Posted by Tony (CA) on October 25, 2005 at 21:31:59:
Thanks again Ron. Should be out there within a month!!
Anyone in Baltimore City? - Posted by Tony (CA)
Posted by Tony (CA) on October 24, 2005 at 24:28:36:
Hello All,
I recently returned from a trip in the Baltimore City area where my in-laws own over ten investment props in the area. I drove around to see the props (around the University of Maryland) and noticed the neighborhood going through some improvements. Much of it is still a war zone. My question is how is the market been? I intend to invest in Baltimore City by spending 2-3 weeks out of the month there and doing some rehabs and/or sec 8’s. I have contractors lined up. I only need to locate 1 or 2 properties to start. Additionally, does anyone know the pros and cons of sec 8’s? Any information anyone can provide would be greatly appreciated. Any contacts would be appreciated as well.
Re: Anyone in Baltimore City? - Posted by Ron (MD)
Posted by Ron (MD) on October 24, 2005 at 11:22:40:
Tony,
I’m gonna leave it to others to answer most of your questions, but I wanted to offer come cautionary advice about Section 8.
Balt. City Section 8 has gone through some changes over the last two years. Just about two years ago, they instituted a program called “rent reasonableness”. They have a database created by an outside consultant that magically determines reasonable rent by block within the city. There is, essentially, no rent negotiation. They inspect the house, then they tell you what rent they will pay. Period.
Prior to this program, they were very lax with rents. They were paying very high rents for lousy houses in lousier neighborhoods. It made sense to do something. Most landlords would say that they’ve gone too far. They used to pay well above market rent. Now, they often pay below market rent…while requiring you to jump through all the standard Section 8 hoops.
I will say that they will adjust their max. rent if you can prove that at least two market tenants (non-subsidized) are paying more within the same census tracts. The census tracts are relatively small areas, so often they will reject comps from a few blocks away. Or, if your house happens to be on the border of a census tract, they will reject a comp from one block away. It’s tough to get comps to prove your case.
Tenants that were in place prior to the inception are grandfathered in at their old rent. However, if the landlord asks for a rent increase, they treat it like a new tenant and the run the property through their “rent reasonableness” program. If their program shows that the “market” rent is lower, they will cut your rent, despite your request for an increase.
Recently, they have had budget cuts. One of their solutions has been to put a moratorium on any rent increases. Even if they agree that your rent is below market, they are approving no rent increases.
When you’re buying a rental with the expectation of renting to Section 8 tenants, you need to understand that the rents ain’t what they used to be. For example, if you buy a house with the expectation that you will get $800 rent from Section 8 because they’re paying that next door, you could be in for a surprise. If the tenant next door pre-dated the “rent reasonableness” program, the rent may be higher than you will be able to get today.
Ron Guy
Re: Anyone in Baltimore City? - Posted by Tony (CA)
Posted by Tony (CA) on October 24, 2005 at 22:57:22:
Thank you for all of the information Ron, I really do appreciate you taking the time to respond. May I ask your opinion on Baltimore overall? In other words, I noticed that there was alot of improvements being made,particularly east of the John Hopkins center. Do you see the area improving? Just want to see if flipping or buying and holding would be my best bet. My brother-in-law has quite a few that he intends on flipping so I wanted to see if I should just ride his coat tails and follow along.
Re: Anyone in Baltimore City? - Posted by Ron (MD)
Posted by Ron (MD) on October 25, 2005 at 07:42:05:
Tony,
I work exclusively on the west side of Balt., so I don’t know the market you’re asking about.
In general, city housing is definitely improving because of all the rehabbing that is going on. As for the market, it has cooled off a bit, but it is still strong. Rehabbers are still eagerly looking for junkers. Owner-occupants are still buying.
I listed a $95k renovated townhome in a so-so area about ten days ago. Realtors showed it about ten times and I got three contracts.
If you can find decent deals, it’s a good time to be in REI in Balt.
Ron Guy
Re: Anyone in Baltimore City? - Posted by Tony (CA)
Posted by Tony (CA) on October 25, 2005 at 21:32:09:
Thanks again Ron. Should be out there within a month!!