Investing near JHU Homewood campus - any tips?

Question

I'm really new to real estate and doing research into getting my first investment property here in Baltimore. I'm looking for a place that I can rent out near the Hopkins Homewood campus (Charles Village/Hampden), as that's where I live and go to school so it would be easier for me to manage the place. Does anyone here have experience with properties in this area, and what the best strategies are for investing in college towns? I don't know whether a condo, SFH, or multi-family is the better in this type of location, but I've budgeted around 500k to spend in cash. I see some older condos here and there for cheap, and was thinking maybe it'd be good to fix one up and furnish it for rent. But then the condo fee is a bit of a burden too. Any advice or tips would be greatly appreciated!

Tim Jacob · Answer

With 500k you have options. Multifamily with less than 8 units. There are a few in Reservoir Hill that are interesting. That area is a little on the frindge. If you get closer to campus bump the costs. If you spend 400k you could out right own a triplex that will earn 3300 rents with them paying the utilties. Thats very turnkey with easy tenant turnover and not bad on the maintenance side. The goal should be around the 1% rule but dont get out of hand with that. A lot of people push there luck with that. The 2% rule really isnt feasible if you want to be profitable. Reservoir Hill is interesting. I manage in Station North and its easy and has Hopkins and Mica students there. I know of a few in lesser neighborhoods that are working class deals between 1.3%- 1.7%. Not so much multi family there. If you are less comfortable hire a pm for those and they could equally as profitable as the JHU area. I am not talking about war zone areas. I like how you have the defense mechanism to not try to buy 30 properties in rough neighborhoods for 10k to 15k. Dont lose that.You get what you pay for. You can take calculated risks with a little more of a blue collar neighborhood just don't get carried away with that.Realistic numbers. Get a 3 unit in Charles Village for 350 to 400. Make sure its rental ready. Hopefully sink little into it. Say you are all in for 400k including closibg costs and minimal repairs. Rents are 3400. Taxes & insurance- 800Maintenance including capex- 200This is assuming a building has had replacenent roof, hvac, plumbing, etc. Make sure the whole place is not on a single 50 gal water heater. Vacancy- 135Utilities- 50 assumes no boiler or common water heaterExpenses- 1185Income- 2215Utilities-You can probably do better but it will be stress free knowing the tenants will pay with low maintenance. Over time you will hit the 1% rule. Renovations are tempting just make sure you allocate enough money for that. I saw one across the street that was probabky a complete guy at auction for 148k on st paul. Dont know if it went for that. Maybe with a lot of work you could cut your cost basis to low 300s with a lot of sweat equity there assuming that it went for 148k for the triplex. Similar rents there with similar tenants. It very well could have been more.

Joey Zee · Answer

I invested in a couple of properties (row homes near R House) when I used to live in Baltimore around the school. They went for anywhere between 120-200k. If it's still around that range, I'd say it's fairly priced. There's no shortage of student renters and usually there's no problem. However, there are lots of gotchas while investing in Baltimore City. Besides the high taxes, you have to think about whether you want to be a Maryland resident indefinitely.. Leaving the state while trying to sell the property in the future can be a hassle and net you some additional cost. Nevertheless, I think properties in Baltimore are generally undervalued so probably a good choice!

Ozzy Sirimsi · Answer

I would stay away from the condos around there, most of them has 400+ condo fees. As far as houses goes, unless you find something off market, there is nothing ythat makes sense these days unless you want to live in it as well. Charles village houses are big and you can put may students in them.I live ion Hampden and have couple houses in Charles village, let me know if you have more questions.

Tim Jacob · Answer

@Ryan Cu. I wouldn't for being brand new. I would learn on a smaller scale. To not take out a loan for over 9 units I think anything over 9 units will be in areas you dont want to invest. I think your highest ROI will be buying C grade single family or small multi family. Because there are so many more deals in single family I would look there. Make sure you get thorough home inspections. Thats one thing I would not skimp on cost for. You can probably get 4 homes in decent parts of town unrenovated for a little less than 100k and be all in for each for around that after minor stuff. If you rent them for an average of 1350 to market tenants.About monthly 800 taxes and insurance and 800 for vacancy and maintenance would leave you 3800 with no pm fees. If those areas are intimidating for you as it won't be Hopkins students but solid blue collar areas dm me. Thorough screening will be needed to make it work but it can .

Ryan Cu · Answer

Thanks for that info...really helpful! What are your thoughts on larger multifamily buildings (i.e. 8-12ish units) in Baltimore? Or do you think getting commercial real estate isn't worth the hassle, especially for someone making their first real estate purchase?