July 11, 2011

Q&A: A lead-paint primer for new (and accidental) landlords




The difficult housing market has turned a lot of homeowners into landlords by necessity. They can't sell, at least not for the price they require, but they still need to move on -- so they're renting out their former homes.

For these "accidental landlords," and really any new landlord with an older home in Baltimore, trying to figure out how to comply with lead-paint rules seems daunting. One reader has a whole host of questions, and I thought a number of you would love to know the answers, too.

Enter Ruth Ann Norton, executive director of the Coalition to End Childhood Lead Poisoning in Baltimore. She kindly agreed to do a Q&A guest post, with input from other staffers at the nonprofit.

She has run the coalition for 18 years.


Take it away, Ruth Ann:


Question: How does one best go about the process of getting square with the Maryland Department of the Environment lead rules for renting? Do I test the place myself first? Call MDE first? Call an outside contractor first?

Continue reading "Q&A: A lead-paint primer for new (and accidental) landlords" »

June 13, 2011

Q&A: Renting

You asked for answers to renting questions. Nokomis Johns kindly volunteered.

She's the senior tenant/landlord counselor for Baltimore Neighborhoods Inc., a nonprofit that has a hot line just for questions in this arena. A BNI employee for more than seven years, her mission is getting "more people informed on the correct laws and procedures before they get into a bad situation."

BNI counselors often provide information about tenant/landlord laws, but they're not attorneys -- and of course the answers to the questions below aren't legal advice. They're designed to point you in the right direction.

Take it away, Nokomis:



Question: What is considered "normal wear and tear" in a rental agreement? I am thinking about what a landlord can deduct from a security deposit and what he cannot deduct.

Answer: Normal wear and tear are things that result from coming and going. They are things that cannot be prevented. For example, the carpet wears down as you walk on it, or after a while the paint starts to crack and peel. These types of things cannot be prevented and the landlord cannot charge you for replacing the carpet or repainting due to ordinary wear and tear. If you do not agree with what is deducted from your security deposit, you can sue the landlord.

Q: I'm really concerned about rising rental costs. Are there rent consumer advocates to help us fight for our rights? For instance, it would be useful for consumers to determine if the rent is fairly priced for the area and amenities. When there's a rent increase, is the amount fair?

Continue reading "Q&A: Renting" »

May 10, 2011

Cash deals drive Baltimore's housing market

Want to guess what percentage of homes selling in Baltimore are purchased without bank financing?

More than half.

Yeah, you read that right.

Real estate investors plunking down cash for purchases -- their own or from other investors -- are a major part of the buying pool in the city these days. Today's story gets into some of the causes. Effects TBD. One question is whether this group of investors will fare better than the many who got caught by the housing bust, leaving rentals and half-finished rehabs for the banks -- and neighbors -- to deal with.

Though many investors these days expect to buy and hold as landlords, riding the wave of rising rents, there are still "wholesalers" at work who get homes under contract and then flip the contracts for a fee to other investors -- landlords and rehabbers who don't want the bother of dealing directly with homeowners. Here's a video with wholesaler Mark Whitten of The Equity Depo, who says he's done more than 150 wholesale deals since he got into the business in 2008:


Whitten, 29, calls himself a "hustler" by temperament, and he's certainly using his marketing degree to good effect. His van is a moving advertisement, wrapped with his photograph, his telephone number and "Mark Buys Houses" in big letters. He's got videos on YouTube, email blasts with the properties he's hawking ("Granny wants out!!! Minor Cosmetics!!!") and a coaching program for others wanting to give wholesaling a try.

Continue reading "Cash deals drive Baltimore's housing market " »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (26)
Categories: Real estate investing

March 16, 2011

Landlord to tenants: Let's break the vicious cycle

Renters complain about landlords. Landlords complain about renters. If you're been on one side of the fence for a while, chances are you've dealt with someone on the other who burns your biscuits.

So I was interested in the response that one landlord wrote to a question of the day aimed at people renting their home out. Steve, who's from Baltimore and works at a university in town, owns a few rentals on the side and wanted to share an off-topic point by email. I figured it might interest you all, too.

