Welcome to the Ultimate Guide on Buying Your First Investment Property in Baltimore, Maryland.

Are you planning to invest in rental properties in Baltimore? Real estate has produced several wealthiest people in the world.

So, there are plenty of reasons to think about purchasing an investment property in Baltimore. Buying an investment property is actually the best way to boost an additional income and in fact, you can also take a break from your 9-5 day job.

But, to make your first purchase of investment property successful you must know the important things to consider.

This can be wonderful for anyone with a basic understanding of real estate and also the capital to make it happen. Even if you are not planning to buy an investment property in Baltimore then you should definitely give this option a chance in the year 2021.

Property investment in Baltimore in 2021 is not only beneficial for experienced but beginners also. This is not only affordable but also provides a good return on investment.

The real estate business gives incredible benefits to investors. There’s nothing much to worry about when spending your money on an investment property in Baltimore if you have knowledge of the real estate business.

This never dries up or mature instead, this provides a regular flow of income without any loss of assets. Also, you will get tax benefits. From mortgage interests to maintenance costs to property management fees, the investors can deduct for every conceivable expense.

Well, along with the benefits and advantages of property investment, this also comes with shares of the downsides and risks. We’ll discuss each and everything but first, let us tell you why Baltimore is good for property investment 2021.

Is Baltimore a Good Place for Real Estate Investment in 2021?

When the investors look for a place to buy property investment then the major factors like demographics, rental rate, property prices, economy, and good return on investment make a housing market a top place to invest in real estate.

Luckily Baltimore combines all these important factors that make it a good place for real estate investment.

Factors That Make Baltimore a Good Place for Real Estate Investment

1. Demographic

According to the US census, Baltimore is the most populous city in the US state of Maryland. And also it’s the 30th most populous city in the United States. With more than 611,000 residents Baltimore is the most populous city nationwide.

Even though there’s not too much change in the population since the past few years then also this much of the population is a strong signal for those who are interested in the real estate market in Baltimore. The strong population of a city translates into a strong rental demand.

2. Economic

The diverse economy of the city is one of the main factors when considering real estate investment. An economy that just focuses on one industry can be a risky housing market for real investors.

No matter how the successful sectors are at the moment, if it collapses in the future then the employees will be unemployed or forced to leave.

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But, the economy in Baltimore is diversified, with mixed job opportunities in both public and private sectors like education, professional services, trade, etc.

And this is another reason why real estate investors should be looking for Baltimore for their next property purchase in 2021.

3. Rental Demand

Baltimore is one of the 22 largest cities in the United States and the demand for rental properties in Baltimore is as strong as ever. In fact, the number of renters exceeds the number of homeowners.

So, this is the main reason that attracts real investors. And if this reason is not enough for you to invest in Baltimore rental property, what will be?

This is the straightforward measure for all the real estate investors that their property will enjoy high rental demand.

4. Affordability

Even if you know the most profitable housing market in the US, it’s of no use if you cannot afford to buy a property there.

But, this is not the case for the real investors in Baltimore because Baltimore real estate market is much affordable. Compared to the famous neighborhood cities like Washington DC and New York, Baltimore is much more affordable.

If a 3 bedroom property will cost you around $145,000 then the rent of that property will be approx. 1,250, which is just 1% of the total purchase amount.

This is one of the main factors that makes the Baltimore real estate market the perfect choice for new or beginner real estate investors.

How Investors Make Money in Real Estate?

There are basically two ways to make money in real estate that are ‘appreciation’ and ‘income’. This means the investors purchase a property and then wait to let the price appreciate so that they can sell the property at profit.

For regular income, the real estate investors either rent out the property or give it on lease to use the property as a regular source of income. Additionally, most investors maximize profit by utilizing some tax deductions.  

So, now if you know how you can make money through investment property then let’s know how you can buy and what things you must consider before buying your first investment property in Baltimore.

9 Things to Consider Before Buying First Investment Property

1) Are You Ready to Invest?

The first thing that you should ask yourself before investing in investment property is whether you are really ready to invest in it or not. Because the real estate business is not for everyone.

Also, you need to check your patience level, as it’s important to know that investing in the real estate business is doesn’t mean “get rich quick”. You will have to be very patient after investing in real estate.

