How investors in 2013 are taking advantage of Low Home Prices in Baltimore

Baltimore has seen its share of distressed properties since the real estate market crash. In fact, Baltimore real estate prices have dropped considerably as the number of distressed properties has gone through the roof in recent years. This had caused an interesting switch in the way investors are viewing these properties. Today, instead of buying Baltimore real estate to flip and resell, investors are instead investing in properties to turn into rentals.

Cash Purchases Increasing Number of Rental Properties

During the past few years, it became increasingly feasible for investors to purchase properties at a fraction of their normal costs.  A home once worth $250,000 were now selling for only $25,000 in Baltimore. Banks sitting on numerous properties are now willing to negotiate with cash buyers, creating a market where a large portion of investors are buying Baltimore real estate with cash rather than pulling out loans. Upon purchasing these affordable properties, investors are turning them into a profitable rental business.  During an interview on NPR News with Janet Tonkins, President of ART Enterprises, LLC, it was reported that more than half of homes sold in Baltimore in 2011 were bought with cash. According to the National Association of Realtors, "[r]oughly one-third of all homes purchased in the United States [during 2011] were bought with cash."

This has been possible because of the huge influx of foreclosed properties in Baltimore since the housing market crash. Actually, more  than half of the homes sold in Baltimore during these past few years have been distressed properties. In the spring of 2011, the median sales price was just $95,000. This was a market that investors couldn't ignore. Add to it an economy creating an increase in the number of renters rather than home buyers, as well as an increase in rental prices; investors found the perfect location to make a profit by purchasing rental properties. Home prices in Baltimore are rising, but they are still on the low end of the spectrum in comparison to other housing markets in the U.S. Currently, Baltimore's (estimated) average home price is $102K.  

Prices Starting to Increase

Baltimore's real estate market has been an investor's dream in recent years, and trend of increasing home prices has shown to remain steady during the first quarter of 2013. The average sale price has risen to $240,000, which is up 0.20 percent over last year and 0.84 percent over last month. Interestingly, the number of properties has dropped by 17.45. With signs of a health real estate market, now is a great time to start looking into buying investment property in Baltimore.

Where to Invest in Baltimore

While prices are on the increase, those buying Baltimore real estate as an investment can still find properties below $100,000 if they know where to look. Some of the community's established neighborhoods, like Baltimore City and Hamilton, have some of the best bargains and distressed properties with highly motivated banks as the sellers. Baltimore's historic neighborhoods, like Washington Village or Pigtown, also still offer bargain-priced properties.

In areas like these you can find both single-family properties and condos to purchase as investments for under $100,000, with many properties under $50,000. Multi-family properties are also available at bargain prices, and these offer greater potential rental income.

If you are interested in purchasing a piece of Baltimore real estate as an investment, talk to a real estate agent who has experience with short sales and foreclosures. If you have the cash to invest, now is the time to do it, before the market has a chance to improve more drastically. With a handful of rental properties in Baltimore, you can have residual income for many years as you make the most of the current real estate situation in Baltimore.

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