Newbie Investor - Baltimore Vacant to Value

[Folashadé Shelton]

Hi all! Cheers 🍻 to my first post here on BP! I've been a member for sometime now but I typically take the backseat on the forums soaking up as much advice/knowledge as possible while saving capital. I currently live in Raleigh, NC but interested in investing in Baltimore, MD (where I had attended school) due to the low property cost and the redevelopment I see occurring in certain neighborhoods. I'm an eager desired newbie investor — haven't taking that leap just yet. However, I had a thought and wanted to run it by a few minds to get a gist of how incredibly feasible or incredibly unrealistic its is. My first investment property (totally hypothetical) hope some folk have knowledge into the Vacant to Value program in Baltimore, MD. Scenario 1 Buy a multi-family property through the"Vacant to Value" program in a developing neighborhood. Purchase the property with a FHA loan and use a 203K loan to rehab the entire property. Scenario 2 Buy a multi-family property through the "Vacant to Value" program in a developing neighborhood. Purchase the property with saved capital since the property might be +/- $15K depending on condition. Take out a load to rehab the entire property. Live in one unit (for a yr if I go FHA route) while renting out the other unit(s) for market rent value since it's been fully renovated. Meanwhile the property appreciates rapidly due to the revitalization happening in the neighborhood, I've forced appreciation, and maximizing my incomes on the unit(s)... Thanks for your thoughts.

[Ned Carey]

@Folashadé Shelton congratulation on your first post. I see you are up to 6 now so I guess it didn't take long once you got your feet wet. 

Vacant to value properties are not necessarily good values. Many are in heavily blighted areas. Unless you can buy a whole block in these areas, then they don't make sense. 

The ones in areas that do make sense are often bid up well beyond what they are worth as is. At the prices that are bid there would be no way to make decent money. Virtually all of them are full gut rehabs, meaning every stick of wood in the entire house gets replaced accept perhaps joists and sub floor.  One I looked at with a bidder had no roof and the floors had caved in.  Are your ready for this scale of rehab?

Also I suspect that very very few are multi family. 

While I agree baltimore is a great place to invest I am not sure this is the best way to start.