Shell Houses: Baltimore's Investment Properties

• August 13th 2008

by Mark Wellborn

If you have seen the Baltimore-based drama The Wire, then you are familiar with “shell houses.” A shell house was used by drug kingpin Avon Barksdale as a drug depot in the series’ first season and Omar Little used various shell houses as temporary shelters upon returning from his Caribbean exile.

However, these run-down properties are more than just cinematic backdrops. They have tremendous potential, both as nice homes and investments, if you have cash on hand and the time and experience to fix them up.

A shell house is essentially the skeletal structure of an old property. While there are walls and a roof, the interior is completely gutted and sometimes the floor has been ripped out. Most shell properties are not inhabitable and are priced accordingly, ranging from $10,000 to about $60,000.

“In most shell houses, the interior is a mess,” Keith French of Baltimore’s United Property Group told UrbanTurf. “You have to gut everything except for the walls and start from the ground up.”

Cheap shell houses appear to be a Baltimore phenomenon, and opportunities like these are probably long gone in DC. As anecdotal evidence, do a search for “shell” on Craigslist Baltimore and you get over 170 properties. Do the same search on Craigslist DC and you get none.

Those buying a shell know that they will have to pour money into renovations, but do so with the plan of either moving into the finished product or flipping it for a nice profit. “A lot of beautifully renovated properties in Baltimore were just cheap shells at one point,” Judy London Murray of Remarkable Properties told UrbanTurf.

While the result can produce a nice return on an initial investment, London Murray cautioned that buying a shell is not for everyone.

“When I direct people to purchase shells I try and make sure that they have the money and the skill to rehab the property,” she said. “For a newbie, I don’t think this is the way to go. You usually need to pay for the property in cash and can’t live in it while you are going through the renovation process.”

Redfin’s Baltimore specialist Taylor Connelly voiced other concerns.

“If you buy a shell and plan to rehab it, it is really important that you are familiar with the types of things that can go wrong,” Connelly said. “The roof might need to be replaced. New plumbing might need to be put in. The joists may need to be stabilized. These are things that the normal home buyer doesn’t think about.”

While most buyers are still opting for a finished home instead of a shell, the prospect that you can buy a shell for about $20,000, put $50,000 to $100,000 into it and then either live in it or flip it and make a handsome profit is very attractive. However, here are some things to keep in mind as you set out on this endeavor.

• Look at the State of the Neighborhood Market — Research how long it takes a property to sell in the neighborhood where you are considering buying. If three properties have sold in the last six months, then even a beautifully rehabbed shell might just sit on the market. But if 100 properties have sold, then the market is clearly doing well. (Note: Many shells are located in undesirable Baltimore neighborhoods, but there are also shell houses available in up-and-coming areas like Canton and Ridgely Delight.)

• Experience and Time Commitment Are Crucial — As noted above, shells require an immense amount of work and a lot of direct involvement by the owner. “The time commitment is huge,” Taylor Connelly told UrbanTurf. “You need to be at the property constantly and if you are using a general contractor, you will need to be checking up on them regularly to make sure that work is proceeding as it should.”

• The Shell Industry is Not for Everybody — We must reiterate that shells are in very poor shape. Judy London Murray remembers an advertisement for a shell that noted there was a hole in the floor and when a buyer got to the property he found out that there was no floor at all. If you are not prepared for hiccups like this, buying a shell is probably not for you.

This article originally published at https://dc.urbanturf.com/articles/blog/shell_houses_baltimores_investment_properties/137.