All Forum Posts by: Rob Poole

Hi @Nicole A.

I take it he's seeking conventional financing? If so, is he planning on living in the property / owner occupying? If he is then he should, more than likely, have no issues purchasing with less than 20% down with a conventional loan.

I have an excellent conventional lender that is very knowledgeable about conventional products and is very easy to work with. He's great with communication, too. I have used him for a couple of my loans and several friends and family have used him; he's consistent everytime.

Dave Meurer
PrimeLending
Located in Timonium, MD
https://lo.primelending.com/dmeurer

If he's NOT planning to owner occupy then he will likely have to go another route if he doesn't have 20% cash plus closing to put down at settlement (the minimum DP for most conventional loan products on investment properties), such as private money OR something more creative such as seller financing as you've indicated.

Hi @Nicole B.

I would say in most cases it's not worth it. Especially for 2 units. Maybe for 3, but the zoning would have to be correct on the lot where the property sits.

In order to seek out a project like this you have to check the zoning for that particular property (ex. DR5.5 - which in Baltimore County means Density Residential 5.5 units per acre (the county and city may differ)). The setbacks and lot size must meet the minimums before you can increase from a single-family to anything more. Baltimore County has an online tool/map where you can check zoning on a particular property: http://myneighborhood.baltimorecountymd.gov. Not sure about Baltimore City.

I had looked into this for my primary residence. I know that where my primary residence sits (DR5.5) the county zoning department told me I have to have a minimum of 10k sqft of land and meet the setback requirements (which I don't remember exactly what they were offhand at the moment) in order to have a legal 2 unit property. Otherwise you can attempt to get a zoning variance / petition for a special exception where they place a sign on the lawn for, I think it's, 60 days and then you have a hearing where anyone from the community can come and speak against it. I'm not sure if they will allow this in all cases or not and there's obviously no guarantee it will happen. So going this route on a non-conforming lot/property, you would be taking a gamble.

So is it possible? Probably with some research and effort. Whether or not it's worth it is a whole different discussion. Converting a house into 2 units would obviously not be cheap since if you're going to do it right you're talking about all new mechanicals and split utilities. After everything is said and done you now have a less liquid asset as 2 units tend to sit on the market longer and don't appeal to regular retail buyers (since it's no longer a single family). If your numbers are really good then it could work out, but if they're even close to tight it could turn into a bad investment very quickly.

Whether you're in the city or county, I'm assuming city based on the price range and size of houses you're mentioning, check with the zoning department. Call about a particular property address you have in mind and if you can look up the zoning beforehand so you can tell them over the phone. Then ask if it's possible to convert it to a 2 unit or more multi-family property.

I believe the city is more strict on these conversions, however, based on something I remember reading from a post by Ned Carey.

@Jim Adrian

Good catch in that version of the document and thanks for the tips. I quickly searched Google and glanced at that notice. I didn't catch the variations between the hard copy document I received and the one I found online. The hard copy I was referring to does not indicate choosing just one of those options. Maybe it was a typo? See below:

I currently use the interconnected hardwired smoke and carbon monoxide alarms in my units with 10 year sealed batteries to satisfy the current, and hopefully future, requirements. My guess will be that they will start requiring the same for carbon monoxide alarms (hardwired and interconnected NOT battery). This is what they did with smoke alarms initially. Overall this is not a big issue unless they start requiring this central control unit that requires some sort of monitoring service. My fear is they will start moving this way in the future. I don't want to start having to equip rental units with alarm systems and pay for the monthly fee that goes along with it.

@Ed Riemer,

I would go with all electric for the rentals. My main reasoning behind this is due to Baltimore County's rental licensing requirements that are getting more and more strict on having carbon monoxide detectors throughout a rental unit. In 2018 Baltimore County is requiring carbon monoxide alarms / detectors to be:

• hardwired with a secondary battery backup (similar to smoke detector requirements in Balt County now)
• battery must be sealed, tamper resistant, and must last for a minimum of 10 years
• connected to an on-site control unit that monitors the carbon monoxide alarm remotely so that a responsible party is alerted when the device activates the alarm signal and receives its primary power from a battery or the control unit

(Ref: Baltimore County Notice with details)

The one in bold specifically concerns me. I'm not sure what this will entail, but it sounds like it's going to be expensive and possibly involve a monthly fee?

Of course you are exempt from all of this if you don't have any of the following in the dwelling:

• fuel burning equipment
• attached garage
• wood burning fireplace / pellet stove

This has made me want to go to all electric appliances in my rentals in Baltimore County. I myself like gas appliances as they're more efficient than their electric counterparts and in some cases, they just work better (gas furnace vs. heat pump). More efficient only really matters if you're paying the utility bill. Obviously, if the tenants are paying the utilities you're not going to see any savings due to more efficient appliances.

For rentals though, it just doesn't seem like it's going to be worth putting in gas appliances for these reasons alone. Not to mention gas appliances tend to cost a little more than electric ones; although somewhat trivial in the grand scheme of things and I don't think most tenants notice nor do I believe it will make or break most interested in renting.

Another annoyance with gas / gas lines -- gas leaks. I've had small gas leaks in 2 of my rental properties and it was costly and time consuming to track down, not to mention concerning.

Another point, if you don't already have gas lines run for these appliances, plumbers in the area tend to be more expensive than electricians for running pipe vs. having a new wire run; assuming it doesn't already exist.

Oh and one more thing... Baltimore County requires a permit and inspection for each new gas appliance you hookup as opposed to electric where you just plug it in (assuming, again the electric is already in place); no permit or inspection required.

