July 15, 2024
Real Estate Investor Explains What to Look for in a Property
  • Todd Baldwin credits his success in real estate to being picky when it comes to buying properties.
  • The investor buys in traditionally overlooked neighborhoods that show signs of new developments.
  • He also prefers newer builds and specifically seeks a bedroom-to-bathroom ratio of two-to-one.

Todd Baldwin is building generational wealth through real estate investing.

The 29-year-old college dropout began his career in insurance sales. He worked his way up to earning six-figures a year, thanks to a 9-to-5 job that offered a commission structure and by putting in extra hours at this role, he said, and used his savings to buy his first property at age 23. 

“My job got me to where I am today, but I wasn’t happy doing it,” Baldwin, who left his 9-to-5 in 2020, told Insider. “About a year ago, I was making so much money in real estate that I didn’t need it anymore.”

In 2021, the Seattle-based investor netted more than $1.5 million from selling properties, a wholesale deal, and rental income. Insider viewed copies of his seller statements and payments from tenants which  confirmed these details.

Baldwin sold five properties last year, including the first house he bought for $506,000 in 2015, he said. It sold for $875,000, meaning he gained nearly $370,000 in appreciation. “Not to mention, that house brought in about $70,000 per year in gross rental income, so about $25,000 per year was pure profit.”

He and his wife Angela agreed that it was a smart time to sell, he said: “The real estate market had gone through the roof. We saw an opportunity to sell, cash out, and invest in other projects, and that’s part of the strategy: We buy houses in undervalued areas that are going through a transition and when the transition is near completion or completed, we can sell for a massive profit.”

Currently, the couple own one property: a duplex that they turned into a “triplex” by converting the garage into a studio apartment. They live in one unit of the duplex and rent out the other half, in addition to  the garage space. The rental income they collect offsets the mortgage, allowing them to live for free in their own home.

Baldwin is always on the hunt for properties to invest in, even in today’s market.

“I know that interest rates are incredibly high right now, but if I find a deal that I want, I’ll take it,” he said. “I keep at least a million dollars in cash ​​— whether that’s going to be for a

down payment

or paying cash for a property — so I’m ready to pull the trigger on something that makes sense. But I’m not in any rush.”

What to look for when investing in real estate 

If you want to be a successful real-estate investor, “knowing your market is really key,” said Baldwin, who prefers to invest in properties just outside of Seattle.

“The property needs to be in an undervalued area that is going through a transition,” he said. To find those areas, he spends hours driving through neighborhoods that have traditionally been overlooked and he looks for signs of development. If he sees new libraries, community centers, or breweries pop up, for example, it could be a good area to buy in.

todd baldwin

Baldwin and his wife Angela live for free in their own home by house hacking.

Courtesy of Todd Baldwin

“Most people would buy the worst house in the best neighborhood,” added Baldwin. “I bought nice houses in overlooked neighborhoods. But I only did that because of the development that I saw coming through.”

That’s what he did with the place he and his wife currently live in. The area they’re in used to be called “rat city,” said Baldwin, but he saw signs of life when he decided to buy there in 2019. His observation was right and, thanks to recent development, his property value has already shot up: The duplex, which he bought for $900,000, appraised for $1.4 million in 2021, he said.

Higher property values have priced out and displaced longtime residents in some neighborhoods, though experts have identified ways to mitigate that outcome, including passing new zoning laws, taxing vacant properties, and pooling capital so that residents can buy land.

As for specific features he’s looking for in a property, right now, Baldwin is looking for multi-family homes. And he wants a brand new or relatively new construction, he said: “I don’t buy old buildings.” He doesn’t want to worry about potential housing code violations. With a new build, chances are, “there are no surprises.”

Baldwin also wants at least two parking spaces for every unit: “So, if it’s a 50-unit apartment building, I want 100 parking spots. If it’s a house I’m renting out by the bedroom, I want one parking spot for every rentable bedroom. So, if there are nine bedrooms for rent, I want nine parking spots.” 

Another dealbreaker is homeowners association (HOA) fees. “I don’t buy anything in an HOA,” he said. 

In an ideal world, the bedroom to bathroom ratio is two to one. “In an eight-bedroom house, there have to be at least four bathrooms,” he explained. “The more the merrier, but at least four.” 

Baldwin recognizes that he’s picky. In fact, he hasn’t found a property he liked enough to buy in over two years.

“I haven’t bought real estate since 2019,” he said. “It’s not because I’m afraid of the market or because I’m bearish on real estate; it’s just because I’m very, very specific with my criteria. But that’s part of the reason I’ve done so well — I only buy specific properties.”