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Updated about 4 years ago, 10/04/2020
San Antonio TX vs Baltimore MD- Help!
Hey BP community!
I’m in transition and I’m considering moving to San Antonio TX or Baltimore MD to start my real estate investing part-time. Both markets have their pros and cons and I’m hoping to get some advice from local investors to help me decide the best market for me.
For context, my goal is to buy-and-hold small multifamily units and want to cashflow a minimum of $250/door. I would like to start with house hacking my first property and BRRRR 1-2 properties/year until I reach financial independence from pure cashflow, maybe in 10 years. Since I plan to hold my properties forever, I need to have a very long-term forecast. I have 60k saved, good credit and have a decent salary as an engineer.
San Antonio Pros: Population growth, unemployment below national average, landlord friendly laws.
San Antonio Cons: Flooding, very competitive, I imagine the window for cash flowing properties is closing, high property taxes, water security issues in the next decade or two.
Baltimore pros: Deals are easier to find, I’m more familiar with the area and have friends there, slightly lower price point than San Antonio.
Baltimore cons: Population decline, unemployment higher than the national average, tenant friendly laws, very long eviction process, older homes, safety concerns in some neighborhood.
Please feel free to correct me on my assumptions and add any pros and cons I might have missed. I’m also open to hearing suggestions about other markets. What would you do if you were me?
San Antonio doesn't have as many flooding problems as other cities like Houston. You'll have a higher price point there and less cash on cash return, but in my opinion you'll see more appreciation over the long term. On the other hand you seem to have local knowledge and people on the ground in Baltimore and you will get more cash flow there. So what are your priorities? max cash flow, or take a chance on a higher long term return?
@Israa A. Being that I'm originally from Houston, to me flooding is a non-issue in San Antonio. Our city is very much an up-and-comer. If you are looking to invest your money for long term gains, which you stated very clearly, I believe this market is the better choice. Cash flowing 250$/door is likely more realistic in Baltimore, however you will not see anywhere near the level of appreciation and growth that San Antonio is currently experiencing and will continue to experience. I see homes on a regular basis that sold for 35K just 7-10 years ago now selling for 90K or higher, and this isn't even in neighborhoods with a heavy investment presence.
I personally feel San Antonio is a much more exciting place to live as well, just my 2 cents. Hope you find success wherever your investment journey takes you.
I'm not sure where you're getting the flood information about San Antonio. I think this year it's rained a total of 15 days out of the year - the majority of the time being a light sprinkle that's then evaporated in minutes given the blazing Central Texas heat. I can see humidity being a complaint after it rains here, flooding I'm not so sure.. As Stone mentioned, maybe Houston and the other Gulf towns. We're pretty far inland.
San Antonio Pros wise: We have relatively low costs of entry, crime rates are lower relatively in many areas of town, the city continues to steadily appreciate and is appreciating more rapidly in certain areas of town, the job market here is stable and improving as more corporations look to headquarter here bringing their jobs and increased local GDP, rapid population growth as you mentioned, plus the city is a great place to frequent if you're an out of towner. The food is tremendous, the nightlife is fun, the people are nice - you'll make a ton of new friends here. You should visit, I think you'll like it.
The Baltimore cons you mentioned make it seem like the risk/reward isn't justifiable because of lower costs / more deals. If a market is competitive there's probably good reason for it.
Cheers!
I dont know tx market so cannot make a comment on it.
I know Baltimore Real Estate market and can tell you that living the city is different than investing in the city.
However, if you invest in higher price points than 100K, you should be okay. If you goal is to invest in 50K houses, I would say, think twice.
- Ozzy Sirimsi
Thank you all for your detailed replies! I appreciate your input and experience. I will update you all once my decision is made :)
@Israa Ajam
Population decline and high unemployment should raise a BIG red flag, way more than high property taxes, or flood zones (which dont really exists in SA like the previous comments stated)
I've lived in both cities. Born and raised in Baltimore, and was stationed in San Antonio for about 18months.
My gut says San Antonio.
My mom is a realtor in Baltimore. My sister works for a big investor, with hundreds of buy-and-holds and flips in Baltimore and Southern PA. I have instant network of lenders, agents, familiarity with the territory, and other elements of a team. But I'll never move back, and San Antonio still feels like a better move to me. I don't have data to back it up, just a gut feeling.
I can't speak to baltimore...but living in and investing in San Antonio here are some things I like and some I don't.
-Our rental market tops out around 1500ish, it seems at that point that most people would rather buy than rent. It's not uncommon to see 400k+ homes listed for rent for 2000-2500 and sitting on the market.
-Our property taxes are high and unpredictable....I've had houses that doubled in a calendar year. And you have to be committed to protesting your taxes if you are going to buy and hold.
