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This is Bigger Pockets Daily. Expert

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advice for real estate investors. If

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you like what you hear, check out

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biggerpockets.com. I think you'll find a warm,

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welcoming community. A wealth of

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data to help you make the best decisions

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and calculators to help you analyze deals. We

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make the blog articles available on this

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show so you can absorb the information

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while you're organizing the garage or remodeling

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your bathroom on this Saturday. Okay,

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almost time for the show. We'll get right into

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it after this quick break. We'll

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get right into it. Steadily

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get right into it. As

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a matter of fact, I was self-managing 10 properties while working

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my 9-5 job, so I know

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anybody can do it. Think about it this way,

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vacation. Wouldn't it be great to rent out your

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space and let your property pay for itself while

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you're gone? I did this one time,

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I pitched my wife and my roommate, because we were

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house hacking, on the idea of renting out our home

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can buy a property for

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one dollar in

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Baltimore. Here's

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how. By Jeff Vachista.

3:56

HBO's seminal series, The Wire,

3:58

put Baltimore's plight on the

4:00

map, with crime and urban blight run

4:02

amuck. Now sixteen years after

4:05

that show ended, it

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seems little has changed from the city it

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depicted. The situation has become

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so desperate that the city is selling off

4:13

dilapidated buildings for a dollar.

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However, before you dig out the loose

4:19

change in your pocket to snag a

4:21

townhouse, remember there are caveats,

4:23

of course. There

4:25

were almost 15,000 abandoned homes in

4:27

Baltimore as of 2022. Blighting

4:33

the landscape and Mayor Brandon Scott, as

4:35

first reported in Bloomberg, is

4:38

offering up 200 of them virtually

4:40

free to encourage investors to help

4:42

transform the beleaguered city.

4:45

It echoes an initiative that helped change Baltimore in the

4:47

1970s. Why

4:49

are we repeating history? Ah,

4:52

well. The city is keen to

4:54

foster homeownership, so owner occupants get the $1

4:56

price. For investors, it goes

4:58

up to three grand. Savvy investors

5:01

could, of course, live in the home initially

5:03

and move out and rent later, thus still

5:05

qualifying for the free home, along with grants

5:07

of $50,000 to assist with renovations. Provided

5:12

recipients secure pre-approval for construction loans.

5:16

So all that said, should

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you even invest in Baltimore? Even

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if it's a dollar? Okay. Should

5:25

you kick off your investing journey by buying

5:27

one of these? To answer that, you need

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to answer another question, too. Do

5:31

you mind putting in a whole lot of

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work and money to fix up a home

5:35

in a crime-invested neighborhood in which you will

5:37

have to live? Before

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responding to that, it's worth noting

5:42

that New York instilled a similar scheme

5:44

in the 70s and 80s in Harlem,

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where it auctioned off brownstones for bargain

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basement prices. Those homes are

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now worth millions. However,

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as you may have guessed, Baltimore is not New

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York, and a lengthy wait may never result in

5:58

millions of dollars in the home. That

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said, though, a developer could ostensibly

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buy multiple homes to transform entire

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neighborhoods for the better. For

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most small investors, if money is tight,

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you're unfamiliar with gut job renovations,

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and maybe you're not really keen on living in a war zone. The

6:17

logical advice would be to just... wrong.

6:21

Like, in the opposite direction. Now,

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quickly, go. Let's go

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ahead and offer some more history, shall we? The U.S.

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has a history of selling one-dollar homes. Baltimore

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is just one of many cities in America

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selling rundown homes for a buck. Newark,

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New Jersey, a 20-minute train ride

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from Wall Street, recently implemented a

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similar program, and HUD has an

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entire website dedicated to one-dollar homes.

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A city-sanctioned sale is

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a safe bet that once all

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the criteria are met, you can buy a one-dollar

6:53

home, and probably be eligible for loans and grants,

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too. However, beware

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of homes advertised for sale for

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a buck elsewhere. The magical sales

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price could be a little bit misleading.

7:07

A luxury New York condo was recently advertised

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for sale at that price, and eventually auctioned

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for two and a half million.

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Bait and switch tactics are common

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with unbelievably low-priced homes, and

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one-dollar homes are not limited to the U.S. either. Italy

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has recently been in the news

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for selling rundown one-euro homes in

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picturesque villages, as have many

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other cities around the world. So

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who should invest in one-dollar homes, you might

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be asking? Is there anything good?

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Yeah, so despite all the negative

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aspects of investing in a dollar home, there

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are instances when it could be worthwhile. There's

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a chronic shortage of affordable housing, for sure.

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A lot of urban cities are nearing bankruptcy.

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Thus, cities are desperate to increase their

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tax rolls and could help

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out with subsidies from state and federal governments

7:55

and profit and nonprofit organizations. To start this

7:58

whole crisis, I want to say thank you for your attention. crazy

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process. Check the HUD

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website for dollar homes near you and

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then look to see which Community Development

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Block Grants, CDBG, are available.

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However, don't consider taking

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the plunge unless all of

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these criteria are met. You are

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extremely handy and can do a whole lot of

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work yourself. If you're handy and

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don't mind taking on the general contractor duties

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of a major renovation, hiring

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subs along the way, you

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certainly can maximize government grants, programs, and loans

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to bring in the renovation without too much

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money out of pocket. Also,

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you are an experienced investor with

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a tight-knit construction crew. If

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you're an investor looking to flip or rent

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multiple homes when finished, the economies of

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scale could work in your favor. Granted,

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you won't be able to pick up the

8:49

properties for a buck, but by having efficient

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crews go from home to home, you can

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minimize costs and help uplift an entire city

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block, raising property values.

8:58

Beware, though, of the perils

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of doing construction in a blighted community. Homes

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are being sold for a buck for a reason. Ensure

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your crews are protected and secure,

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all entrances locked, and

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never leave your tools there. Ever.

9:15

Not even for a minute. Also,

9:19

you are a minority developer and

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can access funds designated for diversity

9:23

and inclusion. Over the last four

9:25

years or so, a lot of

9:27

cities and banks have been keen

9:29

to redress gender and racial inequality

9:31

in construction and lending and have

9:33

earmarked programs and money from minority-led

9:35

projects in historically black neighborhoods. Of

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course, that doesn't mean that everyone hired to work has

9:40

to be a minority. Often,

9:42

minority developers can access the money

9:44

and partner with non-minority contractor or

9:47

business associates. Some

9:49

final thoughts? Seeing homes for

9:51

a dollar anywhere in the US, especially in

9:53

and around major cities like Baltimore, certainly

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going to attract a ton of attention. Cheap

9:58

homes that require an entire gut rehab

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are rarely deals, especially if the land

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is not valuable at all. That's

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because the money you need to spend to make them livable

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usually equals the amount of costs just to buy one,

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without the headache of all that construction. The

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only way to get ahead in the short

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term is to save on construction costs by

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doing the work yourself, trading your

10:20

time for money, or by accessing

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grants or deficient interest rate loans. So,

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they're generally not for short term flips,

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unless the aforementioned factors are in

10:30

place. Instead, these

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are best for long term buy and

10:35

hold owner occupants investing in their futures

10:37

and the increasing prosperity of the neighborhood.

10:42

Thanks for checking out this episode of Bigger Pockets

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daily. Have you checked out the latest new podcast

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