All Forum Posts by: Alan C.

Yes, Baltimore prices appears very attractive when compared to expensive places like Boston, New York and D.C. If you search for threads about Baltimore, you will read about the potential pitfalls. Baltimore City prices vary wildly on a block-by-block basis. It's easy to make an expensive mistake if you don't get to know the area or partner with someone experienced with the city comps. 

I'm a Baltimore native feel free to contact me.

If you want to network with Baltimore investors, search for meetups and REIAs in the area. Of course, there are no live meetings at the moment, but that will change. 

In the meantime, you can still make connections with those groups that are having online meetings. The best groups will encourage education and networking, but there are some that are being run almost solely for the benefit of the founder(s), so beware of any group whose main function is to sell you into a mentorship program offered by the owner (or their friends/partners).

I'm in total agreement with @Joe Norman. 

There is no "one size fits all" partnerships in any business. You need to find a person or business that complements your skills. However, if you are total newbies, there are only two things you can offer seasoned professional: a good deal under contract or money. 

An experienced investor really only needs a a good deal. If it's good, they can get the money, so this boils down to you having a deal too good to pass up. If that's the case, you can get an experienced partner by agreeing to a profit split heavily in favor of the veteran investor.

In exchange for a smaller profit, you get to shadow the investor throughout the entire process. From running comps to closing to rehab to sale, you get educated every step of the way. 

Assuming that there is any profit for you at the end, you will have gained the knowledge that will make it easier to do a deal on your own. Even if you have to do this a few times, you will have been paid (via the rehab profits) to learn the skills that will enable you to make lots of money with your future investments. 

And one day, you'll be the experienced investor partnering with a newbie.

If you don't want to deal with tenants, you shouldn't be a landlord. You say you want to outsource the entire operation of your investment without knowing exactly what you need. You'll be at the mercy of the PM who could really take advantage of you.

No PM company will run your investments as well as you do. In my opinion, the reason to hire a PM company is when you have enough experience and/or properties to justify the expense. I know of PMs that will do a la carte services like you want, but again, I think your one property is not going to get the same treatment as one of their clients with 20, 50 or 100 doors.

Also, I think it's a good idea to know exactly what it takes to manage a property before you turn it over to someone else. The experience you get managing your own properties will generate a checklist of things you will want to look for in a PM. It will also avoid having the PM take advantage of you because you are ignorant of all the details involved in the day-to-day operation of a rental business. And it is a business. 

I can't think of anyone getting into a new business without understanding how all the parts work.And not just on paper. Even McDonald's franchisees spend weeks at Hamburger College to learn every part of running the drive-in before they are allowed to own and operate their own unit. At that point, they are sent home to hire the workers needed for each part of the process. And because they've been through it themselves, they now have a better understanding of what kind of person is needed at each station.

I also tell any new landlords to spend at least one day observing the cases at the local rent court. It will really open your eyes to some bad tenants as well as really bad landlords. The learning experience is well worth the time you spend at the court.

I would not take all the advice from @Randall Alan. Some of it is good, but I'm pretty sure that Lakeland, FL is in a very different rental universe compared to Baltimore City. The type of tenants you might get in Belair-Edison could very well be the type of people who will not take care of the place. This makes it critical for you to screen them as thoroughly as possible and find a way to see them in their current living situation. Whatever their place looks like now is what your property will look like within a few months after they move in.

Also, the Baltimore City laws, rules and regs are among the most pro-tenant (though I didn't think it possible, DC is worse). If you are not careful, you can wind up with non-paying tenants and it will take you 3-4 months or more to remove them while you pay the mortgage and water bills. And currently, there is a moratorium on evictions that some legislators are pushing to extend to January 2021. 

I'm not a big proponent of property management, especially for one property. I run a REIA in Baltimore area and have talked to many landlords over nearly 20 years about property management companies. The consensus is that there is no perfect one and your job is to find the best one and keep on them.

I'm not trying to scare you off of being a landlord in Baltimore, but want you to be aware of the potential problems so that you can make plans on how to avoid them. That way, you won't become one of the many calls I get from out-of-town investors begging me to buy their property (at a loss) and cursing the day they decided to buy a property in Baltimore City.

Good luck with your investment.

I think you're on the right track and you should continue to rent as you get more educated about RE investing. Being in a lease will keep you from becoming a motivated buyer and jumping into your first deal before you may be ready.

You do need to take the time you have and think about your plans and make a decision about the primary home versus investment property. My suggestion would be to consider the "house hacking" route. With your savings and good credit, you should be able to find a good 2-4 unit property in a decent neighborhood. Make sure the numbers work so that you can live "rent free." 

Living in this situation gives you experience in owning and taking care of property and learning about dealing with tenants.

You're smart to want to network with other investors as that is the 2nd most important thing you can do besides increasing your education. Look up your local investor groups and go to their meetings to make connections with other investors. You'll meet investors like yourself, just starting out and more experienced investors who might teach you some things, if only by example.

Good luck on your journey.

I would also say that you need to consider the conflict of interest angle. I do know that Baltimore City has a list of approved inspectors, but don't know what in involved in the approval process. There might be some language that prevents you from doing what you propose.

This is a good idea to add value to your company.

In any case, please post when you have an update.

I don't know if this will get deleted, but @BethH and I are partners in a REIA (Mid-Atlantic) in the Baltimore area we stress education prior to investing and we both know Baltimore having either been born here and/or been investing here for 20 years. We've seen too many people lose money by thinking the low-price properties were a no-lose investment.

Hope we will see you at one of our (currently online) meetings.

I agree with the above comments. There's definitely something nefarious with this wholesaler and possibly the seller. They could be working together. 

I'm a full-time wholesaler and when I accept an offer from my assignee, my assignment contract details all the numbers plus the assignee gets a copy of the original purchase contract. 

You must keep in mind that wholesalers are selling/assigning the contract and not the house!

Since the assignee is buying the contract, they have the right and obligation to review the contract since they must live up to all the terms of that contract.

In your situation, you should have the right to get a copy of the purchase contract. 

And it should't matter to you how much the wholesaler is going to profit. If the total number (purchase price + assignment fee) works for you, then the wholesaler's profit is of no consequence.

You should also have reviewed the assignment contract before your signed it to see if the worst case outcomes (e.g. seller refusing to sell) were covered. That's the purpose of contracts--to prepare for worst-case scenarios. If every deal was guaranteed to have no potential problems, we would't need contracts at all.

Also, I don't see anything wrong with the wholesaler requiring use of his title company. When I first started out, I was naive and let my assignees use their company. One of them reassigned my contract and closed without telling me. Fortunately, the title company was honest and called me to let me know they had my check, but I could have been cheated out of my fee. Ever since then, I only use my title company. 

Hope this works out for you.

I agree with @Eric James that out of state rentals are something that few if any investors should own unless they have family or friends that can be trusted to help look after the property. And even then, its a crapshoot.

Also, most investors take 40-50% off the rent amount to account for vacancies, management and maintenance. Then figure out what your cash flow target is and that will determine what your mortgage amount can be. For example, if the rent is $1,000 then you should figure $500 will go to the categories above. That leaves you $500. If you want $300 in net cash flow, then you can only afford a mortgage payment of $200 or less. You can see why getting a really good cash flow property isn't easy.

You should spend some time in Cleveland and attend some of the local real estate investor groups to connect with local investors.

Best of luck with this.