Opportunities in South Baltimore (Federal Hill / Locust Point)

[Matt Lazas]

My wife & I currently rent in South Baltimore, were mid 20's and anxiously looking buy a home.  We plan to ramp up our RE investing in the next few years...My goal is to convert the first home we buy into a rental as a part of the plan

I love the south Baltimore neighborhood's (Federal Hill, Riverside, Locust Point), and it seems like a good long term investment.  I've been heavily studying real estate for only 1 Month (aka reading BP blog & podcasts)...so I have no real experience in these situations. I'd appreciate anyone with some experience who can share their thoughts on what I'm thinking.  Ideally you can tell me all the reasons my idea wont work so i can revise the plan to be smarter:

- The new  construction market seems pretty hot,  There's more 20+ unit developments going up than ever in south baltimore...

-this could mean challenges renting b/c of inflated inventory 3-5 years down the road.  At the same w/ a row home that has parking and well maintained- my hunch is that will never be too hard to rent for a fair price.  (parking is in high demand in SOBO)

- We'd probably put less than 20% down, so our mortgage payment may make positive cashflow via rental income more challenging.  

-Can someone tell me if I'm being an idiot thinking i can make this work? (i dont want to rely on inflation) . 

- And also, any thoughts on qualifying properties to consider based on these conditions?  My most important factor is avoiding negative cashflow in the future

- Demand seems pretty high relative to supply for such a narrow market area,  so it seems challenging to find truly great deals.  

[M Marie M.]

When I bought my primary I put less than 20% down. It might have been 10% at the most, but I think most of that was closing costs. So don't consider that a problem. When/if your home appreciates refi and make the PMI go bye-bye.

@Matt Lazas I don't think you're being an idiot, as long as you are careful, and as long as the numbers work. There is a reason retail is way more expensive than wholesale and you may need to learn a bit more before making the plunge. Do you have any handy skills (can you screw in a light bulb/ replace the light fixture)? If not, know you'll have to hire a guy and work with trades people. Buy @J Scott 's book find out about how much rehab gonna cost you. 

The area of which you speak is hot. Maybe stupid hot. When I say stupid hot I mean prices might be a little over-inflated based on future expectations. Don't pay for that. Don't pay for anything where the numbers (not just mortgage & taxes) don't work.