Thursday, September 13, 2012

I'm in the potential future money

Monday! Monday or possibly Tuesday. One of those days for sure. Unless it's Wednesday. No, definitely not Wednesday. I'm buying a new house. TWO new houses. In Baltimore.

If you look around Baltimore you'll see lots of houses for sale cheap. $5,000 to $10,000 kind of cheap. Mind you, if you spring for the $10,000 houses be sure they come with a roof. No roof and you're being ripped off. Anything else (i.e. interior walls) is just luck. And, often, you're just buying the "house". The land is owned by someone else. To this other person you must pay land rent. That runs between $1 and $150 per year. So, not great houses. Yummy found a statistic saying there's 15-16,000 of those kind of houses. 9,000 of these really just need to be leveled. These 16,000 cheap houses form a ring of ghetto around the heart of Baltimore. Really. A ring. I mapped a few dozen of them and the pattern is clear.

Finding out about these cheap homes, I started to investigate. I may be able to retire on my eventual inheritance, but I'm not going to count on that. I need my own plan. So I looked at a few dozen places that didn't look too bad. I was trying to stay away from Land Rent. In that quest I found a spot in the most crime ridden parts of one of the most crime ridden cities. Did you see I Am Legend? You know how Will Smith had to set his watch for sunset to make sure he'd get home before the monsters came to kill him? I'd have to do something similar. And, once I saw the paperwork, there was Land Rent anyway. Fuckers. I lucked out because the title issues with the house took so long to resolve that the contract expired and I got out of the deal.

Yummy hated that house. For good reason. She did her own search and found the house some of you already read about on her blog recently. She sent it to me. My response was "That looks good. You gonna get it?" She said "Noooo. No no no. I can't afford... I can't... noooo... well, maybe." And she's gonna get it.

The great thing about her place isn't that it's only $15K. It's not that it has a roof and walls and plumbing and electricity and those rotting things can be fixed easily. It's not even the light rail station two blocks away. The great thing is that there's $2.7 Billion worth of development going on just beyond that light rail station. Apartments, hotels, offices, shops, parks, trails, and possibly a soccer stadium. And it's going to be bigger than the waterfront area that is the current heart of Baltimore shopping and tourism.

My houses are both within a block of her place.
One is a soggy mess that needs $80K worth of work. At least. It's a bog in there. Very bad. But fixable and only $11K.
The other is a different story. Someone was living there recently. It looks like my great grandmother's place. Lace doilies on the furniture, glass lamps, furniture dating from the 50's. It looks like you could move right in. I got the house from the previous owner's estate for cheap. $35K. I got the furnishings, too. Heck, the TV was half the reason I wanted the house. Yummy would be happy with the enameled kitchen table, but she's probably going to get the bathtub, too. Once I replace the 60 year old furnace and that leak in the roof the house is ready for renters. But, I'm offering Yummy the place first. Until her place is ready. Just so she can get her birds back out of my house. Then I find something to do with it for 10-15 years. Rentals maybe.

I write checks for my two houses on Monday or Tuesday.


living room. LOOK AT THAT TV!

dining room

kitchen. Yummy is all about that table.

bathroom. That's the exact tub Yummy had been drooling
over just a week before.  Even the shower curtain hoop.

bedroom 1

bedroom 2

bedroom 3
The wood paneling isn't as awful as it appears in pictures.

There was a third place that we looked at for me. It photographed well, but... Ever get that "off" feeling from a house? This one had it and had it bad. The walls could have been bleeding and a voice screaming "GET OUT!!!" and I would have said "I can work with this." But not that third house. The contractor was going to buy the good house if I didn't. He wasn't even willing to work in the third house. There was just something horribly, horribly wrong with that house. It was rotten to it's soul. Nothing short of a complete gut preceded and followed by a huge fire would have fixed that house. If you're interested it's selling for only $29,900.

There's other homes in the area you can get if you want to try your hand at investing. Homes in good shape are running about $90K. There's still a good crop of homes in need of work for much less. Let me know and I'll help you find some.


phynngrrl said...

OK, We Kansans are used to places that spread out, and sometimes down or up. It seems kind of claustrophobic in your new places.
Is that house REALLY as tiny as it looks? How many moderately-incomed people would normally live in a house that size?

Ibid said...

These houses are row houses. You're not seeing the basement, but it's unfinished. My home fits one comfortably and two friendly people. Even the friendly people may find it tight. These places are bigger than mine. They have basements for one thing. They're a tad wider and deeper, too.
I'd say this house could hold a family of two with a child and moderate income. But they'd be looking for a bigger place for the second kid or when the first hits puberty.
However, those of a lesser income would fit more. Three college students would love the place. I've seen a family of seven in smaller places. I thing there's some families of five elsewhere in the neighborhood.
I'll try to answer better later.

James Breakwell said...

Congrats on your new and exciting career as a slumlord! I honestly want to do this same thing, but the idea of doing renovations on a rental property terrifies me. Also, I don't know if I'm intimidating enough to demand rent from people who refuse to pay me.

You made a good call on the third house. I just finished "Blink" by Malcolm Gladwell. It's a book about how our unconscious minds our so perceptive that our first impressions are usually right, even if our conscious minds don't know why. So when you got the sense that something was "off" about the house, your instincts were likely picking up on something terrible that you wouldn't have been fully aware of until it was too late.

Keep us posted on how the renovations go. I now plan to live vicariously through you.