Two months ago, Jay Walsh was comparing Baltimore’s housing market to crack cocaine for investors. On Tuesday, his company filed for bankruptcy.
ABC Capital Investment LLC has been one of the most aggressive homebuyers in Baltimore in recent years. In an investigation published in October, The Baltimore Sun identified more than 140 homes purchased by ABC Capital since 2019. Walsh said his firm has actually bought about 1,200 homes since 2015, selling most of them to foreign investors and using third-party companies to manage them.
“If you wanted to give investors a drug, Baltimore’s the drug,” Walsh said. “Some people, they think it’s easy. It’s not easy. It’s not easy at all. But if you’re willing to put in the work, I think it’s a diamond in the rough, even with the rats.”
Walsh declined a request for comment Tuesday. But in a September interview with The Baltimore Sun, Walsh described himself as an aggressive but honest investor who got into Baltimore’s housing market early and became a trendsetter.
“As I’ve gotten older, you gotta learn not to sell fairy tales,” Walsh said.
Walsh said he still owned homes in Baltimore, but declined to say a number, characterizing himself as a small-time landlord.
However, ABC Capital was facing more than 30 lawsuits, many of which said he misled foreign investors about homes in Baltimore and Philadelphia, where Walsh first got his start buying homes, as The Baltimore Banner first reported earlier this month.
In one federal lawsuit filed last month, for example, an investor claimed he bought three Baltimore homes from companies connected to Walsh, expecting a 9% annual return on investment. Anibal Orrico and his Florida-based Avelino Harbor LLC said more than $270,000 was paid to affiliates of ABC Capital for the purchases and renovation costs — though most of that money was allegedly pocketed without any work done.
Two of those homes were never renovated and were in a state of total disrepair, according to the lawsuit, and the paperwork to transfer ownership of the third home was never completed. In the lawsuit, the two men accuse Walsh, his companies and associates of running a “ponzi-like scheme.”
According to federal court records, Walsh has not responded to the lawsuit.
ABC Capital filed for Chapter 7 bankruptcy in U.S. District Court in Pennsylvania, meaning the firm intends to liquidate its holdings and use the money to pay back debts. However, ABC Capital claimed in the filing that it had both assets and liabilities of $50,000 or less, and that no funds would be available for unsecured creditors after administrative expenses are paid.
Little other information was disclosed in the initial filing Tuesday, but more details could come to light as the case proceeds.
The Evening Sun
The Sun first reached out to Walsh after an analysis of property sales data found that investors from across the world have bought property in Baltimore through firms like ABC Capital. Many of these sales took place in low-income, predominantly Black neighborhoods that have high rates of vacant homes.
Other findings included:
- More than a third of all city home sales recorded in the first half of 2022 were investor purchases — double the rate just three years ago;
- In some predominantly Black neighborhoods, including Broadway East in East Baltimore, Carrollton Ridge in the Southwest and West Baltimore’s Harlem Park, three out of every five homes sold since 2019 have been bought by investors;
- In 2019, the median home sales price to an investor was $42,000. Earlier this year, that number hit $72,000.
The findings alarmed some housing advocates in Baltimore, who fear Baltimore’s most vulnerable neighborhoods will end up being controlled by faraway owners unless the city takes action soon.
While some developers said the increasing competition from investors was pricing them out of the market, Walsh said Baltimore still was a good deal and said his strategy was simple.
“It’s not really rocket science,” Walsh said. “If everybody’s developing on one block, they’re going to go to the next block. So just go three blocks from where everybody is, and wait for them to get to you. And if you’re not looking to sell in the near future, you can wait and you can get appreciation on top of the cash flow.”
While some investors target completely vacant and abandoned homes, Walsh’s strategy focused on newly vacant or distressed homes in Baltimore.
“There’s a ton of people who are looking for good housing, because there’s a lot of decrepit, beat-up houses,” Walsh said. “I like a house where a tenant just left or it needs a little TLC or something like that. I don’t need to make it the Taj Mahal, but you can do a lot with $10,000, $15,000.”