All Forum Posts by: Seth Hochberg

Welcome to BP Damon! I'm in a similar boat, looking to purchase my first rental in Baltimore in the upcoming months. To answer your question: of course! Loans for investment properties will have higher rates than for owner occupied loans, but you should still be able to get financing. If one bank won't lend to you keep shopping around for a bank that will. 

Yes, you do factor it in. There are two periods you need to consider: when you're living in one of the units and when you're are not.

If you're living in one of the units, with a duplex, you might cash flow negatively which sounds terrible, but it's huge if you consider how much money you're saving. As long as you're saving some $ for repairs and vacancy, this is fine. If all your expenses come out to $400 a month, that's still $1300 savings each month you get for buying a house. This is a good deal. If you're cash flowing negative $1400 a month and only saving $300, that doesn't seem worth the hassle. You determine for yourself how much monthly savings is worth buying the house.

The second scenario is if you intend to eventually rent out all units, then you run the numbers and make sure you think the place can cash flow positively. 

I think Tim was heavily suggesting to just avoid rough areas all together (with the caveat of: if you really want to invest in rough areas, then you will only succeed if you're managing it yourself). What is a rough area? Go to Redfin or Zillow and look at houses sold recently and set your max purchase price to 75k. Wherever you see LOTS of properties are rough areas. Baltimore has plenty of good areas to invest though, and if you don't want to manage it yourself, then that's what property managers are for. 

Hi Bobby - looks like you've deeply researched this. I can follow the numbers, but it seems like you're leaving too much into the deals. A perfect BRRRR is getting all your money back for an infinite ROI. If you leave a few thousand in, you're still getting a super high ROI. But getting 60% of your equity back? If you have to leave a lot into the house, why bother with doing any repairs at all?

For example:

House A is 100k and ready to rent. You put in 20% (20k) and you get a nice 10% ROI or something like that.

House B is the same as house A, but in needs of major repair. You buy it at 50k and you put in 50k in rehab. Now the ARV is 100k. You pull out 80%, leaving 20% in the deal. The ROI is still the same 10%.

Why would you bother with house B if you could just as easily go the House A route? I would aim for 100% equity out in a BRRRR, and be ok with leaving some money in the deal if the rehab doesn't go perfectly according to plan. My thought process is, "WORST CASE, I leave 20% equity in the deal and I just did an extremely time consuming process I could have easily done without any rehab. But at least I learned from it". I would never aim to leave that kind of money in the deal.

Let me know if I'm misunderstanding you. 

Also, I personally, plan to avoid a lot of neighborhoods in West Baltimore that you mentioned above. Too many properties selling for under 50k in a neighborhood is not an easy place to invest (unless you know exactly what you're getting into).

Welcome Shakannah! Real Estate investing is an excellent medium for financial freedom and BiggerPockets is a great way to connect with other investors and learn. I don't quite follow - is your business a Real Estate business? You've already set up an LLC? Or is it completely unrelated.

I would try to educate yourself in two ways. The first is self-education: read as many books as you can find, be active in the forums here at BiggerPockets, ask questions, and listen to the podcasts. Depending how intensely you dive into the self-education, you will eventually hit a plateau of sorts. A point in your self-education where more books and podcasts aren't really teaching you much more. It's not that there isn't more to learn (there's always more to learn!), but more that you know enough to get started. 

This is the second way to educate yourself: with action. An easy step here is to go to meetups and join a REIA to meet other investors (although I'm personally waiting until after the pandemic to do that!) But then you can actually form your team, find an agent, find a lender, etc. A popular piece of advice given here is to offer to work for an established investor for free. But you need to find the right person who is willing to be a mentor. You have to be willing to provide real value in order to get that education. All-in-all, you can either work for someone for free (or very cheaply) and learn that way. And yeah, you would be offering to be someone's assistant for free in exchange for the valuable insight in seeing how they invest. Or you can just do it yourself and learn as you go. I keep hearing on the podcast of investors saying, "I made a million mistakes when I started!" Not only does this allow me to learn from their mistakes, but I realize I'd rather just try it on my own and make mistakes and learn from them. To each their own.