Here it is:


I am a landlord. I believe I am a good landlord. My initial cause was to improve the reputation of landlords in Baltimore City while still making investment incentives for myself. After almost six years of property management, I'm gradually understanding how landlords and tenants in Baltimore get jaded, get sloppy, and ultimately, make their rental counterparts pay for their ignorance.

My current cause has evolved. I still want to improve the reputation of landlords. More importantly, I want to help landlords and tenants understand how things can get ugly and that, by one step in the wrong direction, a snowball of negativity can start rolling down a long hill -- an effect that can gradually grow and influence many landlords and tenants, though undeserving. As far as my investment is concerned, it's a losing one, but one I'm not willing to let go as a complete failure.

Continue reading "Landlord to tenants: Let's break the vicious cycle" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (19)
Categories: Landlording, Real estate investing, Renting

January 5, 2011

Q&A: Baltimore Slumlord Watch

Two years ago, an anonymous blogger declared war on the absentee property owners letting large swaths of Baltimore rot. The Baltimore Slumlord Watch site is still going strong today, shining the unwelcome light of publicity on blighted real estate and the people, LLCs and (in some cases) government agencies responsible for them.

Names, addresses, resident agents, photographs -- they're all there, along with occasional commentary that doesn't pull punches. "Please note the lack of a roof, exposing this house to the elements — the houses on either side of this blighted mess are occupied," the slumlord watcher wrote of one rowhouse.

So, in light of the anniversary, here's an unusual Q&A for you all today -- one with an unnamed person. She describes herself on the blog as "tired of watching out of town 'investors' and others destroy neighborhoods as a result of their negligence."

Question: Is Baltimore Slumlord Watch a one-person affair -- not counting reader contributions -- or is there a slumlord-watch team?

Answer: It started out as a one-woman show, but others have joined in. I have a couple of people I consider "partners" in this venture, along with a legal advisor who I go to from time to time with questions. As word got out, other cities started similar blogs (Richmond, Va. and Columbus, Ohio come to mind) so I like to think we're now a loose coalition.

Q: How many run-down properties have you "featured"?

A: Out of the 358 total posts I've written, probably 200+ are centered on vacant properties.

Q: What prompted you to start the blog?

Continue reading "Q&A: Baltimore Slumlord Watch" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (17)
Categories: Q&A, Real estate investing

November 18, 2010

Through the looking glass with China's housing market

"A Chinese housing bubble is not like an American housing bubble," writes colleague Jay Hancock, who is right now in that country.

I'll let him tell you what he means, but here's a hint: They've got a completely different sort of vacancy going on there, the kind that wouldn't be unfamiliar to action-figure collectors who never lay a finger on their toys.

Posted by Jamie Smith Hopkins at 9:22 AM | | Comments (0)
Categories: Real estate investing

June 28, 2010

Update on the sprinklers-for-rehabs proposal

The Baltimore City Council bill requiring fire sprinkler systems was approved and signed into law last week -- but for new homes only, not rehabs.

The original proposal brought a chorus of rehabber protests because it would have mandated sprinklers on any project covering at least 30 percent of the home's gross floor area, a threshold that would include do-it-yourself replacement of carpet as well as major rehabilitation efforts.

City Councilwoman Mary Pat Clarke, who sponsored the bill with Councilman Warren Branch, said after the early June hearing that she would amend the bill so only gut rehabs -- major projects -- would require sprinklers. But real estate investors were still opposed. Baltimore's housing agency estimated the expense of installing a system in an existing home at $13,000 to $15,000, much more than in a home being built from scratch. 

"What passed finally was new-construction only," Clarke said. "There's no rehabs in the bill anymore."

She said she's disappointed and hopes to try again.

Continue reading "Update on the sprinklers-for-rehabs proposal" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: Real estate investing, Renovation/rehab

June 24, 2010

Paying for the home with cash

People paying entirely in cash accounted for 25 percent of U.S. home sales in May, as the National Association of Realtors noted this week. That's more than the Baltimore region, as it happens -- but less than Baltimore alone, where investors congregate.

Investors aren't the only ones paying in cash, of course, nor are they always cash buyers. But local agents say cash deals are often struck by people who don't intend to live in the homes they're acquiring.

