Licensing and Inspections, Crack Houses, Pre-Fabricated Homes

8 Replies

Properties in some parts of Philadelphia Pennsylvania and even properties in Camden New Jersey are dirt cheap. Most are boarded up run down, excuse the term “Crack Houses”. Can I just knock them down and put a pre fabricated home on the lot for rentals. Anyone have experience with this. I spoke with a new real estate investor that was looking to close on a bundle deal of these homes and he was told they could not provide the deed until “Licensing and Inspection” comes out. Has anyone ever heard of this? Is this area specific? He was told that these particular folks come out to tell you what MUST be fixed but only after you purchase them. I will make a new discussion if I have to but please push this to someone that has experience with this procedure.

Originally posted by @Corey Kenney :

Properties in some parts of Philadelphia Pennsylvania and even properties in Camden New Jersey are dirt cheap. Most are boarded up run down, excuse the term “Crack Houses”. Can I just knock them down and put a pre fabricated home on the lot for rentals. Anyone have experience with this. I spoke with a new real estate investor that was looking to close on a bundle deal of these homes and he was told they could not provide the deed until “Licensing and Inspection” comes out. Has anyone ever heard of this? Is this area specific? He was told that these particular folks come out to tell you what MUST be fixed but only after you purchase them. I will make a new discussion if I have to but please push this to someone that has experience with this procedure.

 Gotta be careful with this strategy my man. If you put a new build in a blighted area like that the cost to build could be much higher than the value of the property. This only works with a decent amount of scale. if you can pick up entire blocks you may be onto something but one random new build here or there in the hood is not a good use of your time and money.

Originally posted by @Kurt Kwart :

@James Wise is right on point and you can see his videos about nightmare issues in high crime areas.  There is success in section 8 but it is a battle

All in a day's work.

@Corey Kenney I will echo what @James Wise said.

If you are buying in a bad area, you need to buy the entire block. I'm seeing that in my market. There is a LOT of new homes being built. If you are venturing out in a new, undeveloped area you either have to buy all the homes or you will sit waiting for another developer to come in and help you out. 

There's probably a reason too that those houses are boarded up. NJ has sky high property taxes!!!

Originally posted by @Luka Milicevic :

@Corey Kenney I will echo what @James Wise said.

If you are buying in a bad area, you need to buy the entire block. I'm seeing that in my market. There is a LOT of new homes being built. If you are venturing out in a new, undeveloped area you either have to buy all the homes or you will sit waiting for another developer to come in and help you out. 

There's probably a reason too that those houses are boarded up. NJ has sky high property taxes!!!

 If you're a big spec player / developer gobbling stuff up it's so much easier and cheaper to just board them up while you wait long enough to be able to buy enough of the land around it then begin your big project. It can cost a ton of money and hassle trying to go through the motions on housing folks in areas this screwed up.

@James Wise

Thanks to all for the insight, especially James. Well they always say to set you goals high right so I guess my goal will be to one day be a big player who can contribute to cleaning up these poor neighborhoods. The reason I brought this up in the first place was the fact that I have an employee of mine at my 9-5 who has bought a couple properties that he is renting out units like a hotel room. Shower,bed, microwave and a tv with cable in small 900-1,000 sqft properties. He makes 4 units out of each one that generate 550 month in rent per unit (Non Section-8) and the properties he is picking up are in the 20-25k range and he is investing 10-15 into them. When I found out what he was doing i started to dig deeper and share the knowledge that I have in the business even though I don’t have the experience and he immediately realized that we could help each other and he offered to help manage anything that I purchase in that area in regards to dealing with tenants and collecting rents. The person I’m referring to has never heard of BP and is not currently reporting his earnings but was interested in learning more and I saw an opportunity to help him grow something legitimate meanwhile helping my own situation to grow with experience. Just wanted to share my thoughts since everyone else was gracious enough to share theirs.

Originally posted by @Corey Kenney :

@James Wise

Thanks to all for the insight, especially James. Well they always say to set you goals high right so I guess my goal will be to one day be a big player who can contribute to cleaning up these poor neighborhoods. The reason I brought this up in the first place was the fact that I have an employee of mine at my 9-5 who has bought a couple properties that he is renting out units like a hotel room. Shower,bed, microwave and a tv with cable in small 900-1,000 sqft properties. He makes 4 units out of each one that generate 550 month in rent per unit (Non Section-8) and the properties he is picking up are in the 20-25k range and he is investing 10-15 into them. When I found out what he was doing i started to dig deeper and share the knowledge that I have in the business even though I don’t have the experience and he immediately realized that we could help each other and he offered to help manage anything that I purchase in that area in regards to dealing with tenants and collecting rents. The person I’m referring to has never heard of BP and is not currently reporting his earnings but was interested in learning more and I saw an opportunity to help him grow something legitimate meanwhile helping my own situation to grow with experience. Just wanted to share my thoughts since everyone else was gracious enough to share theirs.

 Anytime brotha.

P.S.

If helping people or improving neighborhoods is the goal the only way to do it is probably going to be tear down and redevelop. Running low income stuff isn't a feel good business. The tenants are usually savages and you're gonna need to be an even bigger savage and make the emotionless decisions or you're going to get eaten alive. Below is how my team spent the holiday season in Cleveland last year. This is the reality of the business.