Just bought a 18 unit for $12,581.36 in Ohio

Multi-Family and Apartment Investing
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Just bought a 18 unit for $12,581.36 in Ohio

Omar Merced
Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes

Well sort of. I have to pay back taxes of $20k and about $1k in back water. And, yes it needs a full rehab but if I did my numbers right after all is said and done I'll be sitting pretty. I close this week so once I do I thought I would keep a this updated regarding the experience including all numbers so the BP community can benefit from my experience. Let me know your questions!

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Jean BolgerPro Member
Aurora, CO · Member since 2012 · 2k+ posts · 1k+ votes
10y

No need for onsite management in Ohio, so don't worry about that. I bought a 29 unit in Columbus that was 50% vacant and in a C neighborhood. It's taken 2.5 years but it's starting to do pretty well-- however I certainly did NOT have the experience necessary going in, lol.

I agree that the prospects hinge pretty heavily on the city and neighborhood, but at that price it's probably worth a shot either way and I like the bold approach. I'll look forward to hearing more as the story progresses!

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  • Jeffery Waicak
    Investor · Massillon, OH · Member since 2015 · 266 posts · 156 votes
    10y

    nice! If it were closer to me, I would highly suggest the bigger fool play. I'd be happy to be the fool 

    0Reply
  • Account Closed
    Rental Property Investor · Dayton, OH · Member since 2014 · 57 posts · 34 votes
    10y

    Congrats on closing this week.  I know it will be a great investment.  After touring it with you and seeing the inside I am sure it will be easy to rent. 

    1Reply
  • Account Closed
    Rental Property Investor · Friendswood, TX · Member since 2010 · 663 posts · 508 votes
    10y
    Originally posted by @Omar Merced:

    @Zach Quick Found this one through MLS. It's a big project estimated $250k to 300k. I am going gout to get bids next week. It is 100% vacant

    @Nick Thomas It was listed as a 17 unit but taxes say it's 18. One of the apartments are being used as a laundry not sure if I am going to keep it like that.

    @Ernest Quallis Good ole MLS

    @Account Closed Thx

    Thank you all for your well wishes. I am excited and will begin posting cost and my experiences. Please remember to follow the thread so you can get updates. 

     I think a better strategy would have been to get bids before closing so you can work on actual numbers 

    0Reply
  • Jerry Robinson
    Investor · Atlanta, GA · Member since 2014 · 54 posts · 5 votes
    10y

    Nice Omar

    What part of Ohio? I'm lived in Dayton and sometime consider investments there. are you managing it from Vegas?

    0Reply
  • Michael Upshur
    Investor · Silver Spring, MD · Member since 2016 · 61 posts · 18 votes
    10y

    @Omar Merced More power to you.  It takes a certain fortitude to mange D area properties.

    Any advice on how you found success doing this?

    All the best,

    Michael

    0Reply
  • Bryan C.
    Investor · Spokane, WA · Member since 2014 · 733 posts · 155 votes
    10y

    congrats.  I am interested to hear how much in repairs they need etc.

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y
    Originally posted by @Matt R.:

    I know this dude in Detroit that helps investors with these types. Of the two I saw him work with, the first one just could not get going...stripped out a lot and eventually the investor just sold it to the next guy who has been sitting on it since. On that first one he actually cut off the stairs to the second story but still no luck. He did set up a camera way up high but somehow the camera got ripped too. The second one was same scenario but they keep at it. It is like one step forward and two steps back. He wanted to get it up and running with one unit and use that as security-related. He was so close last check but it got stripped again. I think if they can get some 24 hour security set up that is going to be the only way. Hopefully, Dayton is a little more forgiving in that regard. Here is a video of the first place where he took the stairs out but after much invested he had to dump it to the next investors. Keep us posted!

     Lesson learned: You got to be prepared for when Pookie, Ray-Ray, and Peanut come in force.

    3Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    10y

    Congrats on closing @Omar Merced. Welcome to the neighborhood.

    @Wendell De Guzman Fortunately, the property is not in an F area. It's one I looked at a few years ago. I was outbid back then.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Darrin Carey  out bid at 12k thats cool.  

    so is it normal then in that market to buy larger run down multi unit for 500. a door or really get it for free.

    I did see a 4 plex one time in Youngstown that sold at tax sale for 8k.  

    Begs the questions why would this stuff sell this cheap.. we usually understand the reasons in other inner city settins IE its war zone Ghetto.

    What causes RE in that area to be valued  or in the reverse have little to no value ? 

    right now in our areas of the west coast multi is selling for 100 to 135k per door.  run down maybe 75k.

    there has to be some fundamental underlying factors that the market would price this property at that price... 

    and those are usually 

    1. crime

    2. schools

    3. quality of tenant base   IE they don't pay with any regularity

    another words price points adjusted for risk

    Curious on your take on this... 

    Or could it be a simple supply demand issue IE more housing units than people to live in them 

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @Darrin Carey  out bid at 12k thats cool.  

    so is it normal then in that market to buy larger run down multi unit for 500. a door or really get it for free.

    I did see a 4 plex one time in Youngstown that sold at tax sale for 8k.  

    Begs the questions why would this stuff sell this cheap.. we usually understand the reasons in other inner city settins IE its war zone Ghetto.

    What causes RE in that area to be valued  or in the reverse have little to no value ? 

    right now in our areas of the west coast multi is selling for 100 to 135k per door.  run down maybe 75k.

    there has to be some fundamental underlying factors that the market would price this property at that price... 

    and those are usually 

    1. crime

    2. schools

    3. quality of tenant base   IE they don't pay with any regularity

    another words price points adjusted for risk

    Curious on your take on this... 

