Any insight on rehabbing (cost and challenges) in Baltimore?

Question

Hi everyone! This is my first post to BP. I am a new investor in the baltimore area.  I'm looking to take advantage of the vacant housing programs here in Baltimore.  My objective is to rehaband flip my first few deals to build capital and then transition to holding properties.  Does anyone have any experience in rehabbing any homes, especially vacants, within Baltimore City?

Mike Kulnich · Answer

Hi Darius,

I came at from a couple of different angles. I originally started on the west side (Forest Park, Ashburton, Garwyn Oaks) with single family homes. Lots of older big houses that had already been split into multi-units so I figured I could always rent if they didn't sell. The average price was $65-$75,000 and these were two 3/1 units set up as an upstairs and downstairs. Both with kitchens and nice big rooms. I was able to convert them to 3/2 without losing a ton of living space. Rehab spend was about $60k and sold them for $200-225 (there were three in this area). I could have sold them for more, but they were all quick sells and I didn't want to hold them longer than needed.

Dealing with the city wasn't that hard, it just added 2-3 months to my timeline, thus wanting to get them sold quickly. The first house I used an investor who paid for everything and we split the profits. That was fine, but I wanted to try different things so the next I used a hard money lender. That worked out fine as well, but having that loan above my head both motivated me and kept me up at night. In the end, we were able to get that house done two months faster, but the stress was crazy.

Major downside in this area is getting good contractors. I started with friends of friends that normally work in the county, but after their tools were stolen they weren't interested in continuing. Also, one of the contractor's trucks was stolen as well. I had to use half a dozen different contractors to get these projects finished. Some were great, but only showed up when they knew I would be there. Some were terrible, some never showed up.  That also extended the timeline quite a bit. I ended up hiring a GC that was familiar with the area and he was a major help.

I work with investors now and continue to look in that part of town. There are more and more rehabs popping up and prices are hitting $250+. They're not exactly selling like crazy, but the nicer flips are finding buyers.

Really crunch the numbers. Use the BP calculator or another like it if you can. I'm lucky I didn't lose my ass on the first house and that taught me to be much more cautious and to work the numbers much more in-depth. There are a lot of properties in the Baltimore area, best thing I can say is to drive those neighborhoods and really get a feel for what's going on.

Shadonna N. · Answer

The Vacants to Value program in Baltimore look for investors who have experience even if it is outside of Baltimore.  Provide addresses, proof od ownership, and pictures.

Mike Kulnich · Answer

Hi Darius, I flipped a few houses in the city part time before switching to rentals and focusing on other parts of the area. Most of those houses were vacant and two were bank owned. Happy to help

Darius Johnson · Answer

@Yannik C- V.

Thank you for the suggestion Yannick.  I'll add that to my collection now to get a better feel for the numbers.

-Darius

Darius Johnson · Answer

@Mike Kulnich wow thank you Mike.  That was very helpful! I've been eyeing that area VERY heavily simply because if what you said, the ability to convert into multi units.  However, I didn't want to over commit to an area and lose out on other solid deals.  I will continue to practice working the numbers and will hit the ground soon to find a few more solid leads.

Thank you for taking the time!

Yannik Cudjoe-Virgil · Answer

Hey Darius,

One book I think helped me when I first got into real estate and I believe would help you is "The Book On Estimating Rehab Costs" by J. Scott. Although rehab costs vary from project to project and material costs depends on the area, It will give you a good ballpark of what things should cost.

https://www.amazon.com/Book-Estimating-Rehab-Costs-Renovation/dp/1947200127

Hope this helps

- Yannik.

Darius Johnson · Answer

@Lamont Marable

Thank you for the info Lamont!  That's some good stuff to think about.  I know investing emotionally will lead to losing money quickly.  Thank you for your insight.

Lamont Marable · Answer

1. The average costs, in your experience, to get a vacant in livable condition?

About 40 - 60 for a Buy and hold and about 60 - 80 to Fix and flip but it depends on the initial condition of the home

2. What are some of the things that would make you walk away from a potential rehab project?

The numbers.  What I will make out of deal.  I would love to do the neighborhood a solid and have a fixed up property on the block but if the property isn't going to put money in my pocket...FUNK the block.  We are in this business to make money.  Once the money is made then I'll give back.

3. If you used the city program for any of your flips, were there any challenges in working with the city?

Same thing @Greg Dickerson said for this question.

Darius Johnson · Answer

@Greg Dickerson thanks f li r the info Greg.  I am going to start small with a sfh and work my way up from there.  I will keep all this info in mind. Thanks again for your reply!

Darius

Greg Dickerson · Answer

Darius- see answers below,

1. The average costs, in your experience, to get a vacant in livable condition?

This varies greatly on the size, condition etc. You just need to define a detailed scope of work and get quotes form professional qualified GC's

2. What are some of the things that would make you walk away from a potential rehab project?

Cost vs return. Nothing else scares me in regards to scope of work. The only other thing is sometimes its a teardown but that only changes the project scope not my decision to move forward. That is strictly based on the numbers.

3. If you used the city program for any of your flips, were there any challenges in working with the city?

I have not. The best thing is to check with them and understand what they need from you. You can talk to other contractors and investors in the area and ask them.

Any insight on rehabbing (cost and challenges) in Baltimore?

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