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Updated about 7 years ago, 11/14/2017
Baltimore buy and hold market.
I am encouraged to research further into the Baltimore buy and hold rental market due to the rent to value numbers. My intention is to buy and hold a stack of SFH's in a good cash flow area. It appears from my initial research that its possible to find tenants that stick around for a year or more in a C area in Baltimore and still achieve 20% net cash on cash? If not in Baltimore can anyone beat the numbers in any other areas where this is conceivable?Regards Alan
Between these and others, you will get a lot of good information about buying in Baltimore. Key would be a good property manager (and someone well-versed in Section 8 if you are looking to maximize cashflow and not looking for appreciation necessarily) and someone who can do THOROUGH boots-on-the-ground recon for you. Baltimore is all over the place in terms of desirability and affordability.
@Alan
@Alan Charles - if you have tenant turnover/evictions with short term (1-2 yr) tenants, higher than average maintenance costs, repair costs, and loss of rent (during tunrover and nonpaying months) needs to be taken into account.
I prefer areas that are slightly more expensive, where I can get better longer term tenants, they are easier to rent, and Im ok with going there at night.
Without having specific areas/neighborhoods you are looking at it is hard to provide better advice.
Good luck!
hello @Alan Charles
@Lisa Phillips has a very good blog and a podcast where she told some of her experience in Baltimore
best regards
Nereo
Cash on cash return depends varies dramatically whether you pay all cash or finance. Unfortunately it is very tough to get any financing in Baltimore City.
To be a little clearer my question was: Can anyone match or beat the 20% return (no finance, 50% rule and the 2% rule taken into consideration) .that I thought was possible in Baltimore in another market. In other words is there anyone out there that can share with us a market, city or town other than Baltimore that can return 20% net ROI ?
Kansas city MO I deal with wholesale properties that net between 15-20% ROI so yeah the 20%'s are out there and not uncommon. Especially when wholesaling to yourself ;)
Cheers
Thanks Tyler. Wholesaling to yourself, make sense. Like it.
Originally posted by @Ned Carey:
Cash on cash return depends varies dramatically whether you pay all cash or finance. Unfortunately it is very tough to get any financing in Baltimore City.
Hi Ned,
I have started looking into Baltimore.
Why is it tough to get financing in Baltimore City?
What is the solution for this?
...continuation from my previous post.
What feedback do you have about Baltimore County in terms of overall investment potential?
Still interested in learning about why Baltimore City is tough to get financing in.
@Alan Charles
Contact Ian Horowitz of Charm City Cash Cow/Timber Property Management. 267-446-4092. Fully rehabbed property's, Section 8 with tenant, 20% return, and manages the property's. Sounds like exactly what you looking for.
If financing is needed It can be done without a problem in Baltimore.
Joe Impagliazzo
@Joe Impagliazzo your comment about financing surprises me. Who do you know that will REALLY finance in the city (not just claim to )
Originally posted by @Chris Stromdahl:
...continuation from my previous post.
What feedback do you have about Baltimore County in terms of overall investment potential?
Still interested in learning about why Baltimore City is tough to get financing in.
I know there are good rental deals in the county. However that is not my area of expertise.
Regarding city financing, there are many issues. Often properties are so inexpensive they are below minimum loan amounts. Sometimes there are restrictions like "there can't be a board up on the block" Well that eliminates virtually every rental area in the city! The main reason is known as red lining.
Blame the city itself. The city sued lenders for not making enough loans. When those loans went bad the city sued the bank for making predatory loans. I know of one former high up city official that bragged how mush money she collected from banks in the way of fines on the properties they foreclosed on. She was clueless to the fact she was a direct contributer to lenders not lending in the city.
@Ned Carey
Are you looking for financing for something to rehab? Or financing to purchase a home already rehabbed? If it is completed I do them all the time, that's how I know Ian that I mentioned.
Joe Impagliazzo
Joe, rehab financing is available here from hard money lenders. Buy and hold money is what is hard to find. Hard money lenders will not lend on buy and hold because they no there is no one to refinance you out after 6 months to a year.
Thank you for the input.
I will start making the calls and making connections.
I may reach out to you in the near future.
With your permission, I would like to make contact with Ian Horowitz of Charm City Cash Cow/Timber Property Management. Unless you say otherwise, I will call him this week.
@Ned Carey
Yes I can do regular conventional loans on investment property's in Baltimore. Fixed rate terms, Fannie and Freddie.
@Chris Stromdahl
Yes feel free to contact Ian, I will give him a heads up.
