacant months. I have struggled in fall and winter before, with this and other units, and I don't look forward to it again. 

Sorry to whine on you. I suspect the seasonal factor is a little less pronounced in Florida and California.

But it's not all bad.

I've been learning a lot in this forum, plus in local conversations, and have now formed a plan. Tomorrow I will meet with PM to discuss and then we will go to the unit. 

I've proposed the following package: 

-Lease will be scrapped. 

-We will offer a very stringent month-to-month lease, with hike in rent and security deposit, requirement that the residents strictly maintain the exterior, front and back. 

-We review the "quiet enjoyment" clauses with them and ensure they understand clearly what that entails.

-We follow up with unannounced monthly walk-throughs in the first three months to count beds, and after that unannounced quarterly walk-throughs. 

-Any additional occupant is grounds for vacating in 30 days.

-We get 30 days notice to end the tenancy but they have to give us 60 days notice to move out. 

I've asked for a lease for them in Spanish as well. 

Being extremely watchful, we'll see if we can get through the next few months, and if we see it's not working, as you warn it won't, we vacate in the spring and start over. 

If there is no way to avoid vacating, okay we'll do it. That's life.

The PM is on extremely thin ice as well and may be history before it's all over. 

@JD Martin

Google "George Carlin and euphemisms". :)

///

I did. Hilarious. Wow he was great.

@Michael G. Thanks for writing. I just had a conversation with a local buddy of mine, and she would agree with you. She said, y'know, it may work out. You get the extra rent and extra deposit, you rewrite the lease to include everyone who is in there, you make the rules very clear. They may be glad to be allowed to stay.

I understand that a daycare business is an extremely stable tenant, it's hard to beat that. Good for you that you found a way to make it work. Stability is where it's at for me.  

@Matt R. I hadn't heard of an additional occupant charge in a lease. Sounds like a great idea but the leases I'm familiar with specify who is an occupant, and no one else is supposed to be living there. Wouldn't a clause like that in the lease be counterproductive? Do you have any examples of a situation when that provision can be applied?

Also it would be problematic in DC, where "familial responsibilities" is a protected class, meaning the landlord cannot prevent a tenant from supporting a person in a dependent relationship, including (but not limited to) parents, children, and grandchildren. I doubt the landlord could increase rent in that situation.