Purchase for a 4 unit in Baltimore City

[Alexander Spira]

Hi Fellow Big Pocketer's,

I am looking at a 4 unit in Baltimore city around John Hopkins area. Selling for about $230K range. Truthfully he will let us assume the current mortgage of $230K about $1500 per month. In the end it is a sale for $230K, we might bargain with him a bit, tops off would be 20K.

Sounds great. So here is the catch the building is 75% vacant. Plus it is so old it does not have separate meters for electricity. So basically we need to do over each unit. It could take up to $40K per unit to do them over nicely . So we would be all in for $350 about 88K per unit. We are looking to get 1K per month per unit. It will pass the 1% rule per unit.

Does anybody think this price after all expenses is to high ?

Also to keep costs down we want to avoid running gas lines to each unit and install heat pumps.

Is electric heat pump not base board except able to tenants in that area ?

Would a electric heat pump stand up to a Baltimore winter ?

Any information or advice would be extremely helpful. Thanks in advance to everybody.

[Brad Cogswell]

@Alexander Spira without knowing where the property is, that number seems really high. Everyone says "Johns Hopkins area", but the Johns Hopkins area can mean both really nice or total warzone depending on the block.

The 1% rule is relative, in Baltimore I would expect closer to 1.5% or 2% depending on the area and corresponding level of risk. As an example, many of the single families we look at are around 2%. Granted, those are lower income or Section 8 units so they are a bit higher.

Have you visited the property to see the block?