All Forum Posts by: Tim Jacob

I assume you would never consider moving into 1 like occupying an apt in a duplex if that is included.  If you do you can use the 250k tax deduction or double it  for if your married but you need to live there 2 years.  You will need to collect mail there and have your license note that address as well as living there to check that box.

I invest and manage properties up here in Baltimore.  I can tell you this entirely depends on the area.  The area will determine the quality of tenant you can obtain.  If you will only be able to get a certain quality it won't matter in the long run how things work.  If you can't get someone with a 700 plus credit score within a few weeks of quality leasing the property at the right price I would not keep the property.  Things are getting harder and harder in a lesser asset class and as things trend into the future influenced politically that's going to get worse.  In that asset class you are depending on things to save you that are trending against it.

That said if the 30k completes a partial done rehab it might make sense but if it's a purely cosmetic one I would sell it now close to as is.

Go with a background check where you can see what is actually in it not just them giving you a letter grade or pass go.  Also in some states there are free online databases.  

The post about asset quality should not be overlooked.  I do think in A & B you can push those numbers on the high side.  MYve if you factor in holding times during renovations that could be diluted with a longer period of ownership but assuming once its ready to go I like to average 2% or less.  Another thing is the higher the asset the more likely you can push rent prices up.  If your rent increases just mimic inflation close to half or more if you self manage will bump your yield up and cash flow.  Thus think long term and invest in good areas.  Up here in Baltimore high 100s might get you a decent 2/1 rowhome turnkey.  I would t go much lower unless you can estimate rehabbing accurately or bear in mind the asset class to vacancy and other variable cost issues rising.

The biggest thing you can be fought on is parking.  You should make sure your place has the parking available.  Secondly the square footage.  Underpinning or an addition would make most conversions not feasible economically.  I always worry about forecode as well.  As of now you don't need to retrofit places with sprinklers but Maryland is ridiculous on that.

Hi.  I'm an agent, investor, and pm here in Baltimore.  You can do well in the city or county with the right strategy.  Being a Maryland landlord should help you even if the properties are out side of the Baltimore area.  Where in the area are you looking to buy?  

The 1st thing to do is get with an agent who has a clue about rehab costs and where you can get quality tenants based on the work that is being done.  They should actually know the market and all the neighborhoods.  Not just tell you a couple neighborhoods they know are safe and the rest of Baltimore is a war zone because that is simply wrong and shows they do not have local knowledge.  They should have experience in renovation of 100 plus year old buildings as well and should have an inspector with decent remodeling experience.  Hopefully that will help you avoid the pitfall of excessively underestimating renovations.  If you have plenty of rehab experience great but if not I would really get with people with appropriate experience.

After I would ask the realtor about a pm.  Some realtors are pms.  I think what might happen sometimes is the person doing the contractor work is owed  some at the end of their work and the excess is extracted from the rent.  Combining them sounds ok but can backfire.  Maybe have the property manager project manage the contractor and pay them separately is an option or have a 1 stop shop if you trust them and they are reputable.  I would not go with a turnkey company up here.  I have heard a lot of bad experiences come from them.  Whomever it is Hopefully they have a quickbook option.  Costs can still snow ball to some degree.

This is just another example of asset class and why going higher makes sense.  If it's A grade their is a good chance the tenant was so clean you can lease it with the exiting tenant still residing their.  Then you can simply have a 10 day window in between and because they left it in such good shape its a handyman for 1 day doing something like replacing blinds their cat destroyed or a few easy fixes.  If it needs lead cert you might think of getting it done before the vacancy to ensure its done in time.  Another reason to go lead free or limited as well to ensure that.  What I just described is typical for A or B grade for me in Baltimore.  Turnover between tenants is in general 2 weeks average or maybe less.

  In general if  you get to C grade or section 8 bump the average time lines.  Even then I still have had good ones.  Even so a couple weeks sounds fair if it is a hefty turnover with a full week of work for full repaint and a trash haul.  As was stated contractors don't wait around for your work so it might take them 2 weeks to mobilize.  Thus it might be even more but in general a couple weeks sounds decent.  This can he voided with a large company with maintenance but maybe not if they are busy as well.  

Equally as important is when they are going to lease it.  If they lease between November and mid March you are adding vacancy to find the right person at an optimum price so I would  make sure they end leases and set new expirations in the spring to early fall to ensure that.

Back to asset class though think of that because if the preexisting tenant is dirty and destructive not only do you need to pay to fix the stuff their deposit won't cover but you also might have 2 to 4 weeks of vacancy before you can even start to lease it.  Then another couple weeks to find someone that probably won't move for another 3 or 4 weeks for an average of an extra 2 months versus just 2 weeks. 

Most title attorney can get this redeemed for you.  It can cost 2-3k at settlement.  Then it is gone forever.  It usually is less than 200 per year in payments 6 months apart of less than $100.  It is tempting with all the closing costs to tell yourself to save the 2-3k. Just know that many ground rent holders might just mail you your notice.  If you move or forget to pay years down the road the place can be foreclosed on.  Many will not do you any favors in letting you know your property is in foreclosure.  If you have a lender they will stop it before foreclosure but by that point lawyers are involved and the cost will be close to what it would be to redeem it in the 1st place.  

What you don't want to do is be cheap And don't redeem it.  Then years later forget about it leading to you or lender spiking your escrow charge for a year costing you a couple thousand then you ask why and it's because of that then you redeem it after feeling the burn.  Thus the whole process costing you a few thousand more.  

Or worse yet you don't have a lender and find out it foreclosed because you didn't pay them $75 once.

I would just be honest with yourself about being realistic about life happening and forgetting about it and make a redemption decision based on that.

Not only will they not reduce it but increase it with Non payment for added legal fees.