Baltimore real estate market: the well-hidden gem.
The first two quarters of 2018 have proven to be great for real estate investing. Real estate investors across states nationwide have had plenty of success this year. The Old Line State, Maryland, is one of these and its largest city, Baltimore, is definitely a winner when it comes to real estate investing. Why do we call it a hidden gem? Simply because it’s not the first city that comes to mind when thinking about where to invest in real estate. Yet, it is still considered among the better performing real estate markets in the nation.
Baltimore has had slow yet steady growth in its real estate market so far in 2018. And while it’s not among the top or most popular markets, the Baltimore real estate market remains one of the most stable and successful real estate markets among the nation. Also, Baltimore real estate is actually one of the most affordable real estate markets in the US. Median home price in Baltimore stands at $237,855, well below most of the nation’s big real estate markets. Moreover, most Baltimore neighborhoods yield high CoC return as well as cap rate relative to home prices.
Baltimore is also popular among college and university students, many of whom go to John Hopkins, UMBC, and UMD. Why is this important? The existence and proximity of popular college towns and cities mean that there will always be prospective tenants that you can capitalize on as a real estate investor.
Before choosing an area or a neighborhood in any city, it’s important to know the numbers for the highest performing neighborhoods and markets. Take a look at the following ranking of some of the top performing neighborhoods for Baltimore real estate, according to Mashvisor.
Top Baltimore Real Estate Neighborhoods
Old Town
We’re starting out with one of Baltimore real estate‘s most affordable neighborhoods. Located in East Baltimore, Old Town is quite close to downtown Baltimore. Much of Old Town was rebuilt in the 1970s, so income properties are rather new. What’s great about this neighborhood is how high the CoC return and cap rates are. These stand at 10.94% for Airbnb rentals, and at 6.99% for traditional rentals. This is to say that no matter what rental strategy you pursue, you will be making a profit and good ROI. Check out the full data below.
Median Property Price: $94,500
Airbnb
- Rental Income: $2,098
- Cash on Cash Return: 10.94%
- Cap Rate: 10.94%
- Airbnb Occupancy Rate: 54.37%
Traditional
- Rental Income: $1,366
- Cash on Cash Return: 6.99%
- Cap Rate: 6.99%
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Pleasant View Gardens
East of Downtown Baltimore, Pleasant View Gardens is another one of Baltimore’s affordable neighborhoods which also claims its high CoC return and cap rate values. And while real estate here does better as a traditional investment, an Airbnb rental strategy is still very profitable.
Median Property Price: $134,900
Airbnb
- Rental Income: $1,560
- Cash on Cash Return: 3%
- Cap Rate: 3%
- Airbnb Occupancy Rate: 52.44%
Traditional
- Rental Income: $1,790
- Cash on Cash Return: 6.36%
- Cap Rate: 6.36%
Heritage Crossing
A rather small neighborhood in Baltimore, Heritage Crossing is also among the affordable and profitable options when looking into Baltimore real estate. It is a newer neighborhood in the city that is quite well established among locals as well as real estate investors. Check out Mashvisor’s data on Heritage Crossing below.
Median Property Price: $119,750
Airbnb
- Rental Income: $2,010
- Cash on Cash Return: 7.86%
- Cap Rate: 7.86%
- Airbnb Occupancy Rate: 56.79%
Traditional
- Rental Income: $1,484
- Cash on Cash Return: 6.64%
- Cap Rate: 6.64%
Note: The reason cap rate and CoC return are the same value in the provided data is that Mashvisor’s calculations assume all cash payments are made (no mortgage) until an investor’s unique information is entered.
Mount Vernon
This neighborhood is the neighborhood in Baltimore. Mount Vernon boasts its dining and hip nightlife scene and is also known to be the city’s historic and cultural center. These, among others, are what make the neighborhood so popular, especially among tourists exploring Baltimore. It’s important to mention that Mount Vernon is slightly more expensive than other neighborhoods on the Baltimore real estate list. It’s nonetheless a very profitable investment location.
Median Property Price: $256,429
Airbnb
- Rental Income: $1,805
- Cash on Cash Return: 3.85%
- Cap Rate: 3.85%
- Airbnb Occupancy Rate: 56.31%
Traditional
- Rental Income: $1,266
- Cash on Cash Return: 2.43%
- Cap Rate: 2.43%
Downtown
We saved Downtown for last! Downtown Baltimore is an entertainment as well as business hub. It’s most widely known for its theater district, as well as the selection of dining and fish market experiences. No different to other big city Downtown areas, Baltimore’s is bustling with tourists and locals on a daily basis. So no wonder it’s also among the more expensive areas in the Baltimore real estate market.
Median Property Price: $254,719
Airbnb
- Rental Income: $1,900
- Cash on Cash Return: 1.84%
- Cap Rate: 1.84%
- Airbnb Occupancy Rate: 53.66%
Traditional
- Rental Income: $1,830
- Cash on Cash Return: 2.54%
- Cap Rate: 2.54%
A Quick Note on Airbnb Baltimore
Investing in Airbnb rental properties is a highly profitable rental strategy. Airbnb is slowly replacing traditional lodging services such as hotels, traditional bed and breakfasts, motels, and the like. Many investors are considering Airbnb due to its increasing popularity as well as profitability when it comes to real estate investing. Because of this, many state and city councils have found reason to regulate and tax the home sharing service. San Francisco, home of Airbnb, and New York City were notorious examples of lawsuits by cities against Airbnb. Several attempts at better regulating the service were made during those public hearings. Why does this all matter, you’re wondering?
Related: The San Francisco Real Estate Market for Short-term Rentals: New Airbnb San Francisco Laws in 2018
Well, Baltimore has actually recently joined the above cities, among others, in a public hearing and case against Airbnb. The city currently introduced a bill which imposes a tax on Airbnb, similar to hotels’. The bill is likely to get amended, so keep your eyes peeled for further development if you’re considering Airbnb Baltimore. To a real estate investor, this bill could prove to be challenging. And while some investors are discouraged by this, others rise to the challenge.
Conclusion
So is Baltimore real estate ultimately a good investment for 2018? Our figures say absolutely! Baltimore is among the most affordable and most profitable in Maryland and nationwide. It can definitely be described as one of the best places to invest in real estate!
So what are you waiting for?
Related: What Are the Baltimore Real Estate Market Trends at the Beginning of 2018?