    Or could it be a simple supply demand issue IE more housing units than people to live in them 

     What were the circumstances leading up for previous owners to abandon 18 unit type multis or any multi? Have those fundamentals changed? Hopefully, this example is a home run and we learn why and how. Or even a base hit is great. I would think the taxes and insurance is more than the  buy price so that is a niche I am sure the OP understands has unique challenges. Forcing  your will to turn around the area by example sounds awesome still. Many local governments try this with millions. It must have worked out somewhere. 

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    10y

    @Jay Hinrichs For comparison, in the Dayton area, new/nearly new construction A neighborhood might be 75k per door. Retail pricing for a good operating building in a C neighborhood, maybe 25k per door, less if you are patient. I can get a true 8+ cap rate in a B neighborhood (about 40k per door) with almost zero effort.

    Just so all you west coast people don't think we're crazy, check out this Dayton Business Journal Article.

    Dayton has an abundance of land, and no excessive building restrictions (like San Francisco for example). We also had a declining population until recently. That leaves us with a surplus of available properties. Good landlords do really well in our market.

    The abundance of properties lets buyers make a simple decision (Beginners don't always understand this.)

    • Why should I buy your run down property and invest a lot of money into it? 
    • Can I can buy a similar property that's already in good condition for what it takes to fix yours?

    With prices low, and the cost of rehab what it is, that leaves some properties with an actual value of zero. or less.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Darrin Carey  got it supply demand... vs  do i spend time rehabbing a major project.

    As oppossed to cheap stuff I have seen in bigger cities that the price points is directly related to RISK

    IE

    1. crime and theft

    2. tenant base

    3. age and quality of buildings

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  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    10y

    @Jay Hinrichs  The price points here also directly correlate to risk, neighborhood, and property quality. Our price points are simply lower than the coasts. The spread between price points is also narrower.

    Property crime is a big factor in D areas, and about 50% of C areas. Violent crime is pretty low, most of it happens between people who are already acquainted with each other. 

    We're a smaller city, so even our "warzones" are reasonably safe to work in from a personal basis. Anybody from a big city would laugh at what we consider a "war zone"

    The tenant base in the D neighborhoods have the usual problems. I still have a couple D properties, and I do have great tenants there. Tenant screening is absolutely critical. 

    The housing stock in the C and D areas is older, mostly built in the 10s-40s. Structurally, most are in good condition. The rest depends on what's been updated over the years. Sometimes it's not much, sometimes I'm pleasantly surprised.

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    10y

    C-/D+ area is an accurate assessment. This building is one of the big reasons keeping it from being a C-. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Darrin Carey  

    its a very hard thing for us West coast folks to come into these areas and understand all that really goes into valuing the properties.. the locals have a HUGE advantage.. they know the lay of the land and what they will pay for a given location regardless of cap rate or price.

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  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    10y

    @Jay Hinrichs It is hard. I see investors come in and pay far too much too often.

    Cash buyers come in from the coasts, and pay 10-20k more than retail. Too many cash buyers don't get an appraisal, when they should. Especially the new investors.  They get drawn in by the great rental numbers we have compared to where they live. 

    Many would do better buying straight off the MLS. Some of the so called deals the alleged wholesalers push are terrible for the area, even though they would be great on the coast.

    I can buy two good rental properties in a C neighborhood for the price of a new truck.

    2Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Investor philosophies across spectrums vary.

    If your thing is to rehab high risk properties in marginal areas for a perceived higher return then it's your capital to do that with.

    Lot's of heavy lifting and drama on those types of properties.

    If a passive investor or partner goes in with someone on one of these deals make sure it makes up your "fun money" and a very small percentage of your worth. Example if you put in 50,000 as a partner for purchase and rehab and you are worth 2 million then if you lose 25,000 and get 25k back it's not the end of the world.

    If you do this and have 100k net worth it can really mess you up. These high risk deals makes sure it won't set you back for a long time if it doesn't work out.

    Not my cup of tea.   

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  • Aaron Boesch
    Investor · Dayton, OH · Member since 2015 · 1 post · 0 votes
    10y

    Congrats on the purchase. I invest in Dayton and was considering that property - it was just a little too much out of my comfort zone. But I think if you do it correctly there is good money to be made. Send me a message if you want/need any recommendations on local contractors...I've been through a few. 

    0Reply
  • Nik Krohn
    Investor · Woodland Hills, UT · Member since 2016 · 84 posts · 31 votes
    10y

    Congrats!

    1Reply
  • Patrick Smith
    Wylie, TX · Member since 2016 · 42 posts · 11 votes
    10y

    Wow.  Very exciting!  I look forward to hearing more!

    0Reply
  • Omar Merced
    OP
    Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
    10y

    @Wendell De Guzman You're coming with me next week. Can't wait. It's going to be a blast.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Omar Merced  Mr. Sunshine I like it.... I am in Vegas right this minute sitting under a thunderstorm LOL after have spent the morning looking at potential flips.

    Most call me Mr. Wonderful  

    I do wish you the best with it... based on my experience this is not a deal for beginners or those without extensive experience in PM ..  

    Along with us West coast folks just don't know what we don't know and the mid west and rust belt gives us an education quite quickly  :)

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  • Emma Morris
    Investor · Modesto, CA · Member since 2016 · 20 posts · 9 votes
    10y

    Congratulations, that is awesome!!! Very happy and excited for you, keep us posted as to how the rehab goes. 

    0Reply
  • Thirumalai Satish
    Palatine, IL · Member since 2016 · 7 posts · 3 votes
    10y

    congrats

    0Reply
  • Omar Merced
    OP
    Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
    10y

    @Chad Olsen Thx. I'll be posting all the numbers. Good and bad.

    @Jeffery Waicak You're closer than me. Come out and take a look.

    @Account Closed Thank you guys for making an awesome site!

    2Reply
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