All Forum Posts by: Sebastian E.

Hi @Brad Wood Congratulations on deciding to invest in the RE market in Baltimore. I started my RE journey in DC househacking a quad and then about a year and half ago began investing in Baltimore City. Baltimore is different from DC in that there are a lot of "up and coming" neighborhoods depending on who you ask as opposed to DC where things have already up and come. With developed neighborhoods like Fells or Patterson Park you will not find great investment opportunities unless you are doing a flip or a house hack. Because there is high demand for these areas by homeowners it compresses the cap rate and then you can hope for appreciation but there are a lot of people who have been sitting around Baltimore waiting for appreciation while nearby markets like Philly and DC have experienced tremendous growth since 09. 

I own a variety of rentals, so to answer your question it depends on what your goal is. If you want to maximize cash flow then room rentals can be very appealing in areas around a hospital or even in class C areas. There is a large part of the population here who rely on cheaper housing options because the incomes here are quite low. The area of the city where a bulk of my out of stat investors are investing in is on the East side where you can buy properties for between $80-90k invest $25k in them and have them appraise at $140k and rent for $1200 - 1400. They aren't home runs but with this strategy you can slowly build up a decent portfolio of rentals that cash flow at $300 a door. 

It is a great community here so feel free to ask questions and i'd be happy to help out in any way I can.

Awesome. We have the quorum! The name of the group is: 

Hello BP folks in Baltimore and surrounding area. I am starting a Baltimore meetup group focused on building community around topics of financial independence. Some of these aspects will include: househacking, real estate investing, as well as broader personal development topics. All are welcomed to join. Please search for the group on meetup.com 

Hello @Eric Lawson I have heard of agents charging an upfront fee in Baltimore and then crediting it back to the buyer at closing if they make a purchase. I don't do it, but I don't think it is a bad strategy.

With the flat fee, because prices are so low in Baltimore, we do have a flat fee for all transactions under 100k. All respectable agents who I have come across have a flat fee. There are ones who will do lower dollar transactions without one but if they don't really value their own time then you should question whether they have the competence to get you through the transaction. We will bend on our flat fee if it is a person buying a flip for example since there is a larger commission the back end.

Happy investing.

Seb

Hi Brian welcome to investing and the forum. What are the numbers like on your deal? My main suggestion if you plan to scale is to put the property management. It was a choice that helped me to accelerate the growth on my business when I made that choice. There are different schools of thought on it but for me having those aspects taken care of enabled me to focus on growth. 

Happy investing :)

Hello Robert. I own in DC and Baltimore at the moment but I have started putting offers  in Lancaster. I think it is an absolute hidden gem. The cap rates are great and definitely feels like there are certain neighborhoods in a good path of progress. My theory is that Millennials are going to start moving into what I call tier 2 or tie 3 cities like Lancaster, Pa. I would consider NYC, Boston, Seattle, SF, Austin etc tier one cities. It's where a lot of jobs are but the living costs are far too high. There is quite a bit of variability when you get out of tier 1 but broadly speaking some examples are Boulder, Co,  Gainesville, FL;  Raleigh, NC, Grand Rapids, Michigan. These are places with lower costs of living and high quality of life. They are areas with high concentrations of educated people, convenient geolocation, and lower rents and real estate prices than your tier 1 cities. I think the economics and more teleworking is going to end up shifting where people want to live. After spending 9 years living in DC, I think there are many draw backs to living in a tier 1 city that aren't really factored into real estate prices. 

I think Lancaster has the possibility of being such a town that could attract people. I am happy to connect you with the agent who I have been working with there. He has been great.

As for Baltimore City. I just went under contract on my second house hack. Happy to share my strategy.

Seb

@Dara Thomas for house hacking? I like Union Square, Hollins Market, Reservoir Hill, Seton Hill. Basically anywhere close enough to to the hospitals. I am sure you can do it on the east side too with Bayview Hospital but I am just not as familiar with that area.

Welcome @Dara Thomas! I haven't met any sharks out here yet but the water is a little choppy in Baltimore. I find it a great place to invest and live though so I applaud your choice. Another great option in baltimore city is house hacking. 

My most recent house hack cash flows about $1000 per month renting by the room and I just picked up my second that will have lower cash flow but it will allow me to basically live for free. House hacking is by far the best low down payment strategy to get started in real estate.

That is a question you should have a long conversation with your title attorney about. Generally speaking, the lien would need to be cleared for you as part of your real estate contract--assuming you bought this using a contract that has that as a precondition of closing. If you are buying this thing as is / where is with no expressed guarantees about the title, then you'd have to deal with it after you purchased, which in this case doesn't seem like it would be wise to do.

Now for the tax issue. I am not an expert on that but there are some here in the forums, so I don't want to talk out of school on that. What is the total amount that is being sought in the tax redemption case?

Hi Avery,

The best thing to do is to purchase a residence you plan to live in using a VA loan with nearly no money down. It is the only vehicle out there that allows you to secure long term fixed rate debt with little or no money down.

The second thing would be to find a home that has a second unit like a basement unit or in law suite to subsidize the mortgage. Then if you are stationed elsewhere you can rent out the entire house and hopefully you buy right so you are cash flow positive. I know the area pretty well between DC and MD and it's not easy to find deals that make sense but you if you hustle or buy a fixer upper you can make it happen. I would encourage you to check out homepath and hudhomestore.

Once you have that locked down use as many conventional loans as you can to buy cash flowing rentals. Huntsville is a good market for that and so is Baltimore. I generally invest in my area but there are different schools of thought on long distance investing.

Good luck and happy investing.

Sebastian