All Forum Posts by: Tim Jacob

If you are looking to buy you can ask an experienced agent.  They will be incentivized to care if you give them more work in the future and since are getting a commision will really work with you.  Not a fan of gurus.  Providing value with a stranger im sure can be done but if there isn't much that can be done I'd be careful in asking g yourself how much that person really cares. You probably need an agent to get a place unless you can't to take a chance with off market and void protection from a conventional transaction.  Most of the best deals are not off market in the city.  Let me know if you want to talk. 

In Baltimore City the bills can get really high.  In the county they add it to the taxes and  bill much less quarterly.  A lease could delegate payment responsibility to the tenant.  As was stated the city won't shut it off so it can get bad if you aren't reimbursed.  In low grade asset classes I have heard some of the better section 8 landlords just pay it.  If its not a voucher and a higher asset class try to charge monthly back to the tenant.  This has always worked for me.  You or your new pm just need to stay on top of it.  If its sky high maybe its a leaky toilet or a valve break outside.  If its a valve break outside you can be reimbursed for the loss by the city.  Also that can be replaced by insurance if you have it.  If not thats a few thousand.  Just another reason to high grade your portfolio.  Dont feel bad the governor got caught once on a city rental water bill.

As has been stated by others choose your pm wisely.

If you are looking at NOVA there arent going to be many multifamily units.  If you are looking at Baltimore where things are more affordable there is usually 1 decent listing that comes around every month or so.  I would say the big advantage is in an A or B grade area you can purchase far cheaper and still get something thats manageable.  In general a lot of the deals might not be triplexes or quadplexes but duplexes.  Places in decent shape can for a little over 100k per unit.  You can also get A grade townhouse for around 200k that will be close to a 1% rule property.   If a decent duplex presents itself I would bite as getting the ideal 4 unit might take a long time to wait for.  Its really important to not purchase on price alone and get with someone that knows the city and surrounding suburbs.  With the right people you  can do very well.  I'm an agent and pm and  I own and manage for others multifamily in the city and surrounding area.

Some of this stuff is easy.  Some of it might not be.  The furnace and water heat vent needs to be fixed as it can kill someone.  Thats probably less than 2k.  Coming out of winter it probably won't lead to anything bc most likely the lethal amount will come from the furnace.  If the sewer issue is below grade that can get real pricey.  Maybe get a sewer scope and a structural engineer.  Some of those things might not be that bad.  Inspections always catch everything and they are loaded with disclaimers.  Get prices on the big stuff.  Could be a deal breaker on that is how I would look at it.

1 of the reasons to advise against the 2% rule is it didn't really work in the long run.  In general even in cash flow markets they were often D grade assets.  The worst thing that can happen is a property there works and you get a good long term tenant.  Often then the investor thinks its easy to replicate.  Then the law of averages kicks in.  Usually evictions and good pm won't touch it.  I am fairly certain from discussions with people who have continued in those asset classes that they got absolutely killed during covid.  Covid really told the investors to get out of low income rentals so there went 2% stuff.  A lot of decent  1% properties  went away with house prices rising.  Thus the safe and good investment often times is now close to but maybe barely under 1% in a cash flow market or closer to .5% in a higher appreciation market.

To me A grade means ease of leasing and management.  Its easy to lease to someone with a good job and plus 700 credit.  As a result collecting rent is fairly easy.  Afterward things like maintenance the tenant will accommodate you on like be dependable to coordinate a repair and be home to let them in.  B grade you can get the same tenant but have to work harder to find them when leasing.  C grade you can't get that tenant anymore and are in a higher risk status as a result.  Many will still pay but get ready to have that bad feeling around this time of the month as the tenants are late.  Occasionally they are really late and eventually it will effect your vacancy.  D grade and your dealing with evictions and higher vacancy because no one who can live somewhere else will live there.

In Baltimore there is a lot of dishonest turnkey providers selling stuff in the 200k range that seems somewhat close to the inner harbor.  A lot of it is really bad but there is some stuff close by there but on the good side or the 83 corridor that is in an A area that makes sense right around 200k.  I would get a local agent that knows the neighborhoods.  If you physically go there especially at night it should be more obvious.  But there are some gray areas.  I'm a local agent and can help with that if you want to shoot me a pm.

One thing I would do if I were starting in a new city to verify whether a neighborhood is good is look at the BP blogs here.  I would also consider calling a larger reputable pm company with a good Google rating about where they manage and recommend buying property.  A good pm will not manage in rough neighborhoods bc its waiting their time and not profitable not to mention risky.  Thus they should give a good indicator about where to invest.  A lot of them will be helpful for you towards this for a few minutes discussion.

I'm talking about purchasing a place for around 200k so if you put the 20% down it would be 40k for that.

Have you thought about Baltimore.  For around 200k you can get an A grade townhouse that's relatively turnkey.  A lot of people want to run down Baltimore bc of the crime but again I'm talking about A grade areas.  Not D grade areas people think about in Baltimore City.  If you go A grade things should be fairly easy to manage remotely though you may want to pay for someone to lease it if you can't commute over there so it wouldn't be an issue if you move far away.   A grade in Baltimore can be close to a 1% property.

Hello.  If you are looking at getting into small multi family assuming you are looking at Wisconsin and Florida I would say they are drastically different.  Though I have no experience in either of those markets if you are looking around Baltimore or DC where I have a lot more experience it would probably be similar to Wisconsin where there is a mixture of older and newer housing and a lot of the multi families are older with old infrastructure compared to FL where in general things are a lot newer. 

If you need advice in general with small multifamily where you will see upgraded stuff and old cheaper stuff and the differences feel free to reach out.  I have a lot of experience upgrading small multi family whether it be cosmetic and layout change or full infrastructure.  Things can get costly and if you need some ballpark numbers on things to help eliminate lemon properties feel free to reach out.

I also have a lot of experience in Baltimore in multifamily where I own and manage them as well as the DC suburbs.

Its typical for them to withhold some money for ground rent.  Not all of it.  They want to make sure if it stays unpaid they can pay it for you.  Its close to the redemption amount bc that's what it would cost to pay the holder after legal fee add ons though it only started at less than 100 dollars