All Forum Posts by: Tim Jacob

I would say look into proximity to a hospital.  There are so many whether they be Hopkins related or not.  Also is there reliable public transportation for nurses as the public bus ans subway system can be dicey in locations.  Also do they have parking there.  It can work in the right location but just screening can be daunting if not.  Otherwise go long term and atleast the amount of time for screening won't make things unfeasible.

1 thing to note in Baltimore is the tenants can now be selective enough to not live in a war zone.  Thus if you were thinking that the entry point would be 50k per home that's not going to work.  I would say each property should be around a bare minimum  150k per for a standard row home in relatively decent shape.  If you like to renovate Im sure you can cut some price but I really wouldnt go too much lower.  Id be real careful with wholesalers bc you are getting to the point where there will be a temptation to deal with them.  High rise housing doesn't work either unless you want that war zone again.  The city has high taxes and free lawyers available at the court house.  If you go into this asset class you are going to deal with court filings for non payment so that will be a pain. I wouldn't completely discount the city compared to the county if it is a good deal.  The other thing is property management.  Property managers want to be paid fairly and if you low grade everything too much you will get a fair amount of service based on that which won't be much.    Good pm companies will not take on the low asset grade problems bc they simply aren't worth it and you are left with the inexperienced or bad ones.  Either way it won't work in D grade in maybe low C grade.  You can always DIY your pm which might be the best option with that.  Just be prepared for managing low grade areas.  The best low grade investors manage their units themselves.

BMore county can be good.  I would try to stay within the beltway as you go too far out you will deal with less of a tenant pool.  Taxes are much cheaper than the city.

There is a lot of opportunity.  As has been said things can turn pretty quickly.  

Some people buy the D or F grade stuff in hopes they can just sit on it until the A grade development comes to their area.  The city is cracking down on that as a lot of the homes are found to difficult to rent and abandoned and then become a vacant house inviting blight and crime which no one wants.  I would not suggest that route.  The city can take back your property for vacant violations which happens to investors after they give up on it being a long term rental as they can't get a good pm because it's not worth the pm's time and don't want to do it themselves.  From California it makes things impossible for that route to work.

  Another thing I see on here is predatory turnkey providers buying just over the line between the A and D grade stuff.  They buy on the D grade side from another investor fleeing because they now know why D grade investing doesn't work.  They then do a cosmetic renovation or might even do a little more but because their point of entry is so low its profitable.  They then make sure to take great pics.  They bank on the pics selling the place and they present comps that don't tell the story.  The buyer then buys the rowhome for over 200k.  The comps show the A grade stuff just a few blocks away going for the mid 300s this is further backed by New construction closer to the harbor within a mile that might have an extra 700 square feet but is now going for over 700k.  The buyers see this and think they are getting a deal.  In reality they are buying a problem.  I see people on here complain after the fact about the turnkey provider and they never actually visited Baltimore when buying it.

I wouldn't go turnkey.  I would get an agent on here that you trust that has a level of transparency about things.   I would trust them in the buyer phase which could lead to them leasing a property.  I would go A or B grade not buying something that's a problem.  After they lease it maybe you can manage it remotely to avoid a pm charge.  I'd budget a minimum 200k on a 2 bed place that's fairly turnkey.  To confirm the area I would personally go the the property at least once probably during inspection and visit it in the day and night.  

If you have reasonable expectations you can do well in Baltimore and eliminate risk with a solid plan.

@Nicole Blankenship sent you a message

As has been stated about Baltimore I would consider it.  You can get always get a decent single family for around that in a B grade area that is relatively turnkey and mught be able to get a duplex with 2 1 bedrooms as well.  With closing costs and very minor startup stuff it would be possible.  The most important thing is to pick the right asset class.  With Baltimore you can be there for showings to ensure that.  I think me and most people are fairly honest here but after a while of you get some agent working remotely fit you they will just want you to buy something so they can get paid.  If you invest somewhere you need to fly to it might not be good if you have to fly there a few times.  I'd recommend at minimum for the inspection.  Another thing is if it's Baltimore you could save on a pm charge which could save you a lot of cashflow or maybe leasing though with that I would really consider your time.  I have worked with other investors in the DC area and its worked for them.  They purchased B grade stuff which for me means you can get someone with a 700 plus credit score who always pays on the 1st and you lose no piece of mind about that.  If you go into some midwest C grade asset where that can't happen you have a high likelyhood ofmuch more stress.  Furthermore if things break and you are only in Arlington again you might not need a pm but if it's way out in Ohio or Michigan having a pm makes sense. Than deduct the pm fee and there could go your cashflow.  Also if you have a mostly remote job you could have it be a primary residence and be in a great part of town and have a roommate where they have the basement with their own entrance and live in a great part of town so you would attract young professionals or maybe a duplex for that.  

