Property Manager · Queens, NYC · Member since 2016 · 110 posts · 58 votes
slumlord is a pretty harsh term, however, let's say
-Its a rough neighborhood (some spray paint and busted windows on various bldgs)
-A bunch of 2-4plexes on the block
-the living conditions of current tenants is bad (partial electricity, no hot water, holes in windows and walls, rats)
-some visible mold on a couple walls
-doesn't seem to have had any management/maintenance at all
Owner hasn't been able to sell for a few years. recently dropped from 75k to down 60k (a year ago a similar triplex nearby sold for 75k)
The owner is out of state and will carry a note - willing to take 10k down and carry 30 years @5% with 5 year balloon through his realtor.
has 2 2/1 on each end that will rent out for about 450 and in the middle a 1/1 to rent about 350
Personally, I can't imagine allowing people to live in such conditions, and would have to fix it up as best as possible - keeping in mind the neighboring houses are in disrepair as well
sounds like a great deal but also a potential nightmare
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
7y
If this is the "norm" for the area, and there is no foreseeable improvements coming to the area..... then unless you like to deal with the drama of D class tenants and neighborhoods, I would pass.
The fact that you "feel bad" for these people's living conditions is a warning sign that you may be thinking with your heart and not your head. Unless you want to take on the role of social worker and try and pioneer the improvement of the entire neighborhood, then I would pass.
If this area is likely to remain a war zone forever, then I would pass..... $$ can be made but its not my cup of tea.....
Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes
7y
If you do do an owner carry have the title held at a title company and make payments directly to them. They will charge you $20 a month for the service but it protects you from getting hosed in the end by the slumlord. Kansas Secured Title downtown would do this for you. The rents seem ridiculously low. Each unit could use another at least another $100 bill on the rent. I’d get in touch with @Jeremy Woods. He knows what time it is.
slumlord is a pretty harsh term, however, let's say
-Its a rough neighborhood (some spray paint and busted windows on various bldgs)
-A bunch of 2-4plexes on the block
-the living conditions of current tenants is bad (partial electricity, no hot water, holes in windows and walls, rats)
-some visible mold on a couple walls
-doesn't seem to have had any management/maintenance at all
Owner hasn't been able to sell for a few years. recently dropped from 75k to down 60k (a year ago a similar triplex nearby sold for 75k)
The owner is out of state and will carry a note - willing to take 10k down and carry 30 years @5% with 5 year balloon through his realtor.
has 2 2/1 on each end that will rent out for about 450 and in the middle a 1/1 to rent about 350
Personally, I can't imagine allowing people to live in such conditions, and would have to fix it up as best as possible - keeping in mind the neighboring houses are in disrepair as well
sounds like a great deal but also a potential nightmare
Investor · USA · Member since 2015 · 325 posts · 447 votes
7y
@Maurice Evans
I have purchased from a slumlord before. There were bullet holes in the roof and siding among other things. The problem with the property you are talking about it will take a long time, if ever, for the property to appreciate. If it is surrounded by a terrible neighborhood it will attract bad tenants.
The slum I bought was in the middle of a corn field, single family houses, and other farms. It was easy to get the bad tenants out and get the right people in.
I worry that you may be mixing your want and desire to help folks with being a landlord. That is a dangerous concoction. Check out James 1:8. Good luck!
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
We bought one like that here last July. I really did not consider it habitable though it was/is occupied. A seven unit for 13k/unit. It cashflows half empty-- which is good because I had to get out all the crazies/criminals and we needed empty units to fix the many,many plumbing issues. We are financing the many, many DIY renovations via a home depot project loan and we'll do the 12,000 plumbing repairs on a credit card and then balance transfer to a 0 interest card for 24 months. We'll be at 19k /unit AR. The units will be cute and clean when they are done. But I do things that are rarely recommended--- like trading work (mostly low skill work) for rent. I traded rent to get all the demo done for the plumbing and all the old cabinets torn out. My husband is a skilled carpenter. My handyman is a decent basic plumber/drywaller/all around handy guy. I only pay pros when I have to. I go around and find used cabinets CHEAP or free and pay tenants to carry them up all the stairs and I have a tenant trained at refinishing them with the rustoleum kit. I went out on black friday and loaded UP on .50/sq ft laminate and 2/sq ft backsplash tile (YASS we're going to have subway tile backsplashes). There are good tenants in bad neighborhoods.
Would I buy a triplex from a slumlord? ...hmmm let me think about that , heck yes ! In fact I have multiple times ! Except I never paid more than 40 grand for one .the hard part of doing it is learning where to put money into it and what to let go . It’s surprisingly easy to turn into a slumlord yourself especially after you spend four exhausting weekends getting the exterior looking great .. then you stop by and see trash in the landscaping,somebody spray painted the siding and the next week a splattered cherry slushie clear up the side of the building to the roof .. don’t ask me how I know all this lol Eventually you might say “ screw it let them live like animals and I’ll just collect their rent”
Rental Property Investor · Tampa, FL · Member since 2017 · 70 posts · 115 votes
7y
Lol. @Dennis M. never disappoints.
If this house is as bad as you say and been on the market for years, he'll let it go for around 40k is my guess. That being said, it'll take a lot of momentum to get it up to speed and a lot of moxy to deal with the neighborhood and clientele. Unless this is your skillset like our boy @Dennis M., I'd let this one go. Maybe see if this guy has other units that he's looking to offload?
If this house is as bad as you say and been on the market for years, he'll let it go for around 40k is my guess. That being said, it'll take a lot of momentum to get it up to speed and a lot of moxy to deal with the neighborhood and clientele. Unless this is your skillset like our boy @Dennis M., I'd let this one go. Maybe see if this guy has other units that he's looking to offload?
