Looking for Opinions: 6-Unit PadSplit-Style Property – Opportunity or Slumlord Trap?

[Dawson Burton]

Hey BP community,

I came across an interesting property and wanted to get some outside perspective before I move further.

It’s a single-family home that’s been converted into a 6-unit pad split. Each unit has its own kitchen setup (full stove/oven, dishwasher, fridge, etc.), bathroom, living room space, and some units are bigger than others. Asking price is about $209,000.

Here’s what I’ve noticed so far:

• Foundation work: definitely needs to be inspected, most likely repaired.
• AC: 4 new units, 2 fairly new, 1 old.
• Roof: needs inspection.
• Exterior: trees need to be removed, new windows needed, new front porch, repainting, trim, fixing wood rot.
• Parking/Access: back parking lot probably needs to be redone, back stairs may need to be replaced.

Financials:

• Cash flow is projected around $30,000/year.
• Cash return sits in the 12–14% range based on my analysis.

Here’s my hesitation: a big commercial real estate guy I spoke to locally told me this kind of property would turn me into a “slumlord” and that I shouldn’t touch it.

On the flip side, the cash flow and return numbers are attractive—especially at this price point. I know deferred maintenance and tenant quality are the biggest risks in a setup like this, but I want to see if it’s worth a closer look.

Questions for the group:

• Has anyone here owned or managed a property like this (pad split with full kitchens)?
• Do you think the risk of becoming a “slumlord” is as high as people say, or is it more about how you manage it?
• Would you pass on this deal because of the repairs/tenant class concerns, or is this worth pursuing further if inspections come back okay?

Appreciate any thoughts, experiences, or red flags you’d look for in something like this!

[Jeremy Horton]

I personally don't mess with properties that don't have a good base to start with if that makes sense 

It sounds like a weirdly done conversion, shared living spaces, single bedroom units - all stuff I don't like. The single bedrooms will likely mean a lot of turnover. I personally don't go less than a 2bed/1bath type set-up. 

Sounds like a good bit of deferred maintenance/CapEx in order for the property to be in decent condition. Keep in mind this CapEx isn't improvements, this is just getting the property to a rentable state - more stuff not to like.

How much parking is there?

What's the exit strategy - sell I'd assume. The only buyer you'll have is another investor. Not ideal. 

What does your analysis look like in terms of expenses and income?