If you have a 3 bedroom or more the amount of zones could make a condenser more economic negating install.  When I had mine installed it was about 50% labor don't know if that's the case for mini split.  Also wonder what other costs would be associated like the coil and the heat pump itself and not just the zones which can add up on a large enough place.

  Furthermore if you replace the furnace with a heat pump what sort of actual heat will it produce.  I have seen mini splits work great here is Maryland.  The thing is they only work great in upper unit apartments with a high level of resonant heat from a lower unit.  If there is no heat source from below I would not recommend them as this time if year you will have issues and need to provide additional space heaters.  They do work great for ac or supplemental heat.  If you really want to do that maybe add additional baseboard heaters on the lowest finished level.

Furnaces in my opinion are a lot more durable and have a longer life than ac and especially since the old freon is so expensive these days.  My furnaces are old 20 plus years old and doing very well and many of the units I manage have ones from the 90s or earlier.  You can tell from the color of the flame.  The gas valve might need to be changed.  If it absolutely needs changing the replacement should last longer than the mini splits.

Mini splits certainly have their place but not in a  larger ducted unit.  More a smaller unit with ductwork preferably with either supplemental heat from below or in an area of the country that's warmer and I don't think Denver qualifies.

I can tell you if it's already ducted if there is enough space between the plenum and furnace it mi gght be economic with a condenser.  Last time I did 1 was 5 years ago.  It was just $3500 per unit here for that including the coil.   I'm sure now it would be 4 or 4.5k but not bad.  This assumes you have suffice power at 100 amp service per unit.  

If not that will cost you.  Remember that new code requires arc faults if you need to change your breaker location if you go the permiting route.  That could lead to a complete home rewiring of all old wiring of the preromex era as the arc faults trip on old wiring.  Now its probably 20k unless you are an electrician.  Without ductwork I recommend the mini split and as has been stated it's going to cost serious money well over 10k or you can go with ductwork which will be close and then your dealing with more drywall, painting, low lying ceilings, etc.

1500 for a 2/1 in a C grade area is really pushing it.  I hope you have amenities like a washer dryer in the units and good parking along with a good amount of square footage.  In higher grade assets you could get more but it depends on location.  Secondly with that asset class you are not talking about not getting a young professional with a 700 plus credit score.  You are getting blue collar workers which will pay but you will need to work with them and might need to file in court to show you are serious.  If you screen well you should probably avoid eviction but to guarantee that it might mean not gettiing top dollar for rent to attract them.  Beyond that in general I find at move out its usually more possible to lease the place while the tenants in a higher grade asset are still there. Than you leave a week or 2 gap between tenants and minimize vacancy.  If the exiting  tenants don't care and they are dirty you will need to wait to move out clean it and be patient with applicants not to take the 1st one that needs a place immediately because they could be a bad applicant that was evicted and is homeless and living with family.  If you have to wait for the old 1 to leave.  Have the place cleaned and have a haul away and then a lead cert it might take a few weeks before being able to lease it again and if that takes a few weeks then the new guys don't move for a month that's 2 months right there.  That's why 3% really isn't realistic unless it's A grade or B grade.  For maintenance and with old Baltimore places do you understand the cost of old infrastructure like old flat roofs, cast iron drain, etc.  There is a good chance it might be a year or 2 upfront of fixing what wasn't fixed before that settles down.  Hopefully the home inspection will give you an idea. If the agent is telling you C grade but great appreciation I would like to know where they are talking about.  There are areas I consider B grade that are more affordable than A grade and could do that with appreciation but are still more than that price point wise. I know the Baltimore area pretty well I live, own, manage, and sell here in the city and county.  Personally it sounds a little far fetched in that regard.

I obviously know agents don't do inspections or title work but what should be understood is that for the consumers saying how can I cut my fees you get what you pay for.  A lot of people say let's go with redfin for the bare minimum commission.  For a buyers agent especially that person isn't going to see a bunch of homes with the buyers.  They will see the bare minimum.  They aren't going to recommend the best title companies or inspectors.  They aren't going to manage the clients expectations which sounds like an issue for you.  A good agent will do these things.  A really good investors agent will have renovation experience and give line item ballpark breakdown of what renovation or repairs will be with options instead of simply saying a new kitchen costs 15k. A good agent might actually know some minor ways how to cure title issues though the title attorney will as well.  Ofcourse if you go with the cheapest agent you might just go with the cheapest title company.  After all what could go wrong.  Then you find out the seller also sold the home to 3 other people.   Are there bad agent charging 3%.  Maybe but if they are new but asking an experienced broker things they don't understand you are getting a better experience then redfin or another 1% agent.  If people have 1 bad experience with a 3% agent because they didn't do due diligence for instance to find a decent investors agent, which they could on here, I don't think the next step is let's go down to the 1% option because what's the difference.  That's the greed talking.  The best thing like many things is to pay fairly but do due diligence prior to hiring to ensure you get quality service.  Between the 2 you will get the best experience.