Should We Do It? House Hack in Baltimore

Question

My wife and I want to Househack in Baltimore City Maryland. The plan is to live there a year or so with other tenants. Then rent the property. We are looking for a 4 unit. We have heard both good and bad things about Baltimore. Negatives are the crime and and stagnant appreciation values. Positives are the possible cash flow. We are new to all of this is therr anyone who would share some advice, perhaps some Baltimore city investors?

Thanks

AI

Thanks

AI

Jack Seiden · Answer

I theory buying a multi family that cash flows shouldn’t hurt your ability to qualify for another house later, the issue is a lot of stuff in the nice parts of Baltimore are hard to cash flow with todays rates (if you can even find them at all) I’ll be honest if I wanted a single family home in the suburbs I’d just do that, in this current market environment, to me keeping it simple, buying something you want to live in 1st and a investment 2nd is the way to go. My grandfather (who at different times owned like 10 properties) once told me his best investments were accidentally the ones he bought not as investment’s but as primary or vacations homes.

Russell Brazil · Answer

Its better than renting for sure.

Id look at multifamily properties in Charles Village, Canton, Federal Hill and Fells Point.

Tim Jacob · Answer

I have a good amount of experience managing and selling Baltimore multi family places for me and others.  What I would say is a good 4 unit appropriately priced come around a couple times a year.  Usually there is 1 or 2 duplexes that are around that are in good areas and priced well.  Some are mislisted as single family.  I would recommend looking at those as well.  You really don't want to purchase a 4 unit in a bad area just because it's 4 units and not just 2.  A pm will not save you if you do that.  Keep on mind many places in the city are old with old infrastructure.  Understand if you want to buyba house in a year the maintenance or remodeling costs could really get you.  Thus get something in decent shape.  If it's on radiators leave them alone as the cost to convert is way too high.  You might find something that is turnkey as a multi in good areas but I would be patient.  There are a few I see that are mislisted now but not 4 units.  You might see a decent 4 unit that is out there but expect a bidding war.  Some neighborhoods are B grade but not brand name ones.  Thus I would get a local agent that really knows the city.

Benjamin Sulka · Answer

Great stuff in Abel's post above.

Especially since you're house hacking, you have to consider whether your want you or your wife to live in an area with higher crime. It all depends on your comfort level.

My personal comfort is to buy in an area that has less cashflow but lower crime and a higher likelihood of long term tenants. Don't want my significant other to feel unsafe and that's more important than cashflowing a couple hundred bucks extra per month.

All the best!

Kyle Deutschmann · Answer

Lots of great advice here overall. For reference, I have lived all over Baltimore on and off since 2017 and just bought my third property here. My comments... 1) Not all of Baltimore is bad; however, you definitely are taking a risk buying here. There IS crime, the property taxes are high, the insurance rates are high, etc. One part of Pigtown I consider 'safe'. The other half... questionable/block-by-block. Even in the 'safe' areas, there is crime that I have witnessed. You need to have some street smarts and just be cautious. I have never personally been robbed, and I've walked around North Ave, Leakin Park, Carroll Park, Cherry Hill/Middle Branch Park, Lake Montebello, etc..2) Baltimore is kind of like a low cost penny stock that you hope will 'pop' some day. I personally think that day is coming soon.. The inner harbor is getting redeveloped, both the O's (assuming they sign a new lease) and Ravens are both getting $600 million in renovation funds to upgrade the stadiums, we're about to have our second new concert venue open after CFG Bank Arena was recently opened last year. The convention center is back to pre-pandemic levels, Port Covington (poorly re-branded as "Baltimore Peninsula") is almost done where Under Armour is building a new headquarters, the huge Westport development that hasn't even broken ground yet, a new Top Golf, half a dozen new breweries, and one of the most affordable metro areas in the North East.3) As everyone else said already, finding a good 4 unit property will be difficult and it's difficult to use an FHA 203k loan for that type of property due to 'self-sufficiency tests' (ask your lender to explain that). However, you could probably find a row home with a basement with a separate door that you could rent to a long term or short term tenant. I have only done long term rentals, but I know other investors doing short and medium term rentals (medium term generally renting to travel nurses at Johns Hopkins, University of Maryland Medical Center, Mercy Hospital, etc.). Feel free to reach out if I can help direct you to the right resources and vendors I've used.

Jack Seiden · Answer

In the areas of Baltimore I’d consider desirable the is a grand total of 1 legal multi family for sale (plenty of illegal ones lol) and it’s a total and complete gut job, but not a value add gut job just crazy overpriced. While Multi family does in theroy exist in the a/b class areas it’s a laughably small % of the housing stock. In our market “nice” multi family is close to non-existent. Makes much more sense to just buy a single family & rent the basement and if you really want a bedroom as well. Or just rent yourself.

Matthew Paul · Answer

Baltimore isnt that bad , just get yourself your  carry license  ( wife too )  . Drive a car nobody would want to carjack , A security system and some bars on your windows , You may be fine . Cash flow does look good  ( on paper) .

Drive around at night , get a feel for the city

James Wise · Answer

If you're willing to live in the hood go for it. Could be a big money maker.

Sara Frank · Answer

@Kyle Deutschmann hit the nail on the head. I live in Canton and I love it. I bought a 'fauxplex' which is a single family home with a converted walkout basement that acts as a second unit. I decided to do that because there is minimal MF inventory in this area. There are a few neighborhoods in the city (like Canton) that you wont deal with the crime that Baltimore is famous for. Unfortunately, finding a four unit property in those areas is very tough. I recently helped a client buy a triplex in Federal Hill and I want to say it was one of two 3+ unit properties sold that year in one of those great neighborhoods. You can occasionally find 4 unit properties in Charles Village, Bolton Hill, etc. but they will be $1 mil + OR in bad shape. Any other neighborhoods, you'll face challenges with crime. I would consider looking at a duplex (still rare, you have to act fast) in one of the great areas like fed hill, fells, and canton.

Brian Tome · Answer

Al,

I don't have any experience in Baltimore or house hacking, but there is a lot of awesome information in this thread.  Thanks for asking the question.

My wife and I are investors and we run a small REIA on the Eastern Shore. Most of our properties are in Cecil County, but some of the investors who attend are also in Newark/Wilmington Delaware area. We also have some STR investors who buy in Sussex County and Ocean City. Check us out at https://www.facebook.com/groups/846713759601226

It's a great group with a lot of knowledge and a lot of "action takers." And as you know - action takers are money makers!!!

Should We Do It? House Hack in Baltimore

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