A major issue in Baltimore real estate is lead paint. Any property older than 1950 (and 1978 effective Jan 2015) must register with MDE and test for lead paint at each occupancy, or make property pass as lead free.
Lawyers are making quite a living, including buying national sports teams, by suing landlords of city properties. You can be sued up to 21 years after an "exposure" to lead paint. The lawyers are advertising in high schools for people exposed when <6.
Many properties are inexpensive because they contain lead paint and require extensive (50K) remediation to become lead free. There is almost no insurance available now for lead paint.
Lead contamination was a real and significant problem. Maryland has made good progress in reducing child exposure. It still occurs today, often in owner occupied homes.
This legal problem doesn't seem to exist elsewhere in the US, yet. Have an x-ray florescent spectrometer test run on your property to determine, then correct, your exposure.
Just plan in your numbers when rehabbing that you are going to make your property lead- FREE. I can't remember the investor here on BP that recently had a thread going about his litigation experience regarding a lead-SAFE property, but it was a very eye-opening thread. Only way to go is lead-free. Make sure any turnkey you get has a lead free certificate.
Baltimore city as we all know is very block to block. It is hard to meet the 2% rule for properties that are in good condition in low crime areas. 2% is attained easier when the properties drop under 50K. Most buyers are moving to the county to get away from the crime and board ups. Lead paint is an issue, crime is an issue, and the general condition of the properties. People just do not take good care of something they see has no real value to them. @Joe Impagliazzo I see tons of people everyday looking for buy and hold financing in the city and cannot find any. So you are in a good position if you are lending there. What I also find is a lot of the "turn-key" providers are in those rough sections of the city where tenants stop paying rent or lose their voucher. So make sure there is some sort of guarantee there if a "placed" tenant does leave or get evicted.
Ladies/Gentlemen with Baltimore experience: How do you pick a neighborhood? I'm looking around, and Sandtown Winchester has got great prices, but is it a war zone? What about north of Patterson Park? Berea? Charm City Cash Cow is selling some stuff in Pennrose. McElderry Park? Ellwood Park? Other than looking at crime mapping websites, how do you know? Is it a function of driving the neighboorhoods and getting a feel for them, or just experience?
I ask because there is a ton of cheap property that would work on paper, but obviously that isn't the whole story. Having lived in the city, I am only really familiar with Canton, Fells, Fed Hill, Bolton Hill, Res. Hill and the Charles Street Corridor.
I have a good friend who has been rehabbing a property for almost a year in Baltimore. Every time they turned around there was another inspector wanting something from them. This investor has done several rehabs in the county and elsewhere in Maryland without an issue, but the City has been very difficult to work with. That's just another factor to consider.
We've looked at doing some buy and hold in Baltimore, but the horror stories I've heard about tenant friendly courts and City government have kept us from seriously considering it.
Experience gained by driving around and getting a feel for the neighborhoods if you do not live in the city or immediate area. You have to have some level of involvement to know what works and what does not. In every area or city there are good and bad pockets. Even the worst neighborhoods have good people and the potential for good investment. So from my experience getting in and talking with the residents about how they feel or what they think is a good way to understand the nature and atmosphere of any place where one might want to invest. A lot of new investors start with the big name places like Fells Point. Or some may start around the colleges such as Morgan St., Johns Hopkins, or Loyola. A good agent that knows the area can assist. Or you can reach out to local investors to get an idea.
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There's some good, cheap properties in Baltimore County, @Andy Gross . I'm not very familiar with the City itself, but I do know that things can change quality-wise block to block.
I have bought duplexes in Dundalk all for around $72-$80somethingK each. There's some single family homes that are gems too.
I like the area...sometimes it's tough to find a good tenant if you're screening properly. So you have to be willing/comfortable to wait for that right applicant (they will come). I've had people with recent evictions--not at least 3X amount of rent in income per month--not able to come up with 1st month's rent and deposit to move in--a family of 7 people wanting to live in a 2 bedroom apartment....screen, screen, screen, no matter where you invest.
Evidence by all the posts. Their are few that are buy and hold investors in Baltimore city. Most investors are in the popular areas of Baltimore city. Baltimore city is a hard buy and hold area due to tenant friendly laws, fees, and tenant quality. Baltimore city is cheap for a reason. I have several properties in Baltimore city that are not in the popular areas. There are other states where you can make about the same amount of money with less hassel from the local government and better tenants. Baltimore city has high taxes, water bills, fees, bad inspection regulations, and low city up keep.
Dont let the lead issue freak you out. Get a lead test with XRF and go lead free if possible. We are making all our properties lead free now, not a huge deal expense wise typically.