Greetings guys and gals. I’m a brand spanking new investor from NY and I’ve just stumbled across a couple of properties through a friend of a friend who is very motivated to get rid of them because of the need to pay off some debt. Being totally unfamiliar with the market in Baltimore, I need some advice on whether these are good areas for me to either buy and hold or to wholesale flip properties (in other words, are they attractive areas for other investors?). I also wanted to get a feel for whether the areas are up and coming (the low prices alarm me somewhat) and whether the asking prices are reasonable.
Both properties are in East Baltimore and are townhomes.
Prop. #1 is on E. Biddle St in the “Middle East – John Hopkins Biotech Zone” or “Collington Square” area according to him. He is asking 60-65k and currently renting for 700/mo to a tenant who is already in place.
Prop. #2 is on Abbotston St and he is asking 55k and currently renting for 535/mo to a tenant who is already in place
The tenants pay utilities in both properties and there is supposedly very minimal repairs that need to be done on both.
I’m calling him later to get further details and put this under contract if all sounds well but any feedback on the location and general price range he’s asking for would be very much appreciated. Also, should I decide to assign these to another investor, would anyone have any interest? Thanks in advance and happy investing!
Darius…I know absolutely NOTHING about Baltimore, and even less about real estate in Baltimore (I am in SoCal). That said, running the basic numbers 120K purchase price, 24K (20%) down conventional loan @ 6.5% gives you a total of about 606$ per month principal and interest. Insurance shouldn’t be too big a hit and I wouldn’t have a clue about taxes. If the needed repairs are in fact minimal I would be taking a serious look at ANY investment that spins off that much positive cash flow with such a small investment. Drive there, call an agent in the area and get comps, get online and search the areas - you can never have too much info. Also, I would want to see rental contracts etc.
It makes my mouth water to think that you can buy something for +/- 60K that someone can ACTUALLY live in! Our smallest condos start at about 250K.
Unfortunately, there are parts of Baltimore that most folks will NOT live in…the thing about Baltimore is that you must have a very thorough knowledge of the city because the neighborhoods go from good to bad and back to good in a matter of just a few streets…it can be VERY hit-or-miss. There are a few Baltimore investors on these forums though, so maybe a couple will chime in.
Hopefully so. Based on the feedback I’ve gotten so far from other investors, these prices seem too high. I’m not trying to get jerked on my first deal. I looked at the tax records and it looks like he payed 39k about a yr ago for the Abbotston St one (says he still owes low 30’s on this one) and 47k a yr ago for the E Biddle St one (he says he still owes low 40s on this one). Maybe he just overpayed at the time?? I’m going to be contacting a few realtors in the area today as well. Any other feedback is MUCH appreciated
Oh…any ideas on how to get a long distance realtor to give me solid comps even though I haven’t worked with them at all??
Kes,
I am in Maryland. Baltimore is block-to-block. YOu can be on a great street and turn the corner and be in a warzone. I aw your post on MAREIA. If your seller is as motivated as (s)he says, the price will be dumped. The asking is way too high on all. If he really wants out, he’ll sell for what he owes on them.
I know these are rentals but getting them into a decent rental shape is not going to be cheap.
Also, FYI for when you’re ready to renovate and sell - a full rehab in Baltimore is going to run you 80 to 100K. If people are going to move into transitional areas they want high end. Don’t let anyone tell you its going to be cheaper. In fact, I’d bank on 100K to give you some definite wiggle room because as others have pointed out on this forum a million times, Murphy is bound to show up.
Darius,What ever you do just check out the area real good.I have been looking in the Hopkins area and have not come accross this street.I looked up Biddle st. and it is 4 streets away from Hopkins.Not that that isnt still in the area but like the others have said you can have one good street and go around the corner and your on a really bad one.Some streets you can get a house really cheap and down that same street they are going for 250,000.You really have to know the area!!!I hope this helps.Michele
Thanks for the replies guys and gals. I decided that I’ll likely be looking to wholesale these…not buy and hold. They both are occupied with tenants in place so it wouldn’t be a full rehab situation at this point. I have a very nice R.E. Agent helping me with comps but until I get those tomorrow, I checked them out on my own using the MD tax records online. I took 5 houses within a 3 block radius that have sold in the last 6 mos, scratched off the low and the high and averaged the other 3.
