Specialist · Baltmore, MD · Member since 2014 · 10 posts · 0 votes
I've been running the numbers on various properties in the City of Baltimore, as I'm looking to start out as a house-hacker once I've tied-up the right property. For the safe bet neighborhoods in B'more (Canton, Fed Hill, Fells Point, and to a lesser extent Ridgley's Delight) few, if any, properties support even the 1% rule. Should I avoid purchasing an investment property in any of these neighborhoods until rents improve/property values decline?
I agree with Ned. You are looking at A rated areas of Baltimore. I own several properties all in lower income areas of baltimore city that I would never live in myself but they are 2x and a few 3-4x properties. You can buy a 3/2 in a lower income neighborhood that rents for $1300-$1400 for $30k to $40k or you can buy a 2/2 in the A rated neighborhoods for $200k that rents for $1500 to $1600. Now my lower income area properties while being cash cows will probably go up in value 1-2% per year as opposed to the higher appreciation in A rates areas. Give me the Cash Flow!!
Though I do not know Baltimore well I know it is ripe with opportunity. I lend to many investors there that do very very well. You may want to check out some of the local meetups and see if you can partner or shadow some experienced investors there. They are certainly hitting the 1% rule on rentals and are doing very well with flips especially in the neighborhoods you mentioned.
Perhaps something in your formula may be off and you are getting bad results?
Yes your right. Those kinds of nice homeowner neighborhoods rarely generate much positive cash flow as rentals - anywhere in the country. Don't count on rents improving or prices declining to a point where they make sense for a cash flowing rental. - not likely to happen. Those neighborhoods can work if you have a lot of cash, can use the depreciation and don't need the cash flow and only want the appreciation over time. Unless you fit this category you are looking in the wrong areas.
If you house hack and rent spare rooms, then it can make sense but that is an entirely different calculation because you are living there.
I agree with Ned. You are looking at A rated areas of Baltimore. I own several properties all in lower income areas of baltimore city that I would never live in myself but they are 2x and a few 3-4x properties. You can buy a 3/2 in a lower income neighborhood that rents for $1300-$1400 for $30k to $40k or you can buy a 2/2 in the A rated neighborhoods for $200k that rents for $1500 to $1600. Now my lower income area properties while being cash cows will probably go up in value 1-2% per year as opposed to the higher appreciation in A rates areas. Give me the Cash Flow!!
Hi Greg! I just purchased a home in the Beverly Hills neighborhood of Baltimore (21214). In short, it's an amazing hidden gem. This whole area: Lauraville, Hamilton, BH and Arcadia. If you're looking to househack (as I am), there's plenty of opportunity here. Far more for renting out a basement apartment type thing, but also the occasional MFH pops up too. I'm actively looking for additional REI opportunities here as well, so if you want to message me and tell me what you're after, I can keep an eye out for you. An REI friend of mine is shifting his focus from overpriced central Bmore to this area after realizing that the ROI is way higher if you travel a little further NE.
Thanks all for the feedback! Very helpful insights and some great suggestions.
@Julie Hassett - congrats on your recent investment! I'm currently renting in Fed Hill while working in downtown B'more and the walkability of my commute and everyday life has really grown on me. I'll likely continue to search for house-hacking opportunities in the City, but for future investments, the areas you listed sound fantastic. A good friend of mine just moved into a rental over in Eastwood and I've been meaning to check it out (as a New Jersey transplant, I haven't explored much outside of central B'more neighborhoods). Just did a preliminary search in the 21214 area, ran some potential numbers and the ROIs do look much nicer. I'll be keeping an ear to the ground for any good deals and will be happy to share any future findings!
Been investing in Baltimore for over 40 years - still find great equity deals here. As an auctioneer and consultant I see great transactions all the time; commercial and residential - the secret to equity success is to make many offers all the time.
I use the Control and Roll system to flip properties here and in other states, and use a Skinny Contract to accomplished great results.