LOCATION, LOCATION, LOCATION… No matter how many times we say it, it will never be too many times. Location is one of the most important factors in real estate investing, including in the Airbnb business.
Thus, every successful real estate investor is constantly on the search for the next hot market to buy an investment property. If that applies to you, you will be interested in hearing why Baltimore Airbnb is among the top investments in the East Coast at the moment.
Regardless of whether you speak about Baltimore Airbnb or short-term rentals in any other US city, the first thing you need to know is the legal situation in your selected location. So let’s have a look at the legal aspects of Baltimore Airbnb:
Baltimore Airbnb Legality
Any real estate investor should know that recent months have witnessed a number of attempts by various parties to push local legislators to introduce regulations on Baltimore Airbnb real estate investments. It is no surprise that hotel association members and others feel threatened by this growing phenomenon in real estate investing which has not missed the City of Baltimore. In September of last year Mayor Stephanie Rawlings-Blake’s administration put forward a bill designed to update the city’s law by imposing the city’s 9.5% hotel tax on bookings for Baltimore Airbnb rental properties. In early October the Baltimore Judiciary and Legislative Investigations Committee refused to hear the bill during its meeting and declared that the bill would not go any further with the Baltimore City Council during that term, which ended on 8 December the same year. It’s important to highlight that actually the bill has been supported by both the hotel industry, which often feels growing competition from Airbnb and other short-term rentals online platforms, and Airbnb itself, which sees tax collection as a way of normalizing its business in the eyes of the public.
The fight over the proposed legislation continued into 2017 as well. Recently in February this year Baltimore County officials withdrew the proposed bill planning to collect hotel tax from Baltimore Airbnb rentals as well as to require a county license for such properties. The stated reason for the move was that the County Council members wanted to see what would happen in Annapolis, where lawmakers have been debating how to regulate and tax Airbnb activities at the state level. Even more recently, in March members of the Senate Finance Committee showed little interest in passing a bill regulating and taxing short-term rentals advertised online in Maryland.
Although no definite response has been given by either the state or the city legislative authorities and even though pressures from the hotel industry are likely to continue, these have been some very positive signs that Baltimore Airbnb activities are expected to remain fully legal and even untaxed.
Once you know that there are no legal issues with Baltimore Airbnb, it is time to look at the numbers for these investment properties.
Baltimore Airbnb Investment Property Figures
Thanks to Mashvisor’s rental property calculator, you don’t have to waste time and money on real estate market analysis to get the comps on your own. Moreover, all figures are organized by traditional and Airbnb rental strategy, which makes your investment property analysis even easier. So, let’s have a look at the numbers including rental income, CoC return/cap rate, and occupancy rate generated by Mashvisor’s investment property calculator. The reason why the CoC return and cap rate are the same is that the calculations assume a cash investment rather than a mortgage.
- Median Property Price: $318,000
- Airbnb Rental Income: $1,540
- Airbnb CoC Return/Cap Rate: 4.9%
One important feature of Baltimore Airbnb investment properties is that they are quite affordable, with a median property price well below the prices in other top locations such as Boston ($1,025,000), Los Angeles ($939,000), Miami ($494,000), New York ($494,000), and Dallas ($376,000). The Airbnb rental income is good, compared to property prices, which makes Airbnb income properties profitable in Baltimore.
Best Neighborhoods for Baltimore Airbnb Income Property
Once you are convinced that Baltimore Airbnb is the best real estate investment for you, you should choose the right neighborhood for your income property. Once again, Mashvisor’s rental property calculator will be of great help in this endeavor by providing neighborhood-level figures.
1. Seton Hill
- Median Property Price: $105,000
- Airbnb Rental Income: $1,710
- Airbnb CoC Return/Cap Rate: 14.3%
- Airbnb Occupancy Rate: 45.9%
The definite #1 neighborhood for a Baltimore Airbnb rental property is Seton Hill, which offers a median property price of less than a third of the average value for the city and a rental income higher than the average. This means that profitability here is high. Actually, CoC return/cap rate of 14.3% is excellent, according to the vast majority of experts. This historic neighborhood, founded in the 18th century, is made up mostly of single-family homes and is an excellent choice for both traditional and Airbnb though Airbnb is the better strategy here. It is close to University of Maryland Baltimore and to University of Baltimore as well as to the nightlight and cultural opportunities of Mount Vernon.
2. Greenmount West
- Median Property Price: $165,000
- Airbnb Rental Income: $1,530
- Airbnb CoC Return/Cap Rate: 7.3%
- Airbnb Occupancy Rate: 48.0%
Greenmount West is another great choice for a Baltimore Airbnb income property. This diverse community is a popular artistic and commercial area hosting theaters, galleries, music venues, artist studios, shops, restaurants, and coffee shops. It is close to downtown while also offering ample green spaces. It is cheaper than the rest of Baltimore, while the rental income is comparable, which means that profitability is higher than average.
3. Upper Fells Point
- Median Property Price: $275,000
- Airbnb Rental Income: $2,130
- Airbnb CoC Return/Cap Rate: 7.2%
- Airbnb Occupancy Rate: 48.4%
Another recommended neighborhood for Baltimore Airbnb investments is Upper Fells Point, which has a rich ethnic background shaped by various waves of immigrants through the years. Currently it is composed of mainly multi-family homes, which originated as large houses but were divided into several units during the Depression.
- Median Property Price: $425,000
- Airbnb Rental Income: $3,380
- Airbnb CoC Return/Cap Rate: 7.0%
- Airbnb Occupancy Rate: 48.1%
Last but not least, if you are looking for a Baltimore Airbnb investment property in a small, quiet neighborhood, Otterbein is the right place for you. This neighborhood hosts around 200 homes and is located close to M&T Bank Stadium, Camden Yards, Light Rail, MARC Train, the National Aquarium, and Inner Harbor as well as museums, restaurants, and shopping areas.
One of the key aspects to consider when choosing a location for your Airbnb income property is the legal environment at both the state and city level. No matter how much demand there might be for this type of investment property, your profitability will be low if the regulations are too cumbersome. Well, Baltimore Airbnb is an excellent option for real estate investors as both the State of Maryland and the City of Baltimore appear unwilling to put too much burden on local Airbnb hosts.