Is Baltimore City Worth it?

[Tiana O.]

Hey BP fam, I'm looking to acquire my first rental soon so I can start my 2 year clock. I'm aiming to be a buy and hold cash flow investor. I'm debating whether I should get out of the market that I know (which is oversaturated) and head to good ole Baltimore city for the cash flow potential.

I'm in the DC metro area. I wrote a $150k offer on short sale (still waiting to hear back from the bank) for a 4/1.5 two-level (no basement) townhome in Capitol Heights, MD. It's a B/B- neighborhood. All in, the monthly expenses would be around $1,475 (including PITI, $200 PM fees, $50 home warrant, $100 cap ex, $50 condo fee). Average rents are around $1600 ($126 cash flow, 3% ROI), but I'm thinking if I rent to Section 8, I can get $1900 ($426 cash flow 10% ROI).

I'm thinking about blowing this deal and heading to Baltimore City to pick up some of those $50k - $80k properties, or maybe a multifamily for under $150k. The problem is, I really don't know Baltimore that well. I can tell you that Canton, Fells Point, and the Inner Harbor is the place to be (but there are no more deals there). So I'm looking near the colleges or near up and coming areas like Pigs Town and Remington. However, I heard Baltimore changes by block. In order to use the little bit of cash I have to buy multiple units or properties, I wonder if anyone would suggest or advice against going to Baltimore City. I've overlooked it in the past, but its one of the only places that I've found (strictly looking at the MLS), within 1 hour of DC, that you can get properties around $50k with rents around $800 - $1200, beating the 1% rule.

Is anyone familiar with the Baltimore City Market? Would you suggest getting rid of my current deal for 1 property worth $150k to try to diversify my funds into 3 properties worth $50k each or 2 worth $75k or a multifamily.