What's the address? I think I've seen the one you're talking about. Iffy if I'd buy there if it's the same one - some of the blocks in what google identifies as "South City" aren't that bad - dealt with people in my former job in a # of the areas - some really crappy areas (more easterly and southerly - some are just a bunch of blue collar working stiffs. Lots of decent houses that would probably rent for $500-800 - most of the nicer single families are in the middle to northern and western quadrant but E of the RR tracks.
The WWii housing are the neighborhoods known as Hilltop (pocket near Lincoln/Oliver) and Plainview - Plainview has a mini pocket of Asian Immigrants where the houses are nice (relatively speaking) and picked up and insides (of the one's Ive seen) were decent - think they were Thai or Cantonese - can't remember - had to meet with a few folks for for former ins job there - Plainview I would never invest in - but that's me. Figured that's where you were talking about when you said no running water - holes in roofs etc - of any place in town that's where that will happen. The pocket of Asian immigrants I did not see with houses that way - at least the ones I dealt with. did see a lot of drug deals with dudes on bicycles near a warehouse in the middle of plainview was located - When I was in college an employer I worked for rented warehouse space at the empty shopping center in the middle of the community - sure it was a hopping place around WWii at the height of the manufacturing heyday.
But yes you are correct it was supposed to be bulldozed - can find a few interesting articles on those hoods on kansas.com or by googling.
Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
7y
I would avoid unless there is a seed of gentrification. At least 15 percent gentrification. But if you have to go in solo, and there aren't already smarter people gentrifying that area, then I would play it safe. You can't gentrify an area on your first or second deal.
I think these are different. There is some, not a lot, but enough spray paint on a few buildings and a fence, broken/boarded windows and long standing trash on this block and in the various triplex lot
Real Estate Agent · Luray, VA · Member since 2016 · 460 posts · 293 votes
7y
Like others mentioned above, you will have to judge if it is just a war zone or if it is an area that is currently starting to undergo gentrification. Would you say the neighborhood is gentrifying, stable or deteriorating? Location is the most important thing, all of the other things you mentioned can be fixed.
Also, you need to analyze the market and see what rehabbed properties are getting rent wise in this area. If there isn't a whole lot of upside on the rents, then lower prices like that will make it very difficult for you to be profitable due to repairs and long term capital expenditures.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Michael Kiley Yes, pun intended. I saw he is a pastor, but I also saw that it appeared the real reason wanting to buy this property was because he felt sorry for those living there. That is absolutely no reason to invest in real estate. That is more like charity, which is fine, if that is your goal. No disrespect was intended. Just agreeing with everybody else it appears it is not a good buy.
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Maurice W. Evans Seems like this is more than a nightmare and sounds like a horror movie set! 😱
A ton of red flags here! 🚩🚩🚩
Honestly, Real Estate doesn't have to be painful, and the awesome power of this website is having millions of others helping to check your blind spot.
Here are a few questions to consider:
Would this triplex bring your joy? *stole this from Marie Kondo*
Will this area and the neighbouring houses evolve into a very nice neighbourhood in a year?
Can you sell this property to another investor at an appreciated price point within a year?
Make sure you aren't doing a deal just for doing a deal sake.
Real Estate Investing can bring a lot of wealth and happiness; however, it can also bring a lot of pain and angst if done incorrectly, Believe me I know!
slumlord is a pretty harsh term, however, let's say
-Its a rough neighborhood (some spray paint and busted windows on various bldgs)
-A bunch of 2-4plexes on the block
-the living conditions of current tenants is bad (partial electricity, no hot water, holes in windows and walls, rats)
-some visible mold on a couple walls
-doesn't seem to have had any management/maintenance at all
Owner hasn't been able to sell for a few years. recently dropped from 75k to down 60k (a year ago a similar triplex nearby sold for 75k)
The owner is out of state and will carry a note - willing to take 10k down and carry 30 years @5% with 5 year balloon through his realtor.
has 2 2/1 on each end that will rent out for about 450 and in the middle a 1/1 to rent about 350
Personally, I can't imagine allowing people to live in such conditions, and would have to fix it up as best as possible - keeping in mind the neighboring houses are in disrepair as well
sounds like a great deal but also a potential nightmare
:/
Maurice,
I've become quite successful buying apartment buildings in war zone areas. However, I wouldn't recommend it specially for newbie investors.
Lots of headaches.
And lots of things can go wrong.
If you succeed, you'll make a lot of money. If you fail, you'll lose the property.
Either way, you'll work your behind off like you've never done before. And a building in a war zone is not really a passive investment.
Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
7y
@Maurice Evans I would do it. I’ve done it. My only regret is that I paid too much. I looked and looked but stuff still
Got by me. Expect the worse case s scenario on every thing.
I buy that stuff and then one by one I restore the buildings to top Condition. Get some good tenants. Keep in mind like attracts bad landlords have bad tenants. Not all tenants are bad but to give you an example 10% of the 30 tenants I started with when i bought out my slumlord.
He been sucking the life out of those buildings. Don’t let him walk away with a nickel more than you have to.
Real Estate Agent · Memphis, TN · Member since 2019 · 261 posts · 253 votes
7y
We find that units in this range tend to just not be worth it largely, with that sentiment being especially true for out-of-state investors. These types of units are the kind that we will almost always find ourselves reselling within a year or two because the Buyer couldn't make it work.
Rental Property Investor · Portland, OR · Member since 2018 · 45 posts · 10 votes
7y
@Matt P. Yeah those sound like great numbers. I live in Portland and to get those numbers your looking at $200k at least. I’ve been looking around in Ohio cities for bigger multi family but they are all in high crime areas. Have any tips on nice cities near you?