Gas in rentals, at least in Baltimore County and maybe in general, just doesn't seem to be worth it.

Just some food for thought...

Make sure you vet that contractor closely -- the contractor(s) and rehab can make or break a deal. What's in the SOW for $30k? Sounds awfully low for a house in that condition. I could see saving some money if you guys are going to do some of the labor assuming you stick to jobs you're knowledgeable in. Unfortunately rehabs on older houses rarely go the way you want them to.

3116 Baybriar Rd was a very nice rehab. You will not get this level of quality in a rehab for $30k. This is not really a comp, because like I said, it's outside of the neighborhood of the property you're flipping and it's also over a year old. That's not to say it can't be a general guideline in helping you determine price in the general Dundalk / Sparrows Point area; which is what I think you're going for.

Let me know if you have any questions or need some guidance throughout the project. Good luck with everything and congratulations on taking action.

In that area I see one "comparable" (2/1) that sold in that last 6 months for $120k (2548 N Snyder Ave). It's not a great comp though since it wasn't rehabbed. And one comp: 7107 N Point Rd @ $135k that looks like it was actually rehabbed a little, but it does have an unfinished basement. If you look in the past year for sold 2/1's there a few that sold for higher but they are close to / on the water, which does push values up a bit in Dundalk.

You have to be careful basing your ARV on properties outside of the area you're flipping in. An appraiser and buyers are likely only going to consider sold prices in that area, meaning the Sparrows Point area outside the beltway. I wouldn't put too much value on the sold properties inside the beltway in Dundalk.

Now if you can somehow increase square footage and add another bedroom and bath you're in a completely different market with much better comps in the immediate area. Looks like 3/1.5 and 3/2's are selling in the $200k-$250k range. Of course there has to be the potential for this in the existing structure or else the rehab can be cost prohibitive.

I think I see the property you're under contract on: single-family at $50k built in the 20's. To be honest, with hard money and an ARV at $120k I don't see how you could make any profit. The rehab on this is not going to be cheap. I would be considering a cheaper, but quality renovation for rental if you're going to keep it as a 2/1. If you're going to go for a flip, due to the amount it's going to cost to renovate, you're going to have to be inline with a higher resale price and either be willing to sit on it a little longer OR force value into the property by increasing living space.

Hi @Cody Snow

I invest in the Dundalk (county side) area. I have 2 rentals and one flip on the market there. The RE market there is very pocketey (word?). Some streets / neighborhoods are nicer and have stronger comps (closer to Holabird) while others have little to no good comps for resale. 

2/1's are a challenge anywhere. Renting a 2/1 for the right price would be easier than trying to sell one, but even renting one would be a challenge. 3/1's make it much easier and increase the amount of monthly rent you can fetch. As for resale/flipping, most are looking for at least a 3/1.5 / 2. You're market is considerably cut down with a 2/1. Now if there's potential for a 3rd bedroom and/or 1/2 or 2nd full bath you can force more value into the property and probably sell / rent faster.

Does this property have a basement? I can tell you in my experience most renters want, and probably buyers, want a basement in the area. Of my 2 rentals in Dundalk, one has a cellar area for storage and utilities and one doesn't have a basement (mono slab) and both were a challenge to rent -- it took months to get a good tenant. One of the major complaints was not having a full basement (since most of the rowhomes in the area do have basements). I will not buy another property in Dundalk without a basement for this reason.

Where is your property located in Dundalk? Street? It's hard to determine comps without knowing this. Like I said the comps vary from each individual neighborhood in Dundalk.

How are you financing this? If debt, make sure it's not too expensive or it may eat up your profits quickly as you will likely be holding for a while as a 2/1 (renting or resale).

I think the area in general is probably better suited for rentals where you can do a lower end, but still quality, renovation (at least for the rowhomes / might be a little more margin on a single-family purchased at a low price). It's not easy to make profit on a lot of these properties since most were built in the 50's, are in pretty rough shape, need all new systems (electrical, plumbing, HVAC), and essentially need to be rebuilt from the inside out.

Will do and you're welcome.

Hi @Brad Dwin,

Definitive Title in Baltimore (not far from Anne Arundel). You'll have to Google them since I can't share the web address or number in this post.

Bret is the main guy there. Let him know I referred you if you decide to go with them. They do an awesome job and are investor / wholesaler friendly.

I've also used Home First Title Group LLC in Crofton, if that's closer to you. They do a good job as well and claim to handle wholesaling transactions, too (haven't verified this firsthand, only done closings on properties I've purchased here but have asked them about wholesale/assignment transactions and they say they can do them).

Curious about the details of the property you're wholesaling if you care to share. Might have a buyer for you...

Rob

Hi @Kyara G.

To answer your questions in short: Yes. The electrician installs the coax / cable and outlets.

Wiring for low volt (cable / cat5/6 (wired network) is typically done at the rough-in wiring stage along with your high volt branch circuits (receptacles, lighting, etc.). If drywall is already up it won't be nearly as easy to run any of this now. The electricians we hire rough-in coax and outlets making it cable ready. I don't think it's a showstopper and don't think its absolutely necessary.

If and when someone wants cable ran after the fact they can either have it ran/fished through the walls or what most will do, even though I personally don't prefer this option as it looks sloppy and connections won't be as reliable, is have one of the cable companies come out and run coax to the various rooms along baseboards and through closets.

As for WiFi... it's a wireless solution so no wires are needed here. A wireless router (WiFi) can be hooked up at the modem which will likely be hooked up at the incoming cable source.