All Forum Posts by: Ray Arends

@Michael Tucker

Cash flow! I believe that the proximity of Hagerstown to the crossroads of I81 and I70 provide decent jobs in the transportation and warehousing industries. The prices on small multi families are such that the rents can support commercial debt coverage ratios that local banks are willing to lend on.

There are also professional management options available.

Of course there are downsides. The small 4-7 unit buildings I am interested in are typically over 100 years old. They were more than likely large single family homes that were converted into apartments. As a result, some, but not all, floor plans are odd. I avoid the weird buildings. Heat is typically master metered, the landlord on the hook for heat and hot water. Natural gas is widely available and more economical than fuel oil heat. Electric baseboard heat is an alternative, being more easily sub metered  with the tenant paying for what is in my mind the most inefficient heat available. Water, sewer and trash are also paid by the owner. 

Appreciation is pretty much non existent. If you are a buy and hold investor looking for cash flow this isn't an issue as long as you recognize this characteristic prior to jumping in.

Finally, both the city and county tax real estate annually. There's nothing like the arrival of two tax bills in the same week to lighten one's wallet!

Get your agent to show you several properties. I like the north side of town starting about 5 blocks north of Franklin St. At that point it seems to me the area transitions from urban to a more suburban feel.

Jefferson County in the Eastern Panhandle of West Virginia is a far flung suburb of Washington DC. There is commuter rail service to DC which provides access to good jobs. I live in Jefferson County and commute to VA for my W2 job. I don't invest in Jefferson County because of the limited inventory of small Multifamilies available in my price range as well as my lack of experience with local property management companies. I currently invest in Hagerstown, Md which is about an hour away because the numbers work there. Hagerstown brings a full range of opinions here, which if nothing else, provide entertaining reading as well as interesting opinions.

Hi @Account Closed,

Try a local bank for your non conforming property. I had difficulties financing a rural property until I went the local bank route. Here in the east their is also 'Farm Credit' which finances rural properties as well as farm equipment. Your local Farm Service Agency (FSA), a division of the USDA will be able to tell you about any federal loan programs that are available to you. These folks are pleasant to work with and a wealth of knowledge about federal programs available in your area. Good luck and let us know how it works out.

Hi Paulo,

I'm just north of you in Charles Town, WV. I invest in Hagerstown for the same reasons that captured your interest - proximity and cash flow. I believe your contracting ability is a huge advantage and there are several small multi families that fit your criteria on the MLS. The beauty of your approach is that it is scalable, you can pull your downpayment money back out after your rehab is complete by refinancing. This gives you the ability to reuse your original downpayment over and over. Due props to @Brandon Turner for his appropriately named Brrr strategy! Good luck and feel free to reach out with any questions or potential JV deals.

Hi Trevor,

CNB Bank headquartered in Berkeley Springs, WV lends in both Hagerstown and Martinsburg. Their commercial lending department is pretty typical in my estimation, 25% down on commercial deals ( more than 4 units) job and income verification, three years tax returns and personal financial statement. They will also appraise the property ( your dime) and vet rent rolls as part of the application process.

Residential lending at CNB is a straight forward process as well. Same as commercial lending with the obvious exception of vetting the properties ability to cash flow. 

The Bank of Charles Town also lends in both the Martinsburg and Hagerstown Markets. Their prescience in Hagerstown is fairly recent in my opinion. I have never dealt with them although introducing myself to the Hagerstown commercial lending department has been on my to do list for too long.

A quick Google search will reveal several credit unions and regional banks in the area.

Both Hagerstown and Martinsburg generate strong opinions here on BP. Search the topic to see both sides of the opinions. I invest in Hagerstown so I am a believer in the cash flow that properties there produce. It is no secret that appreciation is little if any. There are several property management choices available as well.

Hi Ben,

Welcome! I invest in Hagerstown because I find it to be a vibrant city with lots of opportunity. It's proximity to The I 70 / I 81 crossroads brings many jobs with it. The prices of the properties are attractive, although I am not the first to say they are cash flow strong but maybe not an appreciation play. This fits my criteria though. Good luck on your investing career and I look forward to reading about your endeavors.

@Jeff Kehl thank you for sharing your experience. It has become clear to me that while I don't need my hand held, frequent  communication with the PM is a necessity. My initial plan of monthly calls is seriously deficient!

@Brian Adams thank you for your response. My fourplex is oranges to your 400 unit apples but the fact that you follow your C class properties more closely than your A units speaks volumes. The C's are more management intensive from both a PM and investor perspective.

@Jeff Greenberg thank you for sharing your opinion. I agree with your approach and after an initial couple of seasoning months I hope everything goes well enough to adopt your approach. I see my first report the last week of this month.

How often do you speak to your property manager? I will receive a monthly report but I am unsure of the appropriate amount of phone time in order to manage my manager. How often do you visit your properties? I need to respect the tenants privacy as well as keep an eye on my investments. Thanks.

Hampshire County West Virginia charges a " convenience fee" if I want to pay my property taxes online with a credit card. I realize all states are different, but if the Man can do it, I should be able to do so as well.