How Do You Evaluate a Baltimore Rental or Flip?

Start with the after-repair value (ARV): what the house should sell for once it’s finished. Then work backward. Our team’s rule of thumb is that a rental’s all-in cost (purchase, closing costs, and repairs) should stay at or under 75% of ARV. For a flip, we aim for about 70% all-in and at least $50,000 of profit. These are our own underwriting guidelines, not guarantees. This is general information, not investment, tax, or legal advice.

Ben Garner has completed 50+ renovation projects and owns 60+ rental units, so this is how we run the numbers on our own deals.

Where does the math start?

With the ARV. Compare the house only to closed sales of homes with the same number of bedrooms, and keep the above-grade square footage within about 20% of the house you’re evaluating. A two-bedroom should be measured against other two-bedrooms, not three-bedrooms that happened to sell nearby. Above-grade means living area above ground, so a finished basement doesn’t count.

What is the 75% rule for rentals?

Multiply the ARV by 75%. That’s the most you should have in the deal, counting the purchase price, closing costs, and repairs. On a house with a $400,000 ARV, the maximum all-in is $300,000. On a recent rental purchase of ours, the purchase price was $198,000, which left $102,000 for renovation and closing costs (GARNER+CO project experience, 2026).

How do you run the numbers on a flip?

A flip needs different math, because you’re after profit, not monthly cash flow. Work backward from the ARV and include the purchase price, closing costs, repairs, and holding costs, with a target of about 70% all-in. Then protect your margin. We aim for at least $50,000 of profit. A $30,000 profit can look fine on paper, but one unexpected issue can erase it.

How much should you budget for repairs?

• Flooring: $2 to $3 per square foot
• Paint or drywall: about $2 per square foot
• Bathrooms: $6,000 to $7,000 each
• Central air conditioning: $12,000 to $15,000
• Roofing: $4,000 to $15,000, depending on size and type
• Basement water repairs: $4,000 to $20,000, depending on scope

(GARNER+CO project experience, 2026) Round your total up. Electrical and windows can also decide whether a deal works, so price them early. These are rules of thumb, so get contractor quotes before you commit. For more on repair costs, see Should You Make Repairs Before Selling in Baltimore?

What are the signs of a good deal?

• Time on market. A house that has sat for months (we’ve looked at ones listed for 140 days) may be overpriced or poorly presented.
• Listed as-is. The seller is signaling they won’t do repairs.
• Weak photos or descriptions. Poor presentation can hide a house’s potential.
• Multi-unit clues. Two electric meters or two water heaters in a house listed as a single unit. Before you count on that income, confirm how the property is registered and zoned.

What should you check before you buy?

• Flood zone. Look up the property on FEMA’s flood map and get an insurance quote early. On one of our houses, the flood zone made the monthly mortgage costs too high for a rental, so we sold it after renovating instead.
• Rental rules. Registration, licensing, and lead-paint requirements vary by city and county, especially for homes built before 1978. Check what applies to the property, and confirm with the local housing office or an attorney.
• Bedrooms and bathrooms. As a rule of thumb, a home with four or more bedrooms needs at least two full bathrooms to work as a rental.
• Busy roads. Houses on busy roads can be harder to resell later.

Should you rent it or flip it?

Run both before you decide. The same house can fail as a rental and work as a flip, like our flood-zone example, or the other way around. Let the numbers pick the strategy.

How does GARNER+CO help investors?

We help investors buy and sell. On the buy side, we can walk through the numbers on a specific property with you. On the sell side, we help with tenant-occupied sales, portfolio exits, and cash offers. Learn more on our investors page and our cash offers page.

FAQs

What is the 75% rule for rentals?

Keep your all-in cost (purchase, closing, and repairs) at or under 75% of the ARV.

What profit should a flip target?

At least $50,000, per our guidelines. A $30,000 profit leaves little room for surprises.

Can I compare a two-bedroom to a three-bedroom?

No. Compare to the same bedroom count, with above-grade size within about 20%.

How much does a roof or basement water repair cost in older Baltimore homes?

A roof typically runs $4,000 to $15,000 and basement water repairs $4,000 to $20,000, depending on size and scope.

What should I check before renting out a house?

Check the local registration, licensing, and lead-paint rules, the flood zone, and how the property is zoned. Rules differ by city and county, so confirm with the local housing office or an attorney.

Is a flood zone a dealbreaker?

Not always, but it can change the numbers. Check the FEMA map and get an insurance quote before you make an offer.

Ben Garner, Owner, GARNER+CO. 830+ homes sold personally, $310M+ in volume. Top 1% of REALTORS® nationwide by transaction volume (NAR, 2025). Baltimore Magazine Top Agents 2026. Live Baltimore City Expert. MD license #659786. Selling since 2015.

Looking at a Baltimore investment property? Call or text 240-216-7841.

This article is general information, not investment, tax, or legal advice. Please talk to a licensed professional about your situation.