All Forum Posts by: Herbert Lewis

Hello BiggerPockets,

My wife and I just closed on our 10th property last week. The house is located in Baltimore County, right outside of the city limits. We finally got to the closing table on 6/25.

The deal: A SFH 3 bedroom/1.5 bathroom with an unfinished basement.

Purchase: $80,000 found through a wholesaler we had worked with previously on another deal

Plan: We plan to entirely gut the property and redo the entire house on the inside adding used stainless-steel appliances, adding all-new lighting, refinish the hardwood floors, update the HVAC unit, paint, and updated the kitchen and bathroom.

Financing: Used hard money for the purchase. I used none of my own money for the deal—the loan terms 12 months at 10.9% interest plus 2 points. I have used the same hard money lender for seven other properties, so I have a history with him.

The property will be refinanced after we get a tenant in place. Current rent for Section 8 in Baltimore County range in the $1,600+ range. Most of our rentals have Section 8 tenants, so we look at Section 8 rent to determine the property's rent.

Disclosure: I have my real estate license in Maryland to compare comps and set myself up with auto-emails looking at my current criteria.

@Jared Bartlett

I had a similar issue with a Section 8 tenant who was using drugs. I contacted section 8 and told them this was a breach of the lease. They immediately respond and let them know she was in violation. In the end, the tenant lost her Section 8 voucher, and the county evicted her due to a breach of the lease. Try breach of the lease instead of FTPR sometimes; these cases move faster through the court system.

@Dina Boscio

Yes, driving for dollars works. You can even have your friends and family members do it. Just ask them to tell you about the houses they see that show deferred maintenance.

@Dmitriy Fomichenko Thank You

@Adam Belasco

Hello Adam, the area was West Baltimore 21229.

The areas you mentioned are very desirable! You can get top rent in those areas, but the prices right now don't make sense to buy. If I get something in that area, I will use it as a short-term rental. You will generate more cash flow, and those places are popular with millennial professionals

Investment Info:

Townhouse wholesale investment in Baltimore.

Purchase price: $10,000
Cash invested: $5,000
Sale price: $45,000

This was our first wholesale deal!

What made you interested in investing in this type of deal?

We had other properties that we owned as rentals in the area.

How did you find this deal and how did you negotiate it?

We would drive for dollars in the area where we currently had rentals. This house had lots of deferred maintenance on the outside, so we stopped and starting looking. My wife, who loves talking to strangers, struck up a conversation with a neighbor on the block. He told her that no one has been in that house for 6 years and that the neighborhood did what it could by mowing the grass.

How did you finance this deal?

We used a family friend's money and paid him interest each month.

How did you add value to the deal?

We sold the house as-is to a flipper.

What was the outcome?

We made $30K on the property after paying interest on the loan and carrying cost.

Lessons learned? Challenges?

I read an article on negotiation, and it said never reveal what you are willing to pay for a property first. I asked the seller what she was willing to sell the property for, and I was shocked! She gave me her number, and we got that house under contract the next day!

Investment Info:

Townhouse buy & hold investment.

Purchase price: $30,000
Cash invested: $5,000
Sale price: $53,400

This is the first buy-and-hold property I purchased in 2018. The area is a C- area, but I was making $1,200 per month on rent. I decided to sell the property to another investor and reinvest the money in other houses.

What made you interested in investing in this type of deal?

It was my first buy and hold property.

How did you find this deal and how did you negotiate it?

The deal was presented to me by a realtor.

How did you finance this deal?

Cash

How did you add value to the deal?

The house was in good shape. The only thing I did was paint throughout the house, add new radiator covers, update the appliances, and add a new full-size washer and dryer.

What was the outcome?

The house rented out really fast! My first tenant in this house was subsidized, and I was receiving $1,200 per month. The tenant was responsible for all utilities. I sold the house even though it was generating lots of cash flow. The neighborhood was D- and the drive was too far from my house. I was self-managing all my rental properties, and I wanted to invest closer to my home.

Lessons learned? Challenges?

Don't procrastinate when you find a good deal! When I first started off, I wanted to capture the Infamous 2% rule, and I did with my first deal. I read lots of posts on BiggerPockets about the good and bad with 2% rule properties. I decide to pursue the 2% rule, and the experience I learned was well worth it!

Investment Info:

Townhouse buy & hold investment in Baltimore.

Purchase price: $63,000
Cash invested: $15,000
Sale price: $100,000

I purchased this house from my photographer's aunt. He told his aunt that we buy houses, and she wanted to sell a house she inherited. We paid him a referral fee, and we purchased the house with Hard Money. I sold the house after two years of renting it out for $1,300. I made a profit from the cash flow and sale of this house.

What made you interested in investing in this type of deal?

I was growing my buy and hold in Baltimore, MD

How did you find this deal and how did you negotiate it?

The deal was brought to me by my rental photographer. His aunt just inherited the house from her sister. We paid him a referral fee, and he got to take the pictures of all our rentals moving forward.

How did you finance this deal?

We finance the deal with a local hard money lender.

How did you add value to the deal?

We updated the property with new paint throughout the house, stainless steel appliances, new carpet, and new laminate floors.

What was the outcome?

We had a renter for two years in the property paying $1,300 per month and cash flowing. I eventually sold for a profit to another investor who brought two of my properties simultaneously. She was a new investor looking to grow her portfolio, and we were looking to cash out and reuse the money on other investments.

Lessons learned? Challenges?

It would be best if you always let people know what you are doing when it comes to real estate. This deal was off-market and came to us because we let our photographer know we were investors looking to purchase SFH.

@Ali Horbach , I love the idea of having an accountability partner! I have started reading Invest in Debt by Jimmy Napier and listening to podcasts, and reading forums online. 

@Sandra Andrews

Hello Sandra, I am still investing in Maryland from California. I just put a short sale under contract in Baltimore County, MD. I plan to diversify in notes and continue to buy rental properties.