All Forum Posts by: Alan C.

Need a referral for management in Wabash, Indiana.

Thanks in advance.

One other thought--You say you have an emotional attachment to the area. 

However, this business is about numbers--either they work or they don't

As they say on airplanes, when the oxygen masks come down, put yours on first. You can't help anyone else if you pass out due to lack of oxygen. The same philosophy applies in life. 

Once you are wealthy enough with passive income to cover your lifestyle, you can start a foundation or other non-profit to help people less well-off than you are.

Sorry to be harsh, but how could you buy a rental property without considering all the questions you are now asking?

It sounds like you bought the property hoping it would just work out. That is not a good strategy, especially when there is  so much information available.

Do you know about equal housing laws, rental registration, rental inspections, etc?

If you make a mistake in one of these areas, you could be facing large fines. 

Pardon my language, but you are doing this ***-backwards. 

You will now be trying to get this done quickly to get the place rented and that will cost you a lot in the long run.

I can give you one very valuable piece of advice: The most important thing you can do is to make sure you screen your tenant very carefully. Almost all housing providers will tell you it's better to have a vacant property than a bad tenant.

I'm president of a local REIA and we have a group of housing providers that meet to share their knowledge. I think you should consider joining this group or a similar one in the Baltimore area.

Best of luck.

I agree with all of the above. You especially need a crew who has done this before, the right permits and possibly a structural engineer. There are many stories of people who tried to do this on their own and caused the houses on either side to collapse.

The main thing is to see if the cost is worth the appreciation you'll get or if it would it be better to put the money towards a new project.

I just saw an update about Westport, so that area may see a real jump in prices. 

Here's the link

https://www.baltimoresun.com/b...

The problem is that now everyone knows about this so there won't be much in the way of bargains as homeowners and absentee landlords hold out for top dollar.

Rentals and rehabbing/flipping both work well in Baltimore County. 

As always, it's all about the numbers. 

RIght now, the homeowner market is red hot so flipping is a good way to make some very nice medium-term profits. That may or may not be the story next year depending on the unemployment numbers.

As I've said elsewhere, there should be many bargain rentals available next year as smaller landlords with only a few properties get out of the business due to eviction moratoriums, etc.

I reread your original post and would offer a word of warning about Cherry Hill. Right now, it's one of the more crime-ridden areas. Under Armour is supposed to be building a mini-city/headquarters at Port Covington, a short distance away. In order to get  the city tax funding, they said that they'd put money into Cherry Hill. 

However, Under Armour recently was in the news about accounting problems. Add in the work-from-home situation and the Port Covington project may never materialize the way that was laid out in the initial plans.

The same thing happened to Westport. The billion-dollar project was given the green light in 2007 and was supposed to build up the last waterfront area in Baltimore and I think even Trump had some plans for a high rise. But then the 2008 recession happened and the developer lost everything as his project was auctioned off at pennies on the dollar. And nothing has happened since that time.

So I would be careful of counting on future appreciation. You can look up my other posts and see that I recommend that you "make your money when you buy." Which simply means that you never count on appreciation. If you get it, consider yourself fortunate for the extra profit. And if you don't, you should still have a decent return on your investment.

My personal opinion is that if you want rentals in Baltimore (or most other places, for that matter), next year should be a buyers market. Many "accidental" and mom and pop landlords will be selling their holdings. The pandemic has stopped evictions and in a number of cases, tenants are no longer paying rent, but the owner still has to pay the mortgage, taxes, insurance, water, maintenance, etc. This will cause a lot of owners to get out of the business and look for cash. 

I think there will be a lot of bargains next year, especially if you are good at creative dealmaking and can negotiate seller financing or "subject to" deals.

Recently, I made an offer on a rental with a solid tenant and the numbers were good based on the advertised rent. However, I asked for a rent roll and found that the tenant was only paying 50% of the normal rent due to the pandemic. The seller still wanted the same price as if the tenant was paying 100%. I made an offer to pay a reduced sale price now with a note to make up some of the difference once the tenant was back to paying the full rent. My offer was rejected so the owner is now collecting less rent, but still has the same expenses. My guess is that there are a lot of landlords in this position and as time goes by, they will be more owners willing to work out a sale that is favorable to investor/buyers.

The only way I know to follow up on a code violation is to contact the inspector directly. I've found it very difficult to do in normal circumstances and I can only imagine that it will be very hard given that the pandemic has fewer people in the office. But if you call enough times and are willing to wait on hold, you will eventually reach someone.

One other point  would be to check the property records (Google Maryland and SDAT) to see if the property was sold off for taxes or taken by the city via receivership.

That's OK. 

So you are looking at gutting the property back to 4 walls which, as I said, could run $90-100K. That should include replacing the joists, floors, etc. It could be a bit more as you may be required to bring in a structural engineer and have to pull extra permits.

While it's possible to make money with this type of project, you need to be in the right place at the right time and I still find it hard to believe that you wouldn't be better off finding another property.