Newbie Questions about Investing in Baltimore

[Seth Hochberg]

Hello Baltimore community! As you can see, this is my first post on BiggerPockets and I have tons of enthusiasm for investing in real estate, but also tons of questions. I currently live in DC, but I recently moved here after living in Baltimore for 8 years. While Baltimore doesn't seem to be a hot investors market like Kansas City or Cleveland, I think investing where you know has a lot of value. Also, living in DC, I could make regular weekend trips over if need be (at least to start off). I've made a goal for myself to BRRR a single-family-home / duplex in 2021. If that goes well, I'd look to doubling that every year (but I don't want to get too ahead of myself). I'd be looking at an all-in price point of 100k, but that can go up if I look for more financing options (if it makes sense).

What neighborhoods are people investing in? While I'd love to go back 30 years in time and buy properties in Canton, Fells, and Fed Hill, where are those B, B+ neighborhoods in Baltimore that make sense to invest in? Where are places I can see a stable renters market and opportunities to BRRR? I know Baltimore is very block by block, but I'm still curious. These are areas I, someone with 0 investing experience, would guess make sense that are "up-and-coming". I'd be looking for properties that fit that 1% rule, and avoid chasing the 2% properties. Can anyone with experience give feedback on this list? Any obvious areas I'm missing or areas I've listed that are terrible ideas?

• 3 block radius of Patterson Park
• Remington
• Bolton Hill
• Upper Fells / Butcher's Hill
• 2 block radius around Bayview Medical Center
• Charles Village 
• South of Hampden (Wyman Park?)
• Highlandtown
• Pigtown

Also, what do people think of surrounding county areas like Catonsville, Dundalk, etc.? They might be good markets, but then I lose the competitive advantage of knowing the areas as I rarely left the city. 

Also, I was thinking, later down the line, it would be interesting to pick up a few properties in Cherry Hill to play the appreciation game. I worked there for a few years and as morally conflicted as I feel about this happening, I feel it has potential for gentrification. It's the last area by the water to jump in home values (Canton, Fells, Fed Hill, Locust Point, etc.). Just an idea - feel free to shoot it down.

[Alan C.]

My personal opinion is that if you want rentals in Baltimore (or most other places, for that matter), next year should be a buyers market. Many "accidental" and mom and pop landlords will be selling their holdings. The pandemic has stopped evictions and in a number of cases, tenants are no longer paying rent, but the owner still has to pay the mortgage, taxes, insurance, water, maintenance, etc. This will cause a lot of owners to get out of the business and look for cash. 

I think there will be a lot of bargains next year, especially if you are good at creative dealmaking and can negotiate seller financing or "subject to" deals.

Recently, I made an offer on a rental with a solid tenant and the numbers were good based on the advertised rent. However, I asked for a rent roll and found that the tenant was only paying 50% of the normal rent due to the pandemic. The seller still wanted the same price as if the tenant was paying 100%. I made an offer to pay a reduced sale price now with a note to make up some of the difference once the tenant was back to paying the full rent. My offer was rejected so the owner is now collecting less rent, but still has the same expenses. My guess is that there are a lot of landlords in this position and as time goes by, they will be more owners willing to work out a sale that is favorable to investor/buyers.