All Forum Posts by: Sam Lewis

@Tyrone Marson

I love rentometer - I have the pro membership. I also like to check Zillow and Craigslist to see what homes are going for.

Pro tip - give someone’s ad a call and talk to the PM/landlord - see their take on the market.

I can speak for SFRs in Baltimore County. Assuming a typical vinyl village townhome, cash flow of $800 would generally be doable under a few conditions - property is a minimum 3 bed, fully renovated, Section 8, in your personal name. For each of the previous criteria not met, remove $100 per item. This is how I personally work out deals in my head so I can analyze them quickly, but make sure you use a more practical formula noted below.

Run rental comps for the specific 0.25 mile radius and subtract estimated CapEx (1% of property value/year), vacancy (5-10% of rent), insurance, property taxes, and any other costs that will realistically affect your cash flow.

Note this math does not account for your acquisition costs associated with the purchase of the property - that is where you can lose your head. 

To avoid facing the guillotine, smart investors apply the 70% rule. In other words the summation of the purchase price, renovations, closing costs and holding costs should be under 70% of the after repair value (ARV) of the property. For buy and hold (BRRRR) investors, this number may be closer to 80% in our market.

Originally posted by @Dan Nad:

According to this, Baltimore is getting the worst of Covid among big US cities. Is this what people are seeing? What areas are softest?

From what I understand, more now than ever people are leaving large high-cost metroplexes with the opportunity to work remotely paired with harsh covid-related mandates - being cooped up in a high rise apartment can get old. 

Generally speaking, days on market are much higher in many areas of the city than the surrounding counties of Baltimore, compared to one year ago. Still, available inventory is still much lower for Baltimore city and the surrounding counties than it was a year ago. 

I'd be curious to see the bones behind this data; seems like there is a missing assumption or secondary factor
 

Was running into a similar issue before. Solution: declare income on your househack and it will appear on your tax return, which will effectively change your DTI in the eyes of banks

Echoing Russell on this one. Even at the county level, parts of Harford County can vary greatly compared to Baltimore County. To run estimates on jobs, keep it specific to a particular area (or even zip code). 

Best way to grab accurate data is to walk through potential rehab jobs with reputable contractors

@Joe Villeneuve

Agreed, but I don’t think you have to pay someone to learn how to invest successfully, especially in your local market, and especially if you are just starting out

I think you should trust your gut on this one. I will give you my take. I have met a lot of successful investors who began by reading the books and diving right in and acquiring property. I don't know a ton who told me they paid a mentor early on. Who knows, maybe because those folks are now on yachts in Key West and I'm not!

I think the financial component of a paid mentorship is what comes off disingenuous. I have mentors in my Baltimore network who I look up to, who also rely on me for things - so they benefit in return out of what I like to call social currency, not financial currency.

I think organic, non-transactional relationships are more fun in terms of growth - I am no expert here but am hoping this helps

I was much the same way, long time lurker and finally created a profile. Best time to plant a tree is today. Hopefully your first of many more

Hey William, welcome to the forum! Not many people recognize the power of real estate so kudos to you to getting involved in this community. 

Knowing your market

A couple things right off the bat - are you originally from the Baltimore area? If I were you, I would focus on an area or zip code you have lived in or have been familiar with for the past couple years. While I'm originally from Harford County, I decided to dive into Baltimore County after working in the area for a couple years. 

Vacant and cheap properties

There are many reasons as to why a vacant house selling for 10K may not attract dozens of investors to outbid each other for a property - location, location, location. This is where knowing your market comes in handy - why fix up a property if no one is renting on the block and most properties are covered in board ups?

Househacking

One way a lot of new investors get involved is by purchasing a home in good condition with a low down payment option. You can then rent out rooms, and if done properly, cover the mortgage and live for free. This typically requires credit in the high 600s, roughly 5% of the purchase property of the home to work with, and steady W2 income that can contribute towards a mortgage payment (many lenders require your estimated mortgage payment to be less than 45% of your post-tax income).

There are caveats around a lower credit score, such as going the FHA route - 580 is required. There are also caveats around W2 income - If you are a first time buyer, FHA loans could still be within in your grasp if you furnish additional documentation like 2 years of tax returns and 1099s.

Wholesaling

Wholesaling is the method of 'purchasing' a property by having both you (the buyer) and the seller sign an purchase agreement for a property. With the right clauses and contract, you can then assign (i.e. give) the contract to another purchaser for a higher contract amount. While there are ethical issues I have with wholesaling (especially when sellers are unaware of the value of their property), this is one way to make money with zero dollars of your own money in the process.

Disclaimer: I would not recommend jumping into something like this without shadowing a wholesaler, consulting a lawyer, or getting to know the home buying and legal process of transferring ownership with residential real estate.

Book list

A few books could really help you out, and ones I've read at least 2-3 times:

• The BRRRR Book by David Green
• The Book on Rental Property Investing by Brandon Turner
• Rich Dad Poor Dad by Robert Kiyosaki
• The Richest Man in Babylon by George Clason
• I Will Teach You To Be Rich by Ramit Sethi

Best of luck to you!

Sam

Definitely a unique situation. If the tenants are easy to with, and haven't moved any furniture into the property, let them go with the full deposit. 

Still, you'd think the tenant would have noticed that type of smell while checking out the property initially.