All Forum Posts by: Andy Gross

Hello Laura

There are a ton of MD/DC/VA folks on BP, and @J Scott  flips houses in MD. 

Where in Baltimore did you buy? Also, which local hospital? My wife is a nurse, and we are scoping out the landscape for when we move back. 

Cheers,

Andy

I don't quite get why people are analyzing this dude's marriage. First, you never know what's going on in that relationship. I do know that cheaters often end up divorced, and having an equity partner go through a divorce is a bad place to be in. Often, people treat money differently than they treat their relationships, and they may treat their spouses differently than they treat their friends. We can analyze this guy's moral character until the cows come home, but what's the point? I don't want the guy come to me in six months saying "hey, I know we weren't going to refinance until next year, and I know that we owe contractors money, and I know that the renovation is only 50% done, but I need $10k for a retainer." 

As an attorney who used to handle family law (never again), I would advise against partnering with people who might be headed for a divorce. If his marriage goes sideways, your partner could be forced to liquidate assets to pay for an attorney, alimony, child support, property division, etc, which could come at a really bad time if you are not in the position to liquidate. 

Keep in mind that if this partner has an equity stake in the property, his wife effectively does as well given that generally, all property acquired during the marriage is marital property (with some exceptions, of course).

The reason I don't, and won't touch family law again is because the clients run out of money before their anger does. I've seen plenty of cases where a jilted spouse will spend $100 just to make sure the other party doesn't get $1. I used to get calls at all hours with "you wouldn't believe what that !@$#$!# did this time!" Funny thing was that 99 times out of a 100, it didn't make a difference, they just wanted to scream their frustration at me without regard to the fact that my time isn't free. My best advice to couples going through divorce is mediation. As I always said, you can send your kids through college or buy me a boat. But I digress....

I would absolutely recommend having a system installed, because I think it's a selling point. A sales-rep can discuss with you your transfer options once you sell the house. I would install a security system in my own house, and in many cases, it will  reduce the homeowners insurance costs, which I think is a selling point. You can also add on all sorts of cool home-automation features that might appeal to a higher-end buyer.

@Taylor Chiu , if your property has drug dealing tenants, it could potentially be subject to Civil Asset Forfeiture proceedings. Most jurisdiction use the forfeiture proceeding to take cash or other property found in large scale drug raids. Some jurisdictions, however, have started using the process to raise revenue to the point where they are seizing the houses belonging to the parents of your average 19 year old failure-to-launch-types after they discover said failure-to-launch types selling dime-bags to their friends. Although the odds of the man seizing your rental are remote, do you really want to be caught up in that kind of proceeding? All it takes is one entrepreneurial prosecutor to create the "they paid the landlord with the proceeds from the drug deals" nexus before you find yourself paying a lawyer to sort the mess out. 

It could happen.

I would take credit, but really @Ned Carey said something similar on another post forum, so I've got to give him the credit. It's one of the those common sense truisms that you don't think of until someone says it.

Three words: Civil Asset Forfeiture.

@Christina R. right now it's all about the Shave Ice. Dare I say it's better than a Snowball? 

Thanks all for the good advice. Next time I'm home, I'll dedicate a research day or two.

@Christina R. , I'm with you. I come back about 1-2 times per year, and I am moving back in 2016 after my assignment out here is up. I love Baltimore and the surrounding areas, and my family is in Howard and Montgomery Counties. My plan right now is to sit on the sidelines until 2016. 

I was posing the question because given the vast swaths of low-income and blighted neighborhoods, how does one pick? I've only lived in good or up and coming neighborhoods, so my perspective on the Section 8 and other low income rentals is virtually nonexistent. I'm not even kicking tires at this point, but I would like to understand as much as possible before I hit the ground in 2016.

@Robert Carl , Baltimore is struggling. The city has a lot of potential, but often can't get out of its own way. Part of its politics, part of it's the cycle of drug use, poverty, teenage pregnancy, violence, etc that in turn leads to high unemployment, poor schools and blight. 50 years of poor tax revenue have left the city with crumbling infrastructure. A lot of money left town and moved to the 'burbs. Things are coming along, however, and people are doing good things. In 2005, the area between Penn Station and Charles Village was a war zone. You drove through with your windows up. That's slowly starting to change, but often it's two steps forward and one step back. Before the crash, my dad was convinced that the area between Reservoir Hill and Mondawmin would experience a renaissance, and it's happening, but slowly. From what I am seeing, the slumlords are getting pushed out by responsible investors, slowly.

As another seasoned investor once said, don't do a deal just to do a deal. It's gotta be right.

With that in mind, there are plenty of good 3-4 unit properties in Baltimore in good B neighborhoods such as Bolton Hill, Mt. Vernon, Charles Village, etc. If you area bit more intrepid, B- to C+ neighborhoods like Station North or North Calvet Green in Barclay might be your thing. They generally won't fit the 2% rule, but you certainly find decent properties that come close and fit the 50% rule. You certainly won't cash flow if you are living in one of the units, but, your housing will be free or nearly free. From my research, to get 2%, you are looking at single family townhomes in C to D+ neighborhoods. If you are looking for 2% in a A or A- neighborhoods, you are going to be looking for a while. Living in Charles Village, Bolton Hill, etc, can be a lot of fun, because you are within spitting distance of great restaurants, great parks, etc. It's still in Baltimore, so you have to cognizant of the realities of living in the big city, but it's a ton of fun.

The other question concerns sacrifice. If you live in your multi-family property for 2 years, you can save a significant amount of money while learning some valuable lessons in property management. It's not your dream house, but with the money you save, you'll be that much closer to your dream house or moving on to your next investment. In 2010, when I got my first real job, I kept my college car until it died. I could have afforded a BMW, but I went with a Honda, because I wanted to use that money to pay down college debt and save for investing.
If you have school aged children, living in your multi-unit may not appeal to you. But, everything comes with a trade-off.