Thirty percent of the sales in the city were all-cash in May, according to Metropolitan Regional Information Systems. That's actually down considerably from the dead of winter, when most folks aren't spending time at the settlement table: In January, 42 percent of sales were all-cash.

I've got to figure that buyers rushing to beat the June 30 closing deadline for the home buyer tax credit -- which can't be used for investment purchases -- helped push up the number of mortgaged purchases in May.

For curiosity's sake, I checked out the city's stats in January 2000, before all the boom-and-bust craziness set in. Twenty percent of deals were all-cash that month. In May 2000, it was 23 percent.

So: Just how much cash are we talking about? I can't say, since the stats don't offer average prices by financing type, but I'm sure it ranges quite a bit. Fun fact: 55 city homes sold for less than $30,000 last month.  (By contrast, 12 sold for more than $500,000.)

Most of the "good time to buy or not" debate has focused on purchases for primary residences. Do you see this as a good time to buy a home -- or homes -- for an investment? Or do you think any time is good, depending on the individual deal?

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (2)
Categories: Real estate investing

June 10, 2010

Sprinklers for 'gut rehabs'?

The legislation that would require fire sprinklers in new and renovated homes in Baltimore is undergoing some renovation of its own.

City Councilwoman Mary Pat Clarke said after a Tuesday committee hearing that she's looking to change the threshold so sprinklers aren't required unless the rehab in question is a "gut" project. "Really a major rehab -- removal of interior walls, etc.," she said.

Under the original proposal, the sprinkler mandate kicked in for any renovation affecting at least 30 percent of the gross floor area or adding 30 percent more space. But there was a hue and cry against adding thousands of dollars to the cost of fairly minor projects such as -- say -- reflooring.

Baltimore's housing agency, which opposed the bill as originally written, estimates the expense of installing a system in an existing home at $13,000 to $15,000. 

Clarke, who introduced the bill, said the Judiciary and Legislative Investigations committee is scheduled to vote on an altered version on Monday at 1:30 p.m.

Continue reading "Sprinklers for 'gut rehabs'?" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (13)
Categories: Real estate investing, Renovation/rehab

June 8, 2010

Bill would require sprinklers for new homes, rehabs

A Baltimore City Council committee will hear a proposal this morning to require fire sprinkler systems in new homes and -- more significantly for a city chock-full of aging rowhomes -- in most renovations.

City Councilwoman Mary Pat Clarke, who sponsored the bill with Councilman Warren Branch, said she wants to prevent fire deaths. Rehabs of one- or two-unit homes would require sprinklers if the work covers at least 30 percent of the building's gross floor area or adds 30 percent more space.

Clarke said she began working on the legislation after hearing from Baltimore Fire Chief Jim Clack "about the need for sprinklers in residential homes, because they save lives." (The Fire Department said in a memo that it "strongly supports" the legislation.)

With rotating fire-company closures in the budget-strapped city, "we need other ways for citizens to protect themselves," she said. "And sprinklers are it."

The debate over the value of sprinklers vs. the cost -- with fire marshals on one side and home builders on the other -- has raged for years. But it's usually focused over new construction, not renovation.

In Baltimore, real estate investors were organizing Monday to turn out in opposition to the 10 a.m. hearing today.

Jack BeVier, a partner with Dominion Properties in Baltimore, which renovated about 90 homes in the area last year, said the cost of installing a sprinkler system in an existing property is substantially higher than adding it to a new home under construction. You're pulling apart walls and ceilings, then building them back up, he said.

He estimated the system and installation costs at $7,000 to $15,000 in an existing home, depending on the building size and condition. (Baltimore's housing agency, which is also opposed to the idea, estimates the cost at $13,000 to $15,000.)

"There's large portions of the city that aren't worth anything because of the condition of the property and the block that they're on -- they're not worth the construction cost required to put them back into use," BeVier said. "Adding another line item to the budget just increases the number of houses that fall into that category."

Continue reading "Bill would require sprinklers for new homes, rehabs" »

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (18)
Categories: Real estate investing, Renovation/rehab

April 5, 2010

Fewer homes bought last year as investments

Foreclosures and short-sales notwithstanding, fewer people bought U.S. homes for investment purposes last year.

