Section 8 in Baltimore, MD

[Mert Icgoren]

Hi all, 

Thanks in advance for all your opinions and suggestions. First time posting ! 

First time buyer here. I came across the Section 8 market in Baltimore, the cap rates look attractive, but since I'll be from out of state, I'm a little scared about finding the right property manager. 

I've been trying to do this investment from long distance and I know it's not the right way to do it and I should probably be on the ground in Baltimore, but my plans is to buy a property on Auction at Alexcooper.com, I've been following them closely for the last couple months, looks like there could be some interesteing properties.

Has anyone here invested in Baltimore section 8 market ? What has been your experience so far ? Do you suggest any other markets rather than Baltimore ? 

Thank you and best

[Mark Cruse]

It's very possible you are setting yourself up for a disaster from multiple angles. People see cheap prices in Baltimore and believe its some simplistic element that will make them cash flow rich. That can be true but there are a trillion things to consider in between all of it. Experienced, professional landlords encounter massive problems in dealing with section 8 rentals depending on where they are. You really have to understand that community and know that community. People who know every street, down to each alley have problems. Someone with limited experience who doesnt know anything about the city is set for a very high failure rate. Also, going to an auction? How can you possibly know what you are getting? What if you get a 50k property with and ARV of 90k but takes 200k to renovate. It may be a tear down for all you know. There are certain blocks in Baltimore that are nearly unrentable. What if you get an over priced piece of garbage that cant even be rented? All you will get is vandalism, tons of fines and a worthless asset that is a liability. Go to the discussion in here on investing in the so called inner city. Look at the horror stories they mention. Though I dont concur with some of the perspectives and mindsets in there, they are describing some of the things they encounter. It's not easy and I would emphatically not recommend any of that until you know the city, have more experience and understand the section 8 process. I have been successful in this space and have over 15 years of experience and it can still be rough if not done right. The bottom can drop out any time and if you dont understand multiple dynamics, it's costly and nearly impossible to stabilize your portfolio.