4plex Under Contract BUT!

3 Replies

HELP! I just got a 4plex under contract in the Little River- Miami, FL area. I just went through the inspection and the property is in pristine condition, essentially turnkey with some value add opportunity with increasing rents to market. Section 8 tenants

2 units 2 bed 1 bath

2 units 2 bed 2 bath

Purchase Price $640k

Current Gross Rents $5300

Potential to eventually increase to $6000

9% COC return which is good in this market with potential to get 11%+.

My concern is during the inspection I learned from tenants and neighbors there are shootings at the end of the road at another building community. This happens sporadically and police installed video surveillance to curb the crime. The property is literally right next to a High School so the property itself has not been met with crime but it is evident down the road. All signs point to Little River being in the path of progress with investors turning the communities around. This 4plex happens to be right in the border of this gentrifying area. But this is partly speculative which is what's concerning. The returns are good but the crime gives me cause to pause about the true potential of rent increases and value appreciation.

What should I do here? Any Miami investors with close knowledge of this area. Or any investors who have been met with a similar situation?

Fear is the mind killer. Do the deal and stop second guessing if you know it to be good. All the hereseay and people saying how bad it is aren't multi millionaire real estate professionals. 

If the returns are solid and you like the numbers, go for it.  The area is slowly but surely changing, we've done some good flips around there. 

@Dan M. encouraging words and very true! Appreciate it!

@William Salas great to see a fellow investor from the Mia. Appreciate the feedback. Little River and Little Haiti are surely changing neighborhoods with great opportunity for short/long-term returns. Considering you're familiar with the market, I'll give you some detail...What made me hesitate is the fact this property is not in that clear pocket of progress between I95 and Biscayne BLVD (which we both know is hot right now with investors)! My 4plex is right in the outskirts of Little River directly west of I95 off NE 71st Street. Essentially right on the border of Liberty City and Little River (Zip 33150). While it's clear a lot is happening directly east of I95, I'm concerned about how quickly things will turn in this area, 1 block west of I95, for me to command the rents warranted for a 2 bedroom apartment. Right now rents seem to be compressed there because of the lower income so there has to be some speculation to dive in on this one. How do you feel about this specific area within the Mia considering you're actively flipping???