That's according to a recent National Association of Realtors survey, which suggests that 940,000 homes went to real estate investors in 2009, a 16 percent drop from the previous year. (Primary-residence purchases rose 7 percent and vacation-home purchases were up 8 percent.)

That means 17 percent of all purchases were investments. In boom-year 2005, it was 28 percent.

The Realtors association doesn't have survey information at a state level, but it doesn't take an expert to know that investor activity varies a lot depending on the community. While it's not a perfect stand-in for real estate investment, it's worth noting that 31 percent of Baltimore City buyers last year did their deals entirely with cash, according to Metropolitan Regional Information Systems. That's up from 20 percent in 2008.

So, investors: What are you buying and why? 

Many of the people purchasing Baltimore homes for investment purposes during the boom intended to rehab and quickly resell (or flip without rehabbing, since you didn't have to wait long for prices to rise). That faded as the market turned, and investors -- the ones left -- seemed more likely to buy with landlording in mind. I'm curious what you're seeing out there now, whether you're an investor or a resident watching it happen near you.

I'm especially curious how much investment is going on -- post-purchase -- as opposed to just owning. A lot of homes out there need work.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (2)
Categories: Real estate investing

December 18, 2009

Foreclosure news round-up

Home for the holidays: Fannie Mae and Freddie Mac said Thursday that they won't evict anyone from a foreclosed home from Saturday through Jan. 3 -- a holiday break. Citigroup, meanwhile, announced a 30-day suspension from evictions and new foreclosures.

The Christian Science Monitor, reporting on Citigroup's decision, points out that this sort of move saves a lending institution from comparisons it might not like. For instance, Christmas Eve evictions on the other hand, "bonuses that the bankers are raking in" on the other.

Fewer interested in buying foreclosures: Forty-three percent of adults polled in a survey released this week by Trulia and RealtyTrac said they would be at least somewhat likely to buy a foreclosed home, down from 55 percent in May. Renters are more interested in buying a foreclosure than homeowners (57 percent vs. 38 percent). And -- not surprisingly -- more than 90 percent of prospective second-home buyers and investors are at least open to the idea of a foreclosure purchase.

For you fellow wonks: Just over 2,200 people were polled for the companies by Harris Interactive, which says no margin of error can be calculated because it was an online survey and not based on a probability sample.

More "shadow inventory": First American CoreLogic puts the number of off-the-market foreclosures and close-to-foreclosures at nearly 1.7 million units nationwide in September, the so-called "shadow inventory" that will presumably go up for sale in the future. That's a more than 50 percent increase from a year ago, largely because of a big build-up in seriously delinquent mortgages.

What First American calls the "visible supply" -- homes listed for sale -- totaled 3.8 million units in September, a 19 percent decrease from a year earlier.

Continue reading "Foreclosure news round-up" »

May 20, 2009

In search of "distressed" homes

Banks are trying to get rid of foreclosures, but California-based Redwood Real Estate Partners wants to buy them -- along with homes nearing foreclosure. It said today that it's started an investment fund to get $500 million in distressed properties.

The company expects to focus a lot of its attention on the western U.S. -- not surprising, since there are a lot of foreclosures in California and nearby states. But it told me that Maryland is on its list of "targeted states" for acquisitions.

This move is a change for Redwood, which invests in commercial real estate. Here's the plan, according to its website: "Purchase bulk portfolios of residential REOs and late stage defaulted whole loans through direct relationships with mortgage banks and financial institutions."

The company wants individual homes and buildings with up to four residences, valued between $100,000 and $900,000, with no more than "light rehab" needed.

And it intends to quickly resell -- "at discounted retail levels priced lower than competing distressed inventory." It thinks it can do so because it's expecting to get the properties at a "significant" discount from lenders who see a benefit to getting a bunch of homes off their books -- in return for cash -- in one fell swoop. That $500 million in distressed properties it wants? It's expecting to pay $300 million to $350 million for them.

If Redwood succeeds, this could mean new opportunities for buyers. And new challenges for traditional sellers, the homeowners who just want to move.

Posted by Jamie Smith Hopkins at 10:22 AM | | Comments (2)
Categories: Real estate investing
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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