This is great. When I read Slight Edge by Jeff Olsen shortly after college, it was the first personal development book I read. It found it useful and practical, but it was the first time it occurred to me to continuously invest in my own personal development. That book lead me to read so many others (many which others have already commented on). 

The same goes for 4-Hour Work Week by Tim Ferriss. I haven't really implemented anything in that book, but it was the first time it occurred to me that I do not need to slave away at a job for 40 years. Shortly soon after, I discovered something that really struck home: the blog, Mr. Money Mustache. I've read every single article he's written (400+?) and it's completely shaped how I view my finances. I have always been somewhat frugal, and that blog gave me a direction - a purpose to being frugal. Thinking about retirement in my 20s has gotten me some weird side glances from anyone I share that with, but it fuels a very important question: "What would you do if money was no object?" A very personal question, and one that cannot be: "watch tv all day", it's a good question to keep asking myself. While pursuing financial freedom is a worthwhile goal, it is not the end goal, but only the beginning. It's also helpful to remind myself that luxury is not the end-goal (at least for me) but pursuing meaningful projects. A bit of a ramble here, but I'm sure many people on this forum can probably relate...

A few miles away for the nearest laundromat? I imagine section 8 tenants in a city would be more likely to not have a car, making that a very cumbersome trip. If it were a few blocks away, I would agree that the washer/dryer is not necessary.

Ajeng, welome to Bigger Pockets =)

Baltimore is a great place to invest in, but you need to know the area well. Some people on this forum have asked, "What zip code should I invest in?" and the correct response is: "Bad question! You need to get way more granular than that!" Even "what neighborhood should I invest in?" is not specific enough some times. Your criteria for looking near colleges and hospitals is generally a good idea, but that thinking is too broad. For instance, Johns Hopkins Hospital, one the most renowned hospitals in the world, is an oasis of sorts. This premier hospital, with tons of money, is surrounded by neighborhoods I would not want to invest in (excluding South - South of the hospital is solid). 

Your questions about investing near colleges - they typically come with their own challenges (solid demand, but frequent turnover, etc). I have no idea what the pandemic is going to do to the college market - your guess is as good as mine. Same goes for waiting after the pandemic to invest. A lot of people on Bigger Pockets are saying that it's not a bad time to buy, but it's hard to find good deals (i.e. if you find a good deal - go for it!). Personally, since I'm looking for my first deal, I've decided to wait until the Spring this year and use the next few months to get all the pieces in place while analyzing deals on a regular basis. It's not the right choice, it's just my choice.

Also, Baltimore County is a different ballgame than Baltimore City. The county does has a lower price-to-rent ratio, lower taxes, and more competition. 

At your price point, you wouldn't be able to get a 3 bedroom SFH in an A neighborhood (most of the ones by the waterfront, for example), but you could find something in a B neighborhood. Maybe try Pigtown, Joseph Lee, Greektown (near Bayview). But take that with a grain of salt - I have lived in Baltimore, not invested in Baltimore yet.

Hope this helps =)

If something can hit the 1% rule, then it should be working. I use the 1% rule as my primary filter. If it's not close to 1%, I skip it, otherwise, I plug in the numbers into my spreadsheet. 

2k rent for 3/2 in Upper Fells is reasonable, you just have to find a home around 200k or less. 10% for repairs AND 10% for capex is high. Typically, you go with 5% for both. You're putting an extra 10% in those buckets and that's most of your profit margin right there.

Just to add a few in that realm ("A/A-"neighborhoods): Upper Fells, Butchers Hill, Remington, Bolton Hill, Woodberry, Roland Park, Brewer's Hill, and anything within a couple of blocks East, South, or West of Patterson Park is promising.