And only you know whether you are ready or not. Check your finances and then do your research to get educated. Check the advantages and disadvantages of having a rental property in Baltimore.

Read restate books, blogs on the internet, websites, forums, and stories of landlords to get a firm grip on what real estate investing is all about.

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2) Do You Have a Plan?

Not having a plan is one of the biggest reasons why most investors lose money whether in stocks, real estate, business, or mutual funds.

Lack of planning could cost you a lot hence, you should consider having a good plan that will help you get from where you are right now to the place where you want to be.

3) What Type of Property Should You Start With?

Real estate is undoubtedly an exciting field because you know this gonna provide you constant flow of income also, for the different niches and strategies that you can use to customize your plan to fit your personality.

There are hundreds of properties available, but you need to think about what type of property you should invest in which will suit your personality and your lifestyle.

But, while making the decision you will have to consider your budget also.

Let’s discuss some of the different types of properties in which you can invest: –

  • Well-maintained homes
  • Fancy – expensive homes

But, the experts suggest avoiding fancy or expensive homes because the higher the home price, the lower the net rental income is compared to it. Or you can buy it as a personal residence and then change it to a rental property.

4) Consider Neighborhood

One of the most important things that not only you being the owner of the property would look, but also the renters consider while renting an apartment in Baltimore is the neighborhood.

Location is the most important part that can help you get regular income through your rental property. So, while purchasing the property you must think about the locality and its neighborhood.

It’s not necessary to buy a house in the most expensive place, you can select a locality depending on its popularity and other amenities.

It’s better to drive by your prospective property at different times of the day and also on weekends, to know whether the property meets your expectations.

5) Local Vacancy Rates

You must be thinking why you should think about vacancy rates when you have not even purchased a property. So that’s because the vacancy is one of the most costly expenses that real estate investors face.

However, it’s a normal part of an investor’s life yet every investor should expect this and be fully prepared for this.

You can contact local property management companies in Baltimore to determine the average vacancy rate in the locality where you are planning to buy a property.

6) Do You Know All Your Investment Expenses?

This is one of the most common mistakes every first time real investors or new investors make. They underestimate their expenses.

Of course, they know that there would be repairs from time-to-time, but this is not it, there are several other expenses you may need to account for like: – Garbage, utilities, legal fees, vacancies, water, evictions, scheduled maintenance, property management fees, etc.

On average, the expenses on a property will equal 50% of the monthly income. This means if your property rents for $2000 then you can assume $1000 in expenses per month.

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7. How Will You Finance Your Property?

There are plenty of ways to pay for an investment property, but it’s important to know which method you are going to choose and how you can make the payment.

If you have cash then you can pay all cash to avoid dealing with banks and loans. However, if you don’t have that much cash then you can utilize greater leverage you can supply just the down payment and the remaining cost would be covered through a mortgage.

And if you use a load then be aware of the term and interest rate. Try to avoid any adjustable-rate mortgages as they may go up.

8) Whether to Self-Manage or Hire a Professional Manager?

It’s important to know whether you can manage your investment property by yourself or you would require a professional manager’s assistance in order to manage your rental property.

So, think about whether should you self-manage or hire a professional property management company for your investment property.

A property manager can cost between 7-10 percent of the monthly rent, but he or she can reduce the vacancy rate and have a system in place to make repairs less expensive.

So, plan it before you buy a property in Baltimore.

9) Do You Have an Exit Strategy?

This is important because most of the investors have no idea what to do with their investment property if their plan doesn’t work.

So, you should plan it before you purchase your property. Whether you want to rent it out or sell it in a valuable amount everything should be planned before purchasing your property.

You must have multiple plans for your investment and also you must know how you are going to make money with your investment. Will you rent it out for regular cash flow income or want to sell it in the double price.

Know what exit strategies are available for you, and plan, from the start, how you will exit.

In Conclusion

Like every other business investing in real estate has also pros and cons, either you can make a good amount of money or it can turn into a disastrous experience for you.

If you will start playing it safely following some smart tips and taking assistance from a professional Property Management Company then you can surely be on the winning side.

By the way, if you are looking for one of the best property management companies in Baltimore, Maryland then consider Pioneer Enterprises, LLC for the same. We provide a full range of leading and property management services in Baltimore and other counties and cities of Maryland state.