In need of advice...what would you do next & why?

Question

Hi everyone,I have a question that I've been struggling with and would appreciate your advice. I have a full time job in technology but have also been an investor for 14 years. I've done a few flips but mostly i buy and hold. Today have 7 rentals most are local NoVa but 3 are in the Baltimore area. Over the past few years, as I've gotten older & started a family its been hard enough to manage and keep my properties rented. Its been years since I invested but I think i'm ready again. I've been interviewing my investor friends, agents & have started frequenting the local Real estate groups i used to belong to. As a buy & hold investor, I'm interested in the following but wonder what you think the best angle to pursue would be:Purchase a townhome/SFH as a local rental; my research says Reston/Herndon are prime areas but it's been hard to find something other than a retail deal.Look to purchase multifamily in a nearby semi local area I've been looking @ Baltimore MD/Winchester VA as they seem good & growing. I know many investors purchase out of state properties & do this successfully. I'm somewhat against this as its been hard for me to find good property management. My compromise would be to invest in growing areas that are within 90 mins from me- thus Winchester Va & Baltimore MD.Anyway, thanks for taking a moment to read this. Would love to know what you've found successful & if the research i've done seems legitimate.Thanks again,Steven

Russell Brazil · Answer

@Naveen Kumar Huge potential cash flow. Your property value will never go up a penny. High risk tenant base, and the city is a dump. The city is going fine you every time there is a weed in front of your property, every time the police are called on your tenants and every time there is trash in front of your property. Lead inspections there are a nightmare. I would never buy there. Other people do buy there though. My friend @Andrew Michael has a duplex there. (Not sure if he has others there?)

Naveen Kumar · Answer

Thanks for your insight Russell and Andrew. My goal was to buy-and-hold-and-PM it out for a 5-7year timeframe, and the numbers looked good on paper. Looks like I have to reevaluate my strategy.Back to the drawing board, I guess.

Russell Brazil · Answer

You will get more appreciation in Reston/Herndon than you will in Baltimore or Winchester, but more cash flow in the latter. Winchester is going to be harder to place a tenant as well. It is all about your goals though. If you want your asset to grow in value while remaining relatively low risk, Fairfax County/DC/Montgomery County are your likely best bets. If you want a ton of cash flow, Baltimore is a better better.

Steven Trumpet · Answer

Thanks James A.All fair points. And you're right. I've taken a few lumps in Baltimore. I started investing there because of the price points- but I realized the area isn't for the weak of heart. I learned about B-more's block by block nature & to be shrewd in my dealing w tenants & contractors. They were costly lessons but I still think the city & its better areas are promising. You're right about the Multi's...the owners know they have a sought after asset. I need to start going to the B-more real estate clubs. They helped considerably. Maybe there i'll find a solid agent & someone ready to make a deal on a small multi? If you have additional thoughts/ideas I'd love to hear them.Thanks!

James A. · Answer

@Steven Trumpet Great to hear you are getting back in the game. I think in general if you are looking for cash flow say Baltimore. You said you have a couple in bmore but seem a bit hesitant, am wondering if you have not had a good experience. Also if you are going to go buy and hold try to get more doors under one roof. I am looking for some small multi myself. I am not sure how much you follow the market but multi is very popular now so it will be hard to find on market deals but if you are interested in discussing more just let me know and I am happy to help in anyway I can. Hope you find success!

Steven Trumpet · Answer

Good info & excellent advice. Oddly enough, I looked at Hagerstown MD years ago. Chose Baltimore instead but I think in many ways they're very similar. Thanks everyone!

Ben McMahon · Answer

If your not planning on being super active than continue to play the long game in areas that are safe from big market shifts. There are a lot of areas outside D.C. Metro that have seen good appreciation, and still have some moderate cash flow. My two cents

Andrew Michael · Answer

I would not say that you have to reevaluate. Just do what you are doing, ask the questions and make sure it is the right place for you. There are several investors who do really well up there.

Andrew Michael · Answer

@Naveen KumarThanks Russell for the shout. The Hagerstown story has gone unchanged for the last few decades. I do not see any reason to expect a sudden economic turn around. Also the city makes it really difficult to do business at times. Like you said, the cash flow is massive and you can do very well in that regard. It becomes particularly attractive when you can find good long term tenants. Cash flow aside however your property will likely never appreciate so it all goes back to a few questions.What is your strategy both short and long term?What is your risk tolerance?My Hagerstown Duplex was one of my first investments and I am really grateful for it. But my strategy has changed and I likely will not invest anymore in Hagerstown.

Naveen Kumar · Answer

@Russell Brazil - what do you think of the Hagerstown area? Looks like it cashflows well. Is it easy to place a tenant there?