All Forum Posts by: Yannik Cudjoe-Virgil

Thanks! I think the areas are reversed. I can't really think of an area that went from a B to a D. I'd love to know though so I can keep an eye open. I'm seeing some areas change with all the development in the city by Johns Hopkins or Project Core. I think Baltimore is on the cusp of revitalization. Probably not to a level like DC but something is coming.

In my opinion - yes! These areas have the most renters by necessity with little to no development in the pipeline - keeping a tight strain on supply. My motto is "heads in beds." Vacancies can hinder returns. You can make money in some of those "up and coming areas" as well though. 

Almost all of our properties are in this market. They demand is high for this workforce housing area, and vacancies generally get swept off the market within 30 days - in our experience. And....it's a "safe" area to invest in. My motto is if I wouldn't feel comfortable picking a check up at midnight in an area, then I don't invest in it. 

Great! I am glad it provided value. Baltimore is a good place to invest if you dive deep into its block-by-block nature.  

Hey Joe! Thanks a lot. I don't have one. But feel free to share with your clients!

Baltimore Multifamily Shines During the Pandemic

I've been seeing some folks interested in Baltimore's multifamily market, and I wanted to shed some light on this market during this time. Backed by a historically strong Mid-Atlantic multifamily market with a diverse unemployment base of Feds (Federal Government), Eds (Education) and Meds (Health Services), Baltimore continues to show its resiliency during recessions as compared to other markets around the country.

Despite tumultuous times of the COVID-19 pandemic and the country sustaining heavy job losses, the Baltimore market fared well compared to other metros. According to the Bureau of Labor Statistics, Baltimore ranked 8th in the nation for the lowest unemployment rate at 8.0% ending June 2020, compared to 11.2% nationally.

In the historical context, Baltimore has proven to be a recession-resistant market. Coming out the Great Recession, CBRE ranked Baltimore as the #1 market with the least impacted rent growth in the nation and it recovered in just six quarters, compared to a national average of 12 quarters. We expect Baltimore to continue its historical track record during this current recessionary environment.

Rent Growth

Asking rents continue to grow in Baltimore, and effective rents in the metro experienced a quarterly increase of 1% ending Q3 2020. Data from CoStar/Apartments.com shows that there was a temporary 30 to 45 day decrease in asking rents when the pandemic first hit which soon reversed in May 2020. Ending September 2020, Yardi Matrix noted that Baltimore's rent growth was 1.3% YoY - which is better than some markets like San Francisco, Boston and Dallas and Washington, DC. 

However, asking rents are not increasing in all parts of Baltimore. Submarkets that are development-heavy with a lot of Class A inventory available or in the pipeline are experiencing the most declines in asking rents throughout the metro. These markets are primarily in downtown Baltimore and nearby surrounding areas. This downward trend can be attributed to “Urban flight” as we are beginning to see a population shift from dense inner cities to less crowded suburbs due the impact of COVID-19. According to Yardi Matrix, over 3,200 units are set to be completed by year-end, which can mark a significant increase in both inventory and vacancies in these markets.

Submarkets such as Northeast and West Baltimore registered gains in asking rents of over 2% through the end of Q3, due to their historical affordability for renters by necessity. Affordable areas in Baltimore rarely experience any threat to increased supply as new developments are virtually non-existent in these markets. That keeps vacancies tight and demand high. This truly shows how resilient the Baltimore rental market is given the current economic downturn.

Occupancy

Baltimore’s occupancy rate held steadily at 94% ending September 2020 according to ALN Data. Occupancy in affordable properties were 95.1%, while effective rents in the metro represented a quarterly increase of 1%. As a whole, concessions increased due to the onset of the pandemic, given the tactical approach that many owners took to either retain their tenant base or solicit new tenants. Since then ALN reports that concessions began to decrease toward the end of Q3. Only 4.8% of affordable properties were offering concessions, compared to 14.1% in market-rate properties. This only adds to the strength and resilience of workforce housing in Baltimore.

Economy

Baltimore lost almost 240,000 jobs in the 12 months ending in May according to Yardi Matrix. The unemployment rate rose from 3.5% in March to high of over 10% in April. According to the BLS, the unemployment rate ending July 2020 was 7.7% with a preliminary rate of 6.6% for August 2020, compared to 10.2% and 8.4% nationally.

Conclusion

Baltimore is on pace to rebound well from the pandemic given its location in the recession-resistant Mid-Atlantic market. With a diverse employment base, decreasing unemployment rates and stable rents, these metrics foreshadow a strong future. This data also shows that during a downturn, Baltimore is among the top performing markets in the country for multifamily. Just know the market and invest smartly! 

Sources: CoStar, ALN Data, BLS, CBRE, Yardi Matrix

@Andrew A Sanchez Call Fulton Bank as well. They can go up to 75%

@Tony Vicente you need to call zoning and ask them what you can do. If it's not already grandfathered in as a multi-unit, you take the lot area divided by 750 sqft/du (for R-8 zoning), and that's how you come up with how many units you can do. See zoning doc here. Please verify with zoning and ask them for a verification letter so you can have approval on hand.

@Dominique Ellis taking over a property with a section-8 tenant in Baltimore isn't difficult. Just make sure you have all your paperwork together (LLC docs, bank info, etc). You have to register as a new owner. Make sure to prorate any rent with the seller if you close mid-month so you can get credited on the HUD. Also, get something signed saying that the seller has to send the direct deposit from HABC to your address if the rents deposits don't switch over to you in time before the 1st of the month. Right now the section-8 office is closed due to COVID and things can take longer.

@Candace Ferrell I personally like using leverage. It's a powerful tool when done right. I would use the line of credit as well if it's your personal home. You can get a higher CLTV(Combined Loan To Value) of up to 90% with some banks.