Best rental neighbourhoods in Baltimore?

Question

I live in the DC area but am interested in Baltimore for RE investments. I know there is high RE tax and know it can change block by block so are there any recommendations of where you can best invest for cash flow?

In particular i'm wondering if the areas around Hopkins (or their medical school) are good for targeting students, or if there are other neighborhoods that can be easily and consistently rented. Or, are there other areas - Fells Point, Patterson Park, other?

Thanks in advance for any suggestions - or links to external resources.

-Brad.

Sebastian E. · Answer

Hi @Brad Wood Congratulations on deciding to invest in the RE market in Baltimore. I started my RE journey in DC househacking a quad and then about a year and half ago began investing in Baltimore City. Baltimore is different from DC in that there are a lot of "up and coming" neighborhoods depending on who you ask as opposed to DC where things have already up and come. With developed neighborhoods like Fells or Patterson Park you will not find great investment opportunities unless you are doing a flip or a house hack. Because there is high demand for these areas by homeowners it compresses the cap rate and then you can hope for appreciation but there are a lot of people who have been sitting around Baltimore waiting for appreciation while nearby markets like Philly and DC have experienced tremendous growth since 09.

I own a variety of rentals, so to answer your question it depends on what your goal is. If you want to maximize cash flow then room rentals can be very appealing in areas around a hospital or even in class C areas. There is a large part of the population here who rely on cheaper housing options because the incomes here are quite low. The area of the city where a bulk of my out of stat investors are investing in is on the East side where you can buy properties for between $80-90k invest $25k in them and have them appraise at $140k and rent for $1200 - 1400. They aren't home runs but with this strategy you can slowly build up a decent portfolio of rentals that cash flow at $300 a door.

It is a great community here so feel free to ask questions and i'd be happy to help out in any way I can.

Ian Barnes · Answer

Regretfully, i don't agree with anyone on this thread. The city is a terrible investment. I'm selling my last few houses i bought several years ago. The government is terrible, taxes are high, crime is out of control, credit doesn't exist in tenants, the city looks at you as revenue, you literally can't force someone to pay water, you could only sue them in civil court. You will regret buying anything, and lose a lot of money within 5 years, unless the government miraculously becomes better. The day i sell my last property in the city is the day I get my life back.

JC Cole · Answer

My recommendation would be to look just outside the city for investment properties. You can find decent homes for $50k-$90k, put some work into them and have them appraise for $125k-$150k. Run your numbers of course.

In the county, taxes are half what they are in the city, you won't have to deal with the city government, tenants are a bit better because they're likely moving to go to a county school vs the city schools, and you can still get decent rents.

As @Sebastian E. stated above, they won't be home runs, but hit enough singles over time start to score runs.

Sebastian E. · Answer

@Tony DiDomenico I made it a point to try a few different models in Baltimore and I took some licks along the way. I think it is a great place to invest if you can manage your tenant and regulatory risks and also figure out how to finance and execute your renovations so that you can pull your money back out have been the biggest hurdles. The last part around the refinance can be a particular challenge but I have figured out some ways to get around that now as well. Happy to share what I know.

David S. · Answer

$280 cash flow is not good at all especially for a home that expensive. If you sold the house and made a 40K profit and invested that in the stock market you would be doing  better for less work.

Tony DiDomenico · Answer

That would be great! I’m new to real estate investing but plan to purchase my first property this year.

Mark Cruse · Answer

The majoirty of the neighborhoods can cashflow or be rented easily. It's just multitudes of varying dynamics within the different communities that you must decide is the best fit for what you are trying to do. If your only criteria is renting easily and cashflow, with the right numbers the entire city will fit you scope.

Ozzy Sirimsi · Answer

I second @Joe Norman, you can invest almost anywhere in a Baltimore and make money but our goals strategies, budget plays a  huge factor.

If you want to invest around Hopkins University that will require bigger budget where as Hospital would be a different story.

First you should decide who is going to manage the rental, if you want to update anything , how much involvement you will have etc... then you can decide location. Believe me, there will be areas that will make good money but you dont want to go there certain times :D))

Good Luck!!!

Katie Haman · Answer

@Ryan Gandy Reisterstown is a great area for rentals. We have one that we bought it flipped as first time home buyers for 265k put in about 15k and lived in for a few years. We were able to cash flow $280 a month.

Connor Bell · Answer

@Brad Wood

Curious to know if you made any investments in Baltimore since you made your post?

I would caution investing directly in Baltimore City unless you know it really well. As you correctly mentioned, Baltimore is block by block. I would instead focus on Baltimore County neighborhoods. Baltimore City data hasn't been encouraging over the last several years - population is shrinking (they saw their biggest drop last year and lowest pop. in a century), crime continues to spike (300+ homicides a year), and businesses are leaving.

I see that you're a DC resident - have you looked at house-hacking here in DC? Completely doable in good up and coming neighborhoods. I always recommend house hacking before you do anything else in RE.

Best rental neighbourhoods in Baltimore?

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