Just closed on first investment, 4plex class C/D neighborhood

Just closed on first investment, 4plex class C/D neighborhood

Member since 2024 · 6 posts · 4 votes

Hi everyone, new to BP and excited to be a part of the community and pursue this journey of real estate. I just closed on my first 4plex with all 3 bedrooms and ready to become a great landlord to my tenants/future tenants. This 4plex is in a class C or D neighborhood (not exactly sure which) but my realtor and I saw the potential in it due to the cash flow/COC numbers we calculated and the fact it had a ton of work done to it in 2017 to get it to decent shape (all new electrical, furnaces, HWHs, renovated apartments, new roof, all doors and windows, etc.) Furthermore, I have actively been researching and there is an ongoing housing shortage in the New Haven area, a consistent population growth, great property price to rent ratio, some new construction projects in the nearby area of the property and that it takes a certain type of person with great patience and "people" skills to succeed in these type of neighborhoods. It is a starting point for me that I am willing to take a risk on and learn my lesson if it turns out a nightmare. I did some research trying to find a good detailed lease template to have my tenants sign but none seem to be specific and exhaustive in terms of covering any and everything that comes with the type of tenants that one finds in these type of neighborhoods. Does anyone have experience with the lease agreements for $99 sold here on BP? or can someone point me in the right direction to a good extremely detailed lease agreement? Or should I not be as concerned with how detailed the lease actually is? I have read a ton of the posts on here to pick up some recommendations and advice for managing class C/D properties but always open to more wisdom from my fellow investors!

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
2y

4 units in New Haven for a new investor is going to be quite a bit of work. You should not pay $99 for a lease agreement when you have a real estate agent who helped you buy this property. They can send you a standard CT lease and then you can cruise forums for landlords to see which things you may want to add (pet fees, no smoking, etc.)

The fact that a lot of work has been done will help you in a C-/D, but choosing tenants is going to be the thing that either makes or breaks you and it's going to be hard. Good luck.

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  • Realtor · Houston, TX · Member since 2011 · 916 posts · 296 votes
    2y

    Have you contacted a real estate attorney? They can draw up a landlord friendly lease. 

    Make sure you screen you're tenants well. That is the most important thing.

  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y

    4 units in New Haven for a new investor is going to be quite a bit of work. You should not pay $99 for a lease agreement when you have a real estate agent who helped you buy this property. They can send you a standard CT lease and then you can cruise forums for landlords to see which things you may want to add (pet fees, no smoking, etc.)

    The fact that a lot of work has been done will help you in a C-/D, but choosing tenants is going to be the thing that either makes or breaks you and it's going to be hard. Good luck.

  • Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
    2y

    @Vincent L Sanchez C/D neighborhoods are generally classed that way because of the people. Yes, there can be external reasons - like a stinky factory next door - but mostly it is because bad landlords or property owners fail to maintain their structures and fail to enforce leases and rules. There's always a certain number of "don't give a sh**" people out there who are looking for easy places to live where they won't be hassled to pick up their trash, mind the noise, etc. An area can be turned around to a certain extent if property owners band together. Why don't you reach out to other surrounding owners and create a group?  Ask local law enforcement who the trouble makers are. Discuss which properties need help and what you can do about. Share leases, co-op on painting, etc. It only takes 2-3 nice buildings on a block to make an impact. 

  • Property Manager · Inlet Realty and Property Management · Member since 2023 · 12 posts · 6 votes
    2y

    My buddy lived in his triplex and hired property management. When he saw the tenants, he acted like another tenant, "Damn, I wish our owner wasn't such a jerk!" Hahah! True story and it worked out well for him!

  • Rental Property Investor · Kansas City/Chicago · Member since 2021 · 126 posts · 113 votes
    2y

    I would say its length matters less than its substance. If you are unfamiliar with lease agreements you may want to hire a PM for a couple years until you learn how to manage properties. My concern is more on your vetting process, because that is where the eviction risk lies.

  • Member since 2024 · 6 posts · 4 votes
    2y

    @Shanequa J. I actually ended up doing what @Jonathan Greene suggested just for the sake of being cost effective at this moment. My realtor ended up having a decent standard CT lease in which I tweaked by searching forums. I absolutely agree that screenings tenants very thoroughly is of the most importance. I have some work to do on the vacant apartments before searching for a tenant but will be thorough when screening. 

  • Member since 2024 · 6 posts · 4 votes
    2y

    @Teri Feeney Styers fantastic information! I completely agree with you and have taken some of the steps you described. I did speak to a police officer I ran into while he was parked keeping eye a few blocks away from the property I purchased. He did give me an idea of how the area has progressed over the years in which he did say it has been slow and somewhat steady progression when it comes to improving the neighborhood. He said it has certainly calmed down a bit in the last year and a half to 2 years but that it may get rowdy again when the trouble makers are released from prison or find their way back. He also said it could be the increase in market rent that has driven them out of the area too but there is no telling. He identified a neighborhood liquor store as the source of these “trouble makers” who ruin the neighborhood. I read about another liquor store a few neighborhoods north of mine that recently had their liquor license revoked due to all the loitering, public intoxication, vandalism and crime that the liquor store was bringing to the neighborhood, similar to what the liquor store in my properties neighborhood is causing. I am debating collecting signatures and filing a remonstrance in attempts to have their liquor license revoked as well for its negative impact on the neighborhood. 

  • Member since 2024 · 6 posts · 4 votes
    2y

    @Nathan Williams hahahaha. Thats not a bad idea! 🤔 

  • Member since 2024 · 6 posts · 4 votes
    2y

    @Charles Granja I completely agree and I would hate to bind myself to a lease that does not cover any and every possible thing that can be used in the tenants advantage. Luckily I have decent tenants in there now that I inherited with the building. I also have 2 units that are vacant ready for renovations and to be rented out. I will explore my PM options and ensure I explain the fact that the property may need “more attention and TLC” than the typical property.

  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Vincent L Sanchez our original lease was 6 pages at 14-point font. 

    20+ years later it's 26 pages at 10-point font.

    You live & you learn.

    Recommend you keep researching the leases of others, even in other states, and copy & paste what you like - after running by an experienced landlord-tenant attorney.

    Be careful what attorneys you use as many will charge you while they learn!

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