All Forum Posts by: Eric Masi

@Ned Carey Thanks for your insights! I probably was too optimistic in my assumptions about how long it's going to take to get everything up and running. I'll be a little more conservative in future evaluations, at least until I have more real world experience to base my assumptions on.

Also, I'm planning on self managing to start but I get you're point about property management fees. And I want to start factoring in all those costs now because I know that some day I won't want to manage the properties myself.

Thanks again, and good luck to you during the tax lien auction!

I just did a quick google search and Baltimore County requires all rentals to have hard-wired smoke detectors

https://www.baltimorecountymd.gov/News/PoliceNews/...

In addition Baltimore REIA has an article which indicates that the city requires hard-wired smoke detectors as well:

http://www.baltimorereia.com/smoke-detector-law/

If you read the Baltimore REIA article carefully it lays out when battery powered detectors must be upgraded to hard-wired but of course you should not solely rely on their article.

You may also want to check out craigslist to see what other people are listing their rentals for in that area:

https://baltimore.craigslist.org/search/apa?query=...

Well if you mean Carrollton Ridge then I would also steer clear of both, I consider them to be D class neighborhoods. Whenever I see anything directly on or around Fulton and Monroe Street I immediately move on. But that's just me and I'd love to hear from other people.

@Ned Carey Your point is well taken. In this specific instance I could get it done with personal money (leaving money in reserve just in case) and a private loan of $50K at 8% interest only with a balloon after 12 months. I believe the property is currently vacant and I'd like to get the rehab done (mostly using contractors) and have the place rented in 4 months.

If you have the time to read my explanation below I'd love to get your opinion. Perhaps I'm over-complicating things or perhaps I should be looking at different metrics. I'm trying to get to a point where I can determine if a deal is good for me or not and I still have a lot to learn. Thanks

Gross rent in Year 1 [4 months vacancy, no mortgage]; $1,807 * 8 = $14,456 

Less interest only payments; $14,456 - $333.33 * 12 = $10,456 cash flow Year 1. 

Refinance at the start of Year 2; $185k ARV * .7 = $129,500

- $50k balloon = $79,500 

+ $12,744 [cash flow from rent with new mortgage] = $92,244 cash flow Year 2

Sell in Year 5; 

less the balance due on the amortization schedule $121,909 

= $63,091 cash flow Year 5

The present value is now $135k which means that if I put in $140k at the start ($80k purchase price + $60k rehab costs) I overpaid by $5k.

I realize there are a lot of limitations to this, for starters I didn't increase the rent at all and I assumed no appreciation beyond the ARV. I also didn't factor in any fees at closing in year 5. There are probably some other factors I'm missing and I probably could have used Net Present Value to make it look neater.

Now I realize that your point was about numbers now vs. the future but I think that projecting future cash flows and using PV helps me to understand what I can pay for a deal now if I want a certain rate of return. 

@Mohammed A.

Thanks for your response. If you look at the first picture there is a Vacancy & Credit Allowance just under the Total Gross Income and I've accounted for a 10% loss. In the book "What Every Investor Needs to Know About Cash Flow" the author talks about not just vacancy but also factoring in rent that you can't collect for various reasons, for example a tenant who refuses to pay but is still living in the property (not technically a vacancy). Given the area I want to be conservative so I chose 10% over 5% for that expense.

Hi everyone, I'm finally getting off the sidelines and I'm ready to start investing here in Maryland. I'm trying to understand the market and how to analyse a deal so that I can start making offers! 

I live in Baltimore and I'm currently looking for 2-4 unit properties in Baltimore City, Baltimore County, the eastern part of Howard County and the northern part of A.A. County (perhaps as far south as Crofton). That's probably too big an area for someone just starting out so I hope to narrow it down a bit as I go along. I plan to stat by using my personal money along with some private money to BRRRR. I'd like to buy and hold getting a minimum $250 cash flow per door with a 12% IRR.

For starters I'm looking at REOs on the MLS and I have a hypothetical deal that I'd like to get input on from people who know the area. I'm making A LOT of assumptions here so any insight would be helpful. Here are the details:

3511 Powhatan Ave, BALTIMORE, MD 21216 (Forest Park neighborhood)

4 units: 3x 2br, 1x 1br all separately metered

Rent = 3x $950 + $795

ARV: $185,000

Refinance 70% LTV = $129,500; 30 year fixed 5.5% = 735.29 / mo

Cash flow $1,071.71

Assuming a sale at the start of year 5

Total PV - Rehab Cost = Purchase Price

144,036 - 60,000 = $84,036

Again there are a bunch of huge assumptions here but I'd be happy to elaborate on why I chose certain numbers. I also don't know if there is ground rent or not.

Thanks in advance for any feedback on the numbers, where I'm looking, strategy, etc.

Hi Kristen! I'm just starting out in Baltimore myself so I completely understand the information overload. I have been researching real estate investing for the past year and half! And while I think all of that information has been a valuable foundation I know that, for me at least, it's time to get off the sidelines and start taking action.

I personally don't think it's necessary to get a RE License, or work in any kind of RE related job, unless that's what you want to do. If you think you'll find that work fulfilling then by all means do it, but if you're just doing it for what you'll learn I'd say you're better off doing something else and getting professionals on your team.

Definitely go to REI meetings, you'll find a lot of them both on here and on meetup.com and while you're there start making friends. But most of all: take action! Drive for dollars, define your criteria and analyze deals, etc. Don't create more barriers for yourself to overcome by thinking that you "need" to do X, Y and Z before you start. Educate yourself, meet people and take action. Just my two cents as a guy who sat on the sidelines for too long.

Good luck to you! Feel free to reach out to me if you need moral support :)

You might consider guest posting on another - or better yet several other - blog(s). Or you could try and get on someone's podcast. 

I think if you try to target people in your market that might be especially helpful. For example if someone does a blog about DIY projects or home decor or even local events you could offer to help them in exchange for exposure. 

Pat Flynn of the Smart Passive Income Podcast and Nick Loper of the Side Hustle Show have talked about this kind of marketing so I'd recommend you check them out. I have no connection to either of them I'm just a fan. 

Good luck!

Wow that's an awesome list. Thank you for sharing! I think it's really useful that you've included the frequency with which the books have been mentioned.