My biggest fear is Vacancy- Baltimore (Halethorpe) Deal Analysis

[Jasmin Mcduffie]

Hi BP I've spent the last month visiting Baltimore (get to know the city), looking at the MLS nightly, visiting properties, running numbers, and talked to one PM company and insurance co to get a feel for good rental areas and cost of insurance. While my Baltimore experience is limited, I've started to compile a list of observations / received feedback and welcome any feed back/ comments. I'd also like to share my numbers on a property I found for input My Observations / feedback received from PM & Realtor: Property taxes are extremely high in the City (yes I was warned). They are so high that the 1% rule or the 50% rule for expenses is too low. High Property taxes make most "turnkey" type properties in relatively nice areas not cash flow. Areas I've been looking at are Baltimore Highlands, Pigtown (block by block basis), , highland town. I focused on this areas because they have some properties in my price range (less than 120k) in what appears to be B-C neighborhoods. I also want to buy something relatively safe for my first deal and want to try to avoid section 8 in this one. Once I get more experienced I may widen my focus. Focus on Baltimore County. I'm a city girl and I have to get it out of my head that just because I live in a city doesn't mean I need to buy a rental in the city....more of an internal struggle. Halethorpe over Dundalk (better rents and property values)? With cash flow as my objective I'm not sure this advice is relevant/ important. Property Analysis: Property cost: $98K Gross rent: $1,100 Operating Income: $1,012 Expenses: $428 ( includes repair/cap ex, property taxes, insurance, and PM). I used 1% of purchase value for maintenance and another 1% for cap ex. Pm is 8% of rent and insurance is estimated at $67 month Mortgage: $397 CF: $187/month 10% Cash on Cash 7% Cap rate I'll put 20% down +$4k closing. Property is move in ready. New kitchen and HVAC systems. The neighbor was home when we visited the property ( homeowner who's been there 30y) he thought they cut a few (minor) corners when the renovated the roof over the covered porch. This was one of the first properties I visited and my realtor wanted me to take a second look at it (month later). The numbers appear good..to me as a newbie. There is an identical property across the street for rent (listed for 1200/m). It's been listed since the first time we visited over 30 days ago. I looked st the photos and it also has new kitchen with SS appliances. I plan on calling the PM on the listing to find out the scoop. I understand it may be harder to rent this time of year but that length of vacancy bothers me and is the reason I lowered the monthly rent in my analysis by $100. I'm ready to act but want to make sure I'm not over looking something or developing analysis paralysis. My biggest fear is vacancy. For Baltimore investors what vacancy rates / time tables are you experiencing? Help Thank you Jasmin