Tips for First Time Baltimore Real Estate Investors - Article Banner

Owning real estate in Baltimore is an excellent way to establish financial security and build some long-term wealth. Your investment will appreciate over time, and you’ll also collect monthly rent, which will contribute to the costs of maintaining a rental property. It’s a smart financial move. 

While there are a lot of benefits to renting out your property, there are more than a few challenges as well, and always some unexpected surprises. If you’re investing in real estate for the first time, check out these tips that many of the new investors we’ve worked with have found to be helpful.

What are Your Investment Goals?

We don’t recommend you start buying investment properties without having a clear set of goals. Knowing why you’re investing and what you hope to accomplish will help you identify the right opportunities and make smart decisions. If you’re investing for cash flow, you’re going to be looking for different property types than someone who is more interested in appreciation or is planning to use investment properties to fund retirement. 

Establish those goals before you get started, and then re-evaluate those goals every year. This is the best guidance we can give to anyone who is a new investor.

If you’re not sure where to start – keep it simple. Here are some important questions you’ll have to ask yourself. 

    • Are you hoping to earn immediate cash flow?
    • Are you more interested in appreciation?
    • Are you buying a rental property you plan to live in yourself one day or is this strictly an income property that you or your family members will never occupy?

Your answers to these questions will help you decide if you’re better off investing in residential properties, commercial properties, or both. You’ll know if single-family homes or multi-family units are better. Maybe you’ll decide an entire apartment building is the best way to invest. 

You won’t really know what you’re looking for until you know what you want to achieve.

Those investment goals will also help you approach financing and money management. Some of the questions you should ask before acquiring a rental property or finding the means to pay for it are how much do you have for a down payment? How do you plan to finance the rest of the purchase? Will you work with traditional banks or alternative lenders? Most importantly, you’ll need to understand your own threshold for risk. You’ll need to ensure you have a reserve set aside for maintenance, marketing, and professional services. 

If you have a pile of cash set aside, that’s one way to pay for your investment. But, most new investors are going to finance the property. Prepare to budget for the expenses that come with owning a rental property. You’ll need to qualify for a mortgage as well, so make sure your assets and liabilities are in order and you have access to accurate statements and reports you can provide to lenders.

Prepare to Think in Business – not Emotional – Terms

Real estate can quickly become emotional, especially if you’ve never done this before. You want to prevent this as much as you can, otherwise those emotions may get in the way of smart business decisions. 

It’s important to detach from the property emotionally. Even experienced investors get overwhelmed and stressed. There will be plenty of opportunities to get angry and to consider walking away from the deal you’ve worked so hard to negotiate. 

The key is to surround yourself with professionals. There will always be people who can help, and they’re not going to have the emotional connection that you do to an investment. Remember that this property is not a home to be occupied; it’s an investment with a single purpose: to earn money. This is a business. Treat it like one.

If you want to earn money on this investment, make sure your decisions are made based on data, facts, and the recommendations of local investment experts.  

Focus on what the investment property should provide; consistent rental income in the short term and ROI in the long term. Stay professional and focused on your outcomes. You don’t have to be in love with the property. You don’t want to be emotionally attached to it. This is a business. Run it like one.

Understand What You’ll Earn and Spend

Research the Baltimore rental market. 

There are nuances and trends from neighborhood to neighborhood in this city, and there are also state and local rental laws that require compliance. It’s impossible for a new investor to know everything about the market, but you can start by getting to know the local rental values, maintenance expenses, and vacancy rates. This will help you budget and plan.  

New investors are often unsure about how to establish a reliable rental value for their property. It’s a good idea to consult a Baltimore property management company before you invest. You’ll get a data-driven idea about what rental values are in the area, and you can project what you’ll earn before you buy. 

Anticipating expenses is another part of smart investing. Figure out what you’re likely to lose in vacancy and what you’ll have to spend on routine maintenance and ongoing upgrades and improvements. 

Choosing the Right Baltimore Investment Property

As you begin searching for your first investment property in Baltimore, you have to make sure you know what you’re looking for, and what’s going to earn you the best return on investment. You also need to consider how the property will fit your investment goals and your larger portfolio. It has to make sense mathematically and financially. 

Think like a tenant as you’re choosing a property. Will they be willing to pay what you need them to pay? That’s going to help you decide what to buy and what to ignore. 

Don’t fall into the trap that a lot of first-time investors do. They’ll buy a cheap property that needs a lot of work. This is a strategy that may have some merits for more experienced investors, but it’s not a great way to start your real estate investing career. The rehab that’s needed means there will be a delay in getting that property listed on the market. 

For some investors who are interested in rehabbing and renovating properties, this is the exact strategy that you’ll follow. But if you’re not intentionally looking for low-end properties that you can turn into high-end rental units, stick to those investments that are nearly move-in ready. 

Buy the right property by doing a lot of research before you close on the deal. Get to know the rental value, the likely tenant demographics, the local economy, and the location. These things will impact what you earn and what type of investment experience you have.

Invest in Maintenance and Improvements

Maintenance is always going to cost money, and that can be difficult to accept. But, you don’t want to risk devaluing your property or allowing its condition to deteriorate. Deferred maintenance will also lead to frustrated tenants who are unlikely to renew their leases. 

Once you actually have tenants in place, make sure you’re responsive. When a tenant makes a maintenance request, respond to it right away, or at least let the tenants know when you’ll be able to take care of the problem. Good maintenance practices protect the value of your investment. It also protects you against turnover and vacancy costs. Make sure you’re willing to make ongoing upgrades and improvements. Adding value to your property will mean it’s worth more. 

Work with a Baltimore Property Manager

property management professionalThe smartest investors we know are quick to partner with professionals who can help them succeed. You’ll need a reliable real estate broker. You’ll want to surround yourself with attorneys, accountants, insurance professionals, and fellow real estate investors. This is the best way to ensure success – by learning from the experiences of others and by having resources you can turn to when you need help. 

Most importantly, you need a good Baltimore property management partner. 

Unless you have the time, knowledge, and experience to manage an income-producing property on your own, hire a professional Baltimore property manager to help you have a better investment experience. You need someone who knows the local market and understands the property management industry. Find a company that can accurately price the home, market it, and screen for highly qualified residents

We always recommend you look for property managers who are also expert project managers. When you have a good project manager on your team, you’ll be able to leverage their understanding of budgeting, setting deadlines, creating action plans, and then executing on everything that needs to be done. All of this should be managed with your own investment goals and best interests in mind. 

That’s our strength here at Stripe Management. We’ll help you earn more and spend less with our experience, our relationships, and our ability to follow the trends of the local Baltimore rental market. 

For more information, please contact us at Stripe Management. We work with owners, investors, and properties in Upper Marlboro, Prince George’s County, Washington, D.C., Capitol Heights, District Heights, Baltimore, and anywhere in the DC metro area.