Hagerstown MD small multifamily

[Jason Zhang]

Hi everyone. Newbie investor here. I'm looking for 1-4 unit property within 1.5 hr drive from DC. I notice there are plenty of small multifamily in Hagerstown MD. I'm wondering if there is any investor out there familiar with that market. Maybe share some insights here or contact me directly. Such as how easy to rent, typical renters profile, how difficult to find contractors, etc.. 

[Cristhian Huamani]

Hi @Jason Zhang,

I have multiple properties near downtown area, north mulberry, Maryland ave and summit ave to be exact. I will share my opinion based in my experience as a real estate investor and real estate agent so you can have one perspective about the cons and pros of investing in Hagerstown.

First things first, Hagerstown is mostly a cash-flow market so if you are looking for strictly appreciation Hagerstown might not be the best market for you. 

Biggest Pros:

Demand of rentals, Over 57% of the household units in Hagerstown are tenant occupied!  In my opinion this is a great because there are always tenants active looking for a place to live. I can certainly  confirm this as I have advertised multiple rentals in Hagerstown and received a lot of attention from potential tenants. They all might not be the ideal tenant so you have to do your homework with tenant placement.

Low Initial investment capital, In my opinion, one of the advantages of investing in Hagerstown is the fact that you can buy properties as low as $35,000 that will generate about $800 dollars in rent. You can also buy multi-family apartment buildings for as low as $30,000 per unit that will generate about $650 per unit in average. I personally bought a very small single family in north mulberry for $32,000 and it produces me $750 a month, about 19% ROI. There are deals coming out in the market place all the time.

Biggest Cons:

Household income, the average household income in Hagerstown is about $40,342.  This is a playing factor in tenants' ability to pay the rent. In my opinion a big majority of tenants are living paycheck to paycheck. Your tenant placement systems/strategies play a vital role here.

Crime rate, Hagerstown, like any other cash-flow market has different crime levels depending on the location you purchase your rentals. I have rentals in locations where the crime rate is mild. I do this understanding the level of risk and trusting on my due diligence during tenant placement. A quick tip here, Make sure you buy rentals with off street parking. 

Fees and inspections, If you purchase rentals within the city limits, You will have to get a rental license for each unit. This involves paying a rental fee of $75 and have every unit inspected by the city inspectors. They make sure all utilities are working fine, windows, smoke detectors and much more. I personally have a love-hate relationship with  hagerstown city inspectors. In one end of the coin, they can be a pain in the butt because they will send you letters all the time about grass height, broken windows, chipping paint and more. However, on the bright side they put you in check in keeping up your property in good condition. They also make sure that your tenants are safe which helps you minimizing you liability. You also should know that there is a city tax. The current Hagerstown real estate city tax rate is 0.913%.

Jason, Hagerstown has a lot of opportunities and just like any market it has its pros and cons. My best suggestion is to learn as much as possible about the market place before you buy your first rental. If you can take one thing out of this post, it would be that no matter what market place you invest in, tenant placement is extremely vital.

I hope this helps, 

References:

http://hagerstownedc.org/business-climate/tax-gove...

https://www.census.gov/quickfacts/fact/table/hager...

https://www.neighborhoodscout.com/md/hagerstown/cr...

https://www.hagerstownmd.org/