-Cashflowing rentals are hard to find. The only way i've found good deals is to source them yourself.
-The appreciation is steady and consistent. Your house isn't going to double in value in 3-4 years but the appreciation here is consistent
I don't know the Texas market, but everything comes down to your specific situation and your tolerance for risk/reward.
If you want cash flow, then Baltimore is a great place, but you have to factor in the necessity of knowing the tenant-friendly laws and regulations. These can be dealt with and if you have a good team and/or systems in place, you can make very good money. However, you probably won't see any appreciation unless you get lucky and buy in areas that really take off. But in that case your taxes will skyrocket and you won't be able to appeal them, so your cash flow gets reduced.
Also, Maryland has high income taxes so you need a good accountant to help you structure your business to minimize your net income (see Trump, Donald for an example of this).
Again, your decision will have to be based on your long-term goals and unique financial situation.
Good luck with whatever city you choose.
#1 Investor Mindset Contributor
- Investor
- San Antonio
All the San Antonio realtors are saying in San Antonio. They’re not a bit biased. LOL
@Israa Ajam TX hands down! Maryland isn't very landlord friendly and Baltimore is even worst. Now Maryland has lowered the amount of lead that can be present in any test sample. That and all the BS of Baltimore, is enough for me not to even consider it.
Good luck.
I can't speak about San Antonio, but what I can say is that Baltimore is on the horizon for growth. There are new developments in the pipeline that are coming to the city that is going to turn the city around. Contrary to popular belief, Baltimore is one of the best rental markets in the country. It's well located in a recession resistant Mid-Atlantic market. Also, the cash flow in the city is great. My biggest recommendation is that you need to know where to buy to get the ROI, or you can end up in a tough area. @Israa A.
#1 Investor Mindset Contributor
- Investor
- San Antonio
Originally posted by @Aaron Bihl:
@Joe S. lol, I tried to offer both sides. I live in San Antonio and don't love rentals here mainly because of taxes. I also have zero interest in anything involving more or new clients.
That’s awesome that you don’t need more new clients! A lot of the other realtors that contribute from any city are directly or indirectly letting the world know that they are here to help. It’s great that you have built such a great client base in such a short amount of time. :-)
I would not say that Maryland is rescission proof. DC is more rescission proof due to federal but DC and Baltimore are two different worlds. I don't know the San Antonio market but if you can find income + appreciation you are in good shape.
As a civil engineer myself, I think this is important for you. For flooding areas look at the FEMA maps. Here is the address below to help you understand the given situation on an area in San Antonio. Not that will give you or explain in detail what is a 10 vs 25 vs 50 yrs probability storm event, but is a good source for expecting flooding areas for certain storms.
https://www.fema.gov/flood-map...
Actually you can check the whole country, just type your zip code if its available and look at the map. Hope it helps.
We're jumping into the San Antonio market as well, definitely seeing low likelihood of cash flow. Focusing this investment on an appreciation strategy. Nice to see all the comments are in line with what we've noticed in our research over the past few days!
@Aaron Bihl: Thank you for your insight, I’m a little concerned about property taxes wiping off all cash flow as they continually increase with inflation. Are they easy to contest?
I expect that finding off market deals will be the only way to cash flow. Everything I found on the MLS was overpriced for cash flow. How do you know personally source your off market deals?
Good point about the $1500 cap rent. What would you pay for a house or unit that would fetch that kind of rent if you want to cash flow? I know this is a broad question since #bedrooms, location, condition and size affect this answer. You can qualify your answer.
Thanks again for your reply! I really appreciate your time!
@Shadonna N.: I agree with you, I wouldn’t say Baltimore is recession proof either. You mentioned finding a city with income and appreciation. I’m open to other cities. Do you have any that come to mind? Thank you!
@Israa Ajam
Bottomline, you can live where you want and invest where it makes sense. Why not invest in both markets ? Since you are familiar with Baltimore and have friends, maybe you should make Baltimore your headquarters :)
@Balaji A.: It’s a good idea but I’m not comfortable with investing remotely yet. It’s important to me to know the neighborhoods well and I think building a team while being local is probably easier but who knows what this pandemic has changed. People are meeting on Zoom anyways.
Before you make a decision, I would take a serious look at the net migration numbers. If there are more people moving out than are moving in, that would suggest that it is not a good long term investment. If you are looking to buy and flip, the price appreciation numbers over the past 2 years should also be researched.
Originally posted by @Israa A.:
@Shadonna N.: I agree with you, I wouldn’t say Baltimore is recession proof either. You mentioned finding a city with income and appreciation. I’m open to other cities. Do you have any that come to mind? Thank you!
The income + appreciation market is somewhere but may be harder to find in this environment. I don't want to do any long distance investing so I don't look outside of certain areas.