I know how horrible it could be dealing with deadbeat tennants, crime, vandalism, evictions, collecting rent, etc.
BUT, when $30K buys the whole house, it seems like there could still be opportunites to cashflow, and you can get into the game cheaply. Sure dealing with the BS above is going to be a burden, but if it's between that, and being a 9-5 worker bee, I'll deal with the BS instead.
Should I just hold out until I have enough cash to buy a cleaner property that will attract decent tennants, or should I actually consider buying a $30K property in a horrible neighboorhood since I can buy now, and POTENTIALLY start cash flowing now?
Call your local section 8 office first and confirm that the house you are looking at can be used for section 8 tenants. If so, go for it! Fix it up so you don't get to many maintenance calls, move in your screened section 8 tenants, set up bill pay so you rent gets direct deposited, sit back and collect. What ever goes on at that house, so be it....
I have a duplex with sec 8 tenants and it's been my best property. Rent is always paid in full but the agency, if the tenants screw up, I can threaten them with calling the agency. Pretty good leverage over them as they don't want to lose that housing voucher....NY has a loooooooong waiting list to get back on it..
If the goal is to save the princess, would you set off on your journey wearing flip flops and a t-shirt and plié straight through to the dragons lair and knock on the door or would you let Princess Kashmir sleep a little longer while you saved up for some armour and a sword?
It’s a marathon, not a sprint. Chess, not checkers. Adopt an end game mentality.
It depends on your personality. If you go into this as seeing your property as a tool of the trade, and not the love of your life, and expect damages and evictions and knowing you will have to fix it up every time a tenant moves out, then you can make a nice living out of it.
It also depends on the type of court system you have. Are the Judges leaning more towards the tenant than to land-lords? My properties were in Detroit and believe it or not, their court system was fair. But we also had homes in the City of Inkster and they were the pits. I could tell you nightmares that I faced dealing with that court. The Judge there has since been fired. Yahoo!
If you can keep your cool, and let the courts and the legal system do their job, then you can do it.
If you can be fair and balanced with your tenants, yet be stern and stick to your lease agreement, then you will make it.
But if you get mad easily, then I say no way...... It takes a lot of practice, a lot of not responding right off the cuff when you have to deal with junk, but it does pay well if you can gain the respect of your tenants, and take care of their repairs whenever they call. They will stay long term. And that's what you want no matter what type of property or neighborhood our rentals may be in.
I dealt with hard-nosed druggies. (Couldn't prove it, but the neighborhood was known for it) and it was a hard to rent rental because of it. I don't know if he was a dealer, I didn't ask. But I was fair with him, but I expected my rent to be paid on time, and at first I had to get on his butt to get him to pay on time, but he finally did, and he showed me respect despite of my not backing down, and he lived there a long time. He kept the place nice too. He appreciated having a nice home to live in, even though it was in a rough neighborhood and had a reputation. Police were never called there and he had a good job and kept to himself. He was a big brut of a man, so I guess not too many people would challenge him, I suspect. He just wanted to be left alone.
My husband and I didn't buy properties in bad neighborhoods, they just developed into them after several years had gone by. But most of our rentals were still in good neighborhoods. Low income neighborhoods, but good neighborhoods, which reminds me of a story about a tenant I had who lived in one of our really nice 4plex apartment building. (Judges used to live on that street).
Well, we just put $100,000 into that property to fix it up and one the tenants started complaining about it being cold in the house during the winter. When a tenant called, I immediately took care of their repair request. But each time my husband and I went out to the property to take a look, we couldn't find out why it was cold in there. (Their drapes were drawn and Venetian blinds closed shut. I asked them if their windows were opened and they said no. I couldn't imagine why it would be cold in their when we just spent an arm and a leg on all Anderson Windows in that home.
About a week later he called the Building Inspector on us. Of course, we passed because the building was just remodeled, and he didn't even call us first this time. When we heard he called the building inspector on us my husband and I went over there right away and he and his wife stepped out on the porch and started yelling at us, calling us names, calling us a slum lord.
Because he was a very large man and was getting out of control, I ran back to the car, grabbed my small tape recorder, shoved it under his nose (I'm only 5'2") and told him if he had anything to say to speak into this. Well his wife ran up the stairs crying as he started to stutter. As he was stuttering I looked up at his apartment and I saw that all of his windows were opened. With the recorder still on I said to him, well I see now why you're cold. It would help if you CLOSED THE WINDOWS! I took pictures of it, and he ran up the stairs yelling, we're moving!
Now, this guy had a great job, dressed in a suit all the time, but wasn't a very good tenant, was he? So it just goes to show, that just because we may have properties in low rent areas doesn't mean that the tenants there are worse than the so-called respectable tenants because they happen to live in a better neighborhood.
You see I didn't get mad, I just dealt with it in a different manner. No sense in arguing. He had a lot to say, so why not record it. It certainly shut him up pretty quickly. Funny how he couldn't think of a thing to say with that red button all lit up right under his nose.
to me personally only way it makes sense is to go large.
to buy 1 or 2 of these your playing Russian roulette if its all if not most of your liquidity then i don't think personally the risk is worth it..
I wouldn’t. A roof replacement costs about the same for a $30K house getting $500/mo in rent as it does a nicer house in a nicer area getting $1500/mo rent. Those capex eat away at the profit quick.
I deal with people who make good money, take great care of their rentals, pay on time, etc. That’s my cup of tea. :)
But... there are a lot of people here who do very well for themselves in cheaper neighborhoods.... not me.
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