My first Baltimore buy & hold investment.

Real Estate Deal Analysis & Advice
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My first Baltimore buy & hold investment.

Stephen Predmore
Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes

Investment Info:

Single family rowhouse fix & hold investment in Baltimore, MD.

Purchase price: $65,900
Cash invested: $35,000
Rent: $1,400

What made you interested in investing in this type of deal?

Baltimore is a great cashflow market.  Lots of colleges, hospitals, industry.

How did you find this deal and how did you negotiate it?

MLS. Offered 3k under list price and they accepted.

How did you finance this deal?

Commercial loan (thru my LLC) 75% LTC and 100% rehab. Used 401k loan for down payment and closing costs.

Rehab completed?
New kitchen, flooring throughout, semi-major plaster wall & ceiling repair, replaced part of flat roof/gutters, paint, new appliances.  Minor electric and plumbing.

Lessons learned? Challenges?

Purchased right at the start of the Covid-19 crisis.  Friends thought I was crazy.  Rehab was completed in about 6 weeks (10 weeks planned) due to my contractor having 2 crews able to work on the job (they had other Covid cancellations).   Hired property mgmt company for photos, listing and tenant placement (cost = 1st months rent).  Well worth the cost for me as a rookie.  Currently doing the PM myself.  Using Apartments.com for rent collection.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with my agent, @Joe Norman.  He's a great realtor and investor himself.  Would absolutely recommend him to anyone. I used Scott Freitag with Eastern Savings Bank for my commercial loan.  Awesome as well.

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Most Popular Reply

Jon K.
Rental Property Investor · Perry Hall, MD · Member since 2016 · 586 posts · 598 votes
6y

@Stephen Predmore I always outsource my tenant placement as well. It's so time consuming that it's well worth that first month's rent for me. Scott and Joe know their stuff, both great dudes. Congratulations!

2Reply
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  • Tyrone Marson
    Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
    6y

    @Stephen Predmore how much was your rehab and which contractor you used?

    1Reply
  • Dag A.
    Investor · Washington, DC · Member since 2015 · 12 posts · 11 votes
    6y

    @Stephen Predmore That’s fantastic! CONGRATs for knocking out your first one ahead of schedule during a pandemic! Which zip code is the property located?

    2Reply
  • Andre M.
    Flipper/Rehabber · MD · Member since 2020 · 24 posts · 7 votes
    6y

    Wow, congratulations! This is a nice looking rehab. How did you find your contractor, and where is this?

    2Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    6y

    @Stephen Predmore congratulations. The property looks great. Yes Scott Freitag know his stuff when it comes to investor lending.

    I am going to take a guess - Park Circle neighborhood?

    2Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Tyrone Marson Running through my numbers again - contractor was about 34k, additional 3k that I spent on appliances (1.5k), paint, tile, lighting, smokes, blinds, screens, vents, dehumidifier, locks, etc.   I saved some money by doing the entire house painting and backsplash tiling myself.   

    0Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Dag A.  @Andre M. Thank you.  Property is in 21212 zip code.  
    I found my contractor through the 'Maryland Investors Network' Facebook group. He was also recommended by my lender.




    3Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Ned Carey  Thanks Ned.  That means a lot!   

    Property is in 21212 Richnor Springs

    Scott was great. Really knows his stuff. I needed to go the commercial loan route due to a high DTI.

    I'm glad I finally got my first property under my belt.  I had so much anxiety about pulling the trigger.  Now that my tenant is stabilized, paying all the bills and I'm cash-flowing, I'm kicking myself for not doing this many years ago.

    2Reply
  • Chris Mcdonald
    Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
    6y

    @Stephen Predmore

    Beautiful rehab, nice curb appeal, good job on keeping within budget and creating a very inviting home. Cheers !

    1Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Chris Mcdonald  Thanks.   I guess I should have posted some of the before photos.  I forgot to mention that it was raining inside the sunroom on the day I closed.

    3Reply
  • Alex Keathley
    Rental Property Investor · Saint Louis, MO · Member since 2020 · 44 posts · 39 votes
    6y

    @Stephen Predmore

    Dang! That’s what I’m talking about! Great to see you taking advantage of the Covid shutdown. Not too many people were at that time. Great work! 👍🏻👍🏻

    1Reply
  • Chris Mcdonald
    Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
    6y

    @Stephen Predmore

    🤩 even better with the before pics

    1Reply
  • Danielle Gray
    Realtor · Laurel, MD · Member since 2017 · 38 posts · 36 votes
    6y

    Congratulations, this looks amazing!!! Great job also in taking advantage of the shutdown. You picked a great area too in Baltimore. Wishing you the best on your journey!

    1Reply
  • Stacey Nelson
    Member since 2020 · 4 posts · 2 votes
    6y

    @Stephen Predmore

    Wow! Excellent!!! I own a rental in Baltimore and am wondering if I should go for more! Did you get renters pretty quickly?

    1Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Stacey Nelson  Thanks.  Yes, I got renters very quickly.  Quality photos are huge.  By using a property mgmt company to take photos, list the property on many sites, and hold a open house on a Saturday, it was easy.  I had 5+ applications/credit/background packages to review that following week, I picked one, and they moved in the next weekend.  The PM also handled the lease & other forms through DocuSign, rent/deposit payments, and inspections which made it very easy and convenient.

