KNOW YOUR NEIGHBORHOOD

As with most of my rants, they come from real life situations.  Recently we were asked to manage or sell properties for an out of town investor who purchased 5 rental properties in Baltimore.  The idea was to purchase the properties, the properties were to be renovated by the seller, then rent the properties to someone with a Section 8 voucher.  I was contacted when the properties were a few weeks away from being complete to evaluate the possible rent and the current retail value of the property.  In my assessment, the market rent and retail value were considerably lower than the owner was expecting and what they were sold on when they purchased the properties.  The properties were just a few blocks away from Charles Village, but as we say, a few blocks can be a world away in Baltimore.  So, the rents and retail value that the purchasers were sold on really related to a property in Charles Village and not one a few blocks away.  Because Baltimore is a city of neighborhoods it is imperative, especially if you are an out of town investor, that you work with someone who knows Baltimore and knows the neighborhoods.  A few blocks can be a difference of thousands of dollars.  The situation the aforementioned investor is now in is tough at best.  He can't sell the properties for what he owes and the market rent is about $500 less per property than he was told and what he had based his model on.  Avoid being stuck, make sure you have a real exit strategy and work with someone who knows the city.