I came up with 47k for the E. Biddle one. Tenant there is paying 700/mo rent He’s asking 60-65k but really has no clue. The problem is, he paid about 47k for it when he first bought it a year ago and still owes low 40’s on it, so I doubt an offer of less than that is going to fly. Since I haven’t seen the joint, I have no clue about the condition but based on what he’s told me I’m guesstimating 2k in repairs worst case. I have 1 investor lined up who’s interested in properties on Biddle st. I’m thinking I’ll just have to shoot an offer of around 35-40k and cross my fingers.
The other property on Abbotston is a pretty similar scenario just with smaller numbers. I came up with 42k market value. Tenant is paying 535/mo. He’s asking 55k. He paid 38k for it less than a yr ago, still owes in the low 30’s. Repair on this I’m guesstimating at about 1k worst case based on what he’s said. I’m thinking 30-35k offer here.
I know I’m rambling away…Does this make any sense?? (lol)
Kes,
The numbers you are giving support my thought that your seller needs to sell them for what he owes on them. Remember if you’re going to wholesale these, with those numbers, you cannot expect to make a big profit on them so be realistic in your wholesale fee.
It’s all going to come down to exactly how motivated the seller is. If he’s trying to make a bundle off of selling them, then forget it. Let the greater fool take a risk on them. Unfortunately, there are some out there that make it harder for the rest of us who are trying to actually make numbers work.
Tell him what you’re willing to pay and you do not have a lot of negogiating room so stick to your guns. By the way, is the title work done on these properties – it can take a month in Baltimore to get it.
One more thing - if I had a nickle for everytime someone told me a prop was in the JHU bio-tech zone, I could quit REI. REmember, this facility is not even built yet!! Everyone is around this zone - even if they’re 10-15 blocks out. Be careful with that; it gets thrown around alot to get people’s attention.
Vidaloca, That is all I see when looking for properties.Everyone wants to put that on there listing!I keep a map and look how far away it is.Soon you just know all the streets around.
Yes indeed…very good insight guys! I jus tgot off the phone with a local NY investor who told me to try to Subject To these properties and take whatever cashflow if he’s not willing to come down to a reasonable number in order for me to wholesale them. Sound advice?
Darius,
I think that is sound advice. If you are planning to hold them then the sub-2 is really your best option because it saves you so much money in closing.
If you can pay cash, your seller might be more inclined to do the deal but cash = more of a discount. . . which means definitely for what he owes on them.
Either way, I’d offer to buy if he can sell for what he owes on the props. And only give him like 24 hours to give you an answer so he doesn’t shop around.
I was born and raised in Baltimore and I have worked the streets for over 12 years. Be pretty careful with East Baltimore, especially around he Hopkins area. Keep this in mind, Hopkins is expanding daily, I think alot of people are buying distressed properties and holding onto them in the hopes that Hopkins comes calling for the land. Crime is still rampant and I mean rampant in that part of town. It is true what everyone is saying about Baltimore, on one street you can have a 600,000 home, go two blocks over and your in a war zone. Look at a map of Baltimore. The northeast section of town is pretty stable with good home prices. Also the Patterson Park area is very hot ( southeast baltimore) anything south of the park is untouchable now, however the area north of the park still holds some good deals, good luck.
Anyways, just an update…right now I got the seller down to about 55 on the Biddle one and 45 on the Abbotston one. I’m hoping to get him down to 50 and 40 respectively. He’s not open to sub-2 at all because of a supposed need for a big lumpsum of cash to pay off debt outside of the mortgage. I’m still looking to flip these. I a potential buyer for each lined up and I’m looking to take a 3k finders fee for the Biddle one and a 2k fee for the Abbotston one. I don’t yet have them under contract because I don’t want to take a risk of putting it under contract at a higher price than a buyer will accept. I’m getting each potential buyer into the property this weekend (I know…it’s risky to do without having them under contract already) and hopefully this all works out. Just trying to at least squeeze something out of this deal if I can before I totally walk away from it. Wish me luck guys!
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