Western Maryland Apartment Deal

[Matt Vaughn]

I'm analyzing a deal in Western MD, specifically Cumberland.  I haven't visited the building yet, but I have basic info for initial analysis: 

- (8) 2 bd rm units
- Purchase Price - $115,000
- Potential Gross Rent - $4000 (Units renting at $500)
- Old building, but supposedly new elec, plumbing, and windows
- I built out a Pro Forma for the property, which brought me to 60% expenses and a Cap Rate of 11.8%

A couple questions:

1. Does anybody have experience with Cumberland (an hour West of Hagerstown)? If so, I'd love to pick your brain.  I grew up 30 minutes from there so I have familiarity, but I currently live in the D.C. Metro area.  Cumberland is a town of about 40,000 population with a -3% growth since 2000.  It's a town in a rural area.  Any feedback or insights about rental properties in a town like this would be appreciated

2. I'm working on a live-in flip right now, but otherwise, this would be my first deal.  I would be located 2 hours from the property.  My numbers account for property management if needed.  Does anybody think this is a bad idea solely based upon distance and my experience?

3. Do these numbers look strong or do they scare anybody?  I can provide more info if needed.

Thanks in advance for your help, everyone.

[James Rey]

My partner has a bunch of properties in Cumberland and when we were looking to expand it seemed like the obvious choice as it is close enough to be accessible (I'm in Ellicott City) but far enough from DC/Baltimore that the cap rates were reasonable.    Due to the higher than usual vacancy rate in Cumberland (at least for these properties) and the negative population growth, we are moving on to other markets.  Does not mean you have a bad deal, just something to be aware of.