Acquiring Property for $1 in Baltimore: Here’s the Method

HBO’s seminal series The Wire put Baltimore’s crime and urban decay on full display for all to see, while 16 years after that show’s conclusion it appears little has changed from what was depicted on screen. Now the situation has reached such desperation that dilapidated buildings are being sold off for as little as one dollar; but before you dig out your loose change and buy one be aware there are limitations attached if this option interests you.

At last count, Baltimore had nearly 15,000 abandoned homes that blighted its landscape as of 2022, according to Bloomberg reports. Mayor Brandon Scott responded by offering 200 of these virtually for free as a way of encouraging investors and revitalizing Baltimore as part of an initiative similar to one undertaken back in the 1970s.

The city is dedicated to encouraging homeownership, so owner-occupants receive only $1 for their home while investors pay up to $3,000. Savvy buyers could live in their new home initially before moving out later and renting it out – thus still qualifying for free housing along with grants of $50,000 towards renovation costs if preapproved for construction loans are obtained.

Should You Invest in Baltimore?
Are You Thinking About Purchasing Real Estate in Baltimore? In order to make the best choice, ask yourself two key questions before taking this route: Can You Spare Time and Money to Maintain and Repair Homes In a Crime-Infested Neighborhood Where You Will Live?

Before responding, it is worth remembering that New York established a similar scheme during the 1970s and ’80s in Harlem by auctioning off brownstones at bargain-basement prices – these homes now command millions in value.

However, Baltimore isn’t New York; therefore, waiting may never yield millions in equity. A developer might buy multiple homes to transform entire neighborhoods for the better; for small investors on tight budgets who are unfamiliar with gut job renovations and don’t wish to live in war zones however, my advice would be: run away quickly.

U.S. has a History of Selling $1 Homes. Baltimore is among many American cities selling rundown properties for $1 each, and Newark, NJ recently implemented its own similar program – as did HUD with their dedicated website for $1 houses.

Once all criteria have been fulfilled, purchasing a city-sanctioned sale could provide the assurance of purchasing a home for $1 and possibly qualifying for loans and grants as well. Be wary, however, of properties advertised for sale for this seemingly magical price elsewhere; be wary as their claim could be misleading.

Recently, a luxury New York condo advertised for sale at such an amazing low price was auctioned for $2.5 million – indicative of bait-and-switch tactics often utilized when advertising astonishingly cheap properties for sale.

Of course, $1 homes aren’t just limited to America: Italy recently made headlines for selling rundown one-euro houses in picturesque villages and other places around the globe.

Who Should Invest in $1 Homes? While investing in $1 homes may have its risks, in certain instances they can prove worthwhile. With urban cities nearing bankruptcy and an increasing need for affordable housing solutions, investing could increase tax rolls while taking advantage of subsidies provided by state and federal governments and profit or nonprofit organizations to support cities.

Start the process off right by browsing HUD’s website for $1 homes nearby and researching any Community Development Block Grants (CDBGs). However, only consider taking this plunge if:

Are You Extremely Handy and Able to Do Much of the Work Yourself? If this describes you, and if you don’t mind taking on general contractor duties of a major renovation while hiring subcontractors along the way, taking on this role could maximize government grants, loans and programs in order to complete it with little out of pocket spending.
Experienced investors collaborating with tight-knit construction crews can find themselves reaping great returns by tapping into economies of scale. While you won’t get every home for one dollar, efficient crews going from home to home could reduce costs while helping revitalize an entire city block, increasing property values in turn. Be wary, however, of blighted communities; homes being sold at such discounted prices need protection as well. All entrances must remain locked. Never leave any tools unattended on premises!
As a minority developer, you have access to funds dedicated to diversity and inclusion. Over the last four years, many cities and banks have made efforts to redress gender and racial disparity in construction lending by allocating programs and money for projects led by minorities in historically Black neighborhoods. That doesn’t necessarily mean all workers hired must belong to minority backgrounds – in many instances minority developers can access such money while teaming up with nonminority contractors or business associates in partnering projects.
Final Thoughts Listing homes for $1 in major U.S. cities typically catches people’s eye, yet homes requiring an entire gut rehab are usually not good investments, particularly if their land value is not significant enough. That is because oftentimes the amount you must spend to make these properties liveable equals or surpasses what it costs to buy one already livable without all of the associated headaches of construction.

Short-term success lies in saving on construction costs through doing much of the work yourself–trading your time for money–or by accessing grants or low interest-rate loans. Therefore, these types of properties should typically not be purchased for short-term flipping purposes but rather as investments for long-term buy-and-hold owner-occupants who wish to ensure both their own future prosperity as well as that of the neighborhood.