A good real estate investor is always searching for new markets. How about a Baltimore investment property then? Let’s look at the main features of Baltimore real estate investments.
Why Investing in Baltimore Real Estate?
Honestly, when thinking about buying a new income property, Baltimore is not the first market that comes to one’s mind. Maybe you will be surprised to hear that despite social tensions in the last couple of years, the Baltimore real estate market is growing quite well at the moment. Although it took five years, Baltimore has fully rebounded from the housing recession, and the median price of Baltimore housing increased by 10% in 2016. This trend is expected to continue in 2017, during which Baltimore real estate investments will be driven by affordability and new housing construction rates.
Baltimore Investment Property Figures
Before you make any real estate investment decision, you must know the NUMBERS for your city, for your neighborhood, and for your income property. Mashvisor’s investment property calculator provides you with all of these within a minute from the start of your search. Mashvisor’s rental property calculator will save you lots of time and efforts in your research on Baltimore real estate investments as it will eliminate the need to search for real estate comps and perform a real estate market analysis on your own.
Related: Everything to Know About Real Estate Comps and How to Find Them
So, let’s see the most crucial numbers for Baltimore real estate investments from Mashvisor’s investment property calculator:
- Median Property Price: $277,000
- Traditional Rental Income: $1,640
- Airbnb Rental Income: $1,960
- Traditional CoC Return: 4.5%
- Airbnb CoC Return: 5.9%
- Traditional Cap Rate: 8.1%
- Airbnb Cap Rate: 9.7%
- Airbnb Occupancy Rate: 48.0%
Because of the relatively slow economy and high unemployment rate, Baltimore real estate investments are highly affordable. The median property price is well below the level in many other fast-growing markets such as San Diego, Los Angeles, and Miami. This is definitely good news. On the one hand, it means that buying a Baltimore investment property is easier than buying an income property in other cities where real estate prices are significantly higher. This makes financing less of an issue. On the other hand, the fact that a lot of the population is unemployed means that many people are looking for rental properties as they cannot afford buying their own home. So, investing in Baltimore real estate gives real estate investors a definite advantage. The expected cash on cash (CoC) return and capitalization (cap) rate for both traditional and Airbnb rental strategies are excellent.
Related: 10 Most Profitable Airbnb Locations for Cash on Cash Return
To sum up, the combined effect of good CoC return and cap rate and the expected growths in the prices of Baltimore real estate investments (real estate appreciation) make investing in Baltimore real estate an excellent option in both the short and the long term. As a real estate investor, you should always look for positive cash flow in addition to long-run appreciation.
Traditional or Airbnb Baltimore Real Estate Investments
Usually it’s quite easy to tell whether you should go for traditional or Airbnb rental strategy in any particular city or neighborhood just by looking at the CoC return and cap rate computed by Mashvisor’s calculator. In the case of Baltimore real estate investments, the answer is not so clear cut as the numbers are comparable. Still, an Airbnb Baltimore investment property is slightly more profitable than a traditional Baltimore investment property. The Airbnb occupancy rate is very good as well.
But before you jump into buying an Airbnb income property in Baltimore, you should familiarize yourself with the Airbnb regulations there.
Related: Cities With The Least Airbnb Legal Issues
Airbnb Baltimore Laws
As Airbnb Baltimore is growing, there is a push by various parties on local lawmakers to start regulating short-term rentals, similar to many other parts of the US. The good news is that Airbnb Baltimore is fully legal. Most recently, however, in September last year Mayor Stephanie Rawlings-Blake’s administration put forward a bill aimed at taxing Airbnb activity in Baltimore at the hotel rate of 9.5%. Less than a month later, the Baltimore Judiciary and Legislative Investigations Committee declared that the bill would not go further with the Baltimore City Council this term, which ended in early December. Instead, the City would talk with the Airbnb industry about taxes and regulations. Although this is not a definite NO, it is still a very positive sign that the City of Baltimore is not willing to persecute Airbnb activities.
Best Baltimore Neighborhoods for Real Estate Investing
If you are convinced that Baltimore is the right place for your next income property purchase, it’s time to look into specific neighborhoods for investing in Baltimore real estate. Below are numbers on the three top neighborhoods in Baltimore according to Mashvisor’s investment property calculator.
1. Poppleton
- Median Property Price: $99,000
- Traditional Rental Income: $1,410
- Airbnb Rental Income: $1,520
- Traditional CoC Return: 11.7%
- Airbnb CoC Return: 13.0%
- Traditional Cap Rate: 17.1%
- Airbnb Cap Rate: 18.4%
- Airbnb Occupancy Rate: 46.5%
Located in Baltimore’s West District, Poppleton is by far the top neighborhood for a Baltimore investment property. No wonder that 88% of the inhabitants of this neighborhood are renters, while only 12% are home owners. Poppleton offers excellent opportunities for nightlife. Plus, it’s very affordable with a median property price less than half of that for Baltimore. The traditional and Airbnb CoC return and cap rate in Poppleton are more than excellent.
2. Heritage Crossing
- Median Property Price: $152,000
- Traditional Rental Income: $1,510
- Airbnb Rental Income: $1,270
- Traditional CoC Return: 8.1%
- Airbnb CoC Return: 6.3%
- Traditional Cap Rate: 12.2%
- Airbnb Cap Rate: 10.3%
- Airbnb Occupancy Rate: 42.0%
Heritage Crossing offers a wonderful location in the Central District of Baltimore. The architecture gives this urban area a suburban feel. Though more expensive, Heritage Crossing is more family oriented which makes it a good option for investing in single-family homes. Because of this family atmosphere, Heritage Crossing is more suited for traditional than Airbnb Baltimore real estate investments.
3. Upton
- Median Property Price: $129,000
- Traditional Rental Income: $1,100
- Airbnb Rental Income: $1,310
- Traditional CoC Return: 5.5%
- Airbnb CoC Return: 7.2%
- Traditional Cap Rate: 9.6%
- Airbnb Cap Rate: 11.4%
- Airbnb Occupancy Rate: 43.1%
Another top neighborhood for a Baltimore investment property is Upton, which is characterized by lively history as well as great housing and proximity to transportation and jobs. Airbnb here is more profitable than traditional renting.
If you think Baltimore might indeed be your next real estate investment location, make sure to check out Mashvisor for comps on actual Baltimore investment properties.