Need advice! I came across a 12 unit apt building that has been unoccupied for about two years or less. In that two years it has been stripped of values materials. It is going to have to be gutted and redone. It is brick so that its the only thing that does not need repair. Will need windows, elect, sheetrock and bathrooms redone. I happen to be able to get in to it today to look around briefly. It is 51-100 yr old. 4450 sq ft building 12 units. Gravel parking lot. It is in the middle of a couple of areas that are known for drug use. Buildling itself had shootings in front of it a couple of years ago. Wife says no, but I can tell she is debating it in her mind, I would like to do it to try and help start/continue developing the area. There is some developing going on in the area. New apartments in gated areas. $45000 appriased in 2005 for about 225000. Do you pursue the purchase?
I'd get a really detailed map of the area and work on convincing myself of the realty of the project. Having heart is not enough to being a good deal maker. Grabbing a 12 unit steal in an up and coming neighborhood is the path to awesome profit, if you're right :)
Print out the surrounding 6-8 blocks and see exactly what is going on in the area. When you are done with your map, do you see an area that is going to:
1. Make you money? It might be a bit crude, but buying, fixing and getting out is a viable solution if you can make some solid money.
2. Create the kind of environment you'd want for a rental like this? Or is fixing this place up simply going to bring the drug problems straight back your front door?
3. Present you with a neighborhood of investment options long term? Will fixing this place open up other options(knocking down the crappy place next door, putting in a playground and gifting it the city with a bit of an endowment, etc) for investment?
Before all that, what do the numbers look like on this place?
It seems really risky to me. Honestly if it has drug activity and shootings near by you will have a tough time keeping it rented.
You can make all the improvements you want to the inside but if the neighborhood stinks it won't ever rent for more in the future.
If you wouldn't have your wife pick up the rent checks because of the area then I would pass.
Thank you Gentlemen! Good points and good advice. I appreciate you taking the time to respond. I will keep you updated Brent Paul and Aaron Montague.
After looking at the deal a lot closer sand with another person who does deals also. I decided that I was not going to pursue the deal. Thanks of your help Brent Paul and Aaron Montague
You did the right thing on doing your homework before purchasing. Another deal will certainly come up for you.
Robert, I wanted to add to the other helpful replies...
Make sure that you commit to YOUR way instead of having deals dictate what you do in which cases can confuse you and cause you to make bad decisions. Find a strategy that you love, educate yourself on it consistently, and surround yourself with people who are already doing it. The most important thing is being the best student possible, always be willing to learn as it looks like you are, otherwise you wouldn't be posting here asking for advice :-)
With that said, when you know WHO you are as an investor, and know EXACTLY what you're looking for, it'll be much easier to evaluate and take action on which direction to go.
If your wife knows in advance what KIND of deals you're looking for, I can bet it'll make it much easier to work with her on your decisions. She will also have valuable insight to help you at that point cause she knows exactly the investment blueprint of commitment.
I've been with my wife now for 20 years, and I'll be the first to admit, women have things that men don't in certain areas and as much as some don't want to admit it, a lot of times they're right when it comes to decision making for anything that affects the family.
Good luck on finding you're next property Robert, I believe you'll make it happen.
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