    3Reply
  • Stacey Nelson
    Member since 2020 · 4 posts · 2 votes
    6y

    That's Excellent! I am so happy for you!!! Glad to hear Baltimore has great places like this to rent and people are excited about it! 

    1Reply
  • Andrew Brady
    Member since 2020 · 12 posts · 1 vote
    6y

    @Stephen Predmore

    How did you end up going commercial? I’m currently running into the same issue, trying to get a mortgage and only using my income (not adding wife to add more mortgages/rentals later). I’ve got the down payment, financing the rest is an issue, I’m in Anne arundel county

    0Reply
  • Jon K.
    Rental Property Investor · Perry Hall, MD · Member since 2016 · 586 posts · 598 votes
    6y

    @Stephen Predmore I always outsource my tenant placement as well. It's so time consuming that it's well worth that first month's rent for me. Scott and Joe know their stuff, both great dudes. Congratulations!

    2Reply
  • Joy McleodPro Member
    Rental Property Investor · MD (maryland) · Member since 2020 · 8 posts · 4 votes
    6y

    @Stephen Predmore congrats! I’m new and looking to invest in Baltimore in the next few months. Your story is inspiring.

    2Reply
  • Katherine Collins
    Member since 2018 · 3 posts · 4 votes
    6y

    @Stephen Predmore

    Congrats! GREAT looking rehab. Did you put any money down? Wondering if the rehab was 35k or if that included the down payment.

    1Reply
  • Armel BayotPro Member
    Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
    6y

    @Stephen Predmore

    Congratulations! Very nice!

    Was it a $35k rehab? Did you have your contractor take a look at it before your offer to get the rehab cost?

    1Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Andrew Brady I went commercial because I was denied 2x trying to get a conventional mortgage due to high personal DTI. Commercial lenders mainly use DSCR (Debt Service Coverage Ratio) which is a ratio of operating income to debt service. Basically it means they are more looking at "the deal" versus looking at "the person". They also look at GCF (Global Cash Flow) which looks at your personal financial stmt, credit score, taxes, w2's. Confusing, yes. I'm not a banker, and I don't understand all the differences between DTI vs GCF, but after a few iterations, I was able to qualify for the commercial loan. Yay!

    Commercial loans don't have as low rates as conventional. Mine is 5% 5/1 ARM for 20 yrs (fixed 5% for 5 yrs, then adjustable). Commercial requires a LLC. But you can still purchase single family residential real estate with commercial loans.

    Alternatively you may want to consider a hard money lender to finance your deal.  They'll require you to have the 10-20% down payment (which you have) and they should be able to handle the rest + rehab.  After you're done, you'll just need to refinance into long-term 30 yr debt.

    1Reply
  • Stephen Predmore
    OP
    Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
    6y

    @Katherine Collins @Armel Bayot  Rehab was 37k  (34k for the contractor, 3k misc). Most of this was included in my loan.  

    I put down 25% (65,900 x .25) about 23k.  Plus about 4k for closing/appraisal, 3k holding costs/utilities.

    As a rookie investor, I had some other startup costs including LLC formation, tools/supplies from Lowes (at one point I think I went to Lowes 10 days straight).

    It's definitely scary watching so much money outflow (EMD, down payment, rehab insurance, appraisal, pre-paying the contractor before the 1st draw, utilities, 401k monthly repayment) versus zero inflow during those 1st few months. I was so excited to get my first rehab draw back from the bank (after demo and rough framing/construction), although that was quickly tempered by the 2nd contractor payment being due. Ughh.

    I did have 2 contractors walk thru and give me estimates prior to submitting my offer.  They are both investors themselves  and they gave me a ton of great, Baltimore-specific advice.

    I said "Cash Invested 35k" in the beginning of this forum post because that was my initial seed money from my 401k loan. I opened a new business account at a new bank to keep everything REI-related separate from my personal banking. At one point my balance dipped below 2k and I was freaking out. Definitely need to give myself a bigger cushion for the next deal. Now things have stabilized, my tenant is paying off my mortgage and my 410k repayment. I'm excited for my next deal and wish that I had started this journey many years ago.

    If anyone is interested in some type of partnership to take down similar deals or bigger, I'd be open to chat.  :)

    1Reply
  • Michael Kissi
    Baltimore, MD · Member since 2019 · 47 posts · 22 votes
    6y

    Awesome @Stephen Predmore and thanks for the very detailed breakdown. When I was looking to buy I would have wished to see a post like yours. Unfortunately it's probably going to disappear in the searches 😩. 

     Just did my first deal as well and looking for a second. Let's connect. 

    1Reply
  • Tyrone Marson
    Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
    6y

    @Michael Kissi do you mind breaking down how your deal went?

    0Reply
  • Michael Kissi
    Baltimore, MD · Member since 2019 · 47 posts · 22 votes
    6y
    Originally posted by @Tyrone Marson:

    @Michael Kissi do you mind breaking down how your deal went?

    I would love to. I'm still going through the refinancing process so I'd like to complete that before I make a post. 

    0Reply
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