I would love to hear everyone's opinion on situations like this, since I am still figuring out what my level of tolerability is for deals.
Have a potential deal with high cap rate (20%) triplex. Each tenant with recently renewed one year lease. However the neighborhood is supposedly one of the worst in the city. I drove by twice on Saturday during the day and night.
Day: fairly lively since its weekend, kids are playing outside, saw a few grown men shirtless, walking around. Several vacant units in the neighborhood.
Night: fairly quiet overall
Another issue was that I was able to visit 1 of the 3 unit, it was poor maintained by the tenant. excessive trash & foul smell
I am thinking about speaking with a local property manager for their opinion, I would love to hear everyone's thought here.
Many will tell you to stay away from property in a poor location because your Cashflow will get eaten alive by tenant turnover, property damage, vandalism etc. However, there are plenty of ways to make money buying such cheap property...it depends on who you ask but starting out I suggest going for an easier location to deal with and after gaining some experience then toy with a more "challenging" area.
I wouldn't go into it UNLESS you have an unfair advantage and a long term plan.
It is possible to create a haven for honorable people, however you have to stick around long enough to earn a leadership role.
This is not a flip and it's not an ATM machine.
I agree it sounds like this would be too challenging and time consuming of a property. Think more realistically and you will see how difficult it can be. You won't be able to make bad tenants more honorable no matter how hard you try.
Thanks for the responses!!!
And you all might've guess, I was still hung up on this deal. New findings, Two local property management companies has stop servicing this neighborhood. (Not good).
The good side, seller was able to provide supporting data for all tenant, 2 of the 3 tenant have stayed over 4 years and the third going to 2nd year.
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