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
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.....
I would base it on the location. I recently purchased my first property that sounds exactly like this. The reason I moved forward with it though is the block it sits on is full of new development and new jobs are moving into the area. I've been managing it myself and dealing with a ton of headaches, but I think it will be worth it since I can force some appreciation and eventually raise rents when development is complete.
@Maurice Evans If it cash flows then take the risk. Sounds like a good opportunity to buy and improve conditions of the property to build equity. You’d help yourself, and help improve the living conditions for others. It’s a win for everyone.
Talk with the local lenders bc they will let you know what the lending criteria looks like and you can even give the details of what your looking at to see what they would be able to do for you. I’m Chicago there’s a lender called CIC that helps landlords in rougher area to get loans including fix and hold loans, offering great handholding. Several good conversations had with the lending officer about potential deals. He gave me insight into how to model and their expectations to get me in and up and running. Check local, look for lenders that help these communities. They may have a program that not only gets you the loan but can even help you get some grant money too.
Talk with the local lenders bc they will let you know what the lending criteria looks like and you can even give the details of what your looking at to see what they would be able to do for you. I’m Chicago there’s a lender called CIC that helps landlords in rougher area to get loans including fix and hold loans, offering great handholding. Several good conversations had with the lending officer about potential deals. He gave me insight into how to model and their expectations to get me in and up and running. Check local, look for lenders that help these communities. They may have a program that not only gets you the loan but can even help you get some grant money too.
Thats interesting. Do you have CIC info (via PM maybe?) I bet they know their counterpart here.
@Maurice Evans I would totally buy it if the neighboring buildings were decent. Look for the worst house in a good neighborhood. Buying the worst house in a bad neighborhood can only mean trouble. You'll fix it up hoping to attract better class of tenant but they won't want to live around the neighbors you have. So then you'll attract the same class of tenant you already have but they will just destroy it so that rehab money will just go down the drain. Does this landlord own the adjacent buildings? Perhaps buy them all and start turning the neighborhood around. all real estate is location based. Never forget that.