Buying rental property next to auto body shop

4 Replies

Hi Bigger Pockets community,

First off, this is my first post here! I'm a new investor looking to invest in small multi-family (2-4 unit) BRRR properties in the Portland Metro area for under $400,000. I'm currently eyeing a listing that's in a good neighborhood in an up and coming area, but it's next to an auto body shop, and there is a fairly large apartment complex behind it. It's older construction (built 1906, no rehab info available in the listing or public records) and it will need to be updated. Also it's been on the market for almost 30 days, and they have already lowered the list price by 6%.

On the surface it looks like a decent price for the area, but I'm wondering if it should be priced lower considering the surroundings and the condition of the property. 


Do things like being next to an auto body shop and a large apartment complex affect the amount that I'd be able to ask for in rent? And any advice on making an offer? I'm considering having my agent write an offer that's about ~76% of the asking price with an inspection contingency. 

Also any advice on finding out what work has been done on it?

Thanks!

@Mike Meerschaert if this is within the city and it has sat for 30 days then definitely overpriced. You could ask the seller for bills showing what work has been done. Your agent should be able to get some history on the building.......has it been under contract and failed inspection etc. My agent comes up with all kinds of gems. I'd visit the property and walk the immediate area thoroughly before even making an offer. Often you will bump into a tenant; maybe talk to the body shop owner? Stuff like that. The body shop and the apartment building affect price. I save serious negotiation for after the inspection. All the best! 

We low balled & got a 3-unit next to one & the tenants always complained about paint fumes & noise. Then they installed a 20ft high propane tank, so our insurance carrier cancelled us & we fought the assessment & got it down to 50% of what it was. So we sold it rent-to-own as conv. financing also balked on any financing. So we proceeded to collect a nice return for 10 years until they walked away. We sold it for what we originally paid & moved on.

@Mike Meerschaert  
Do things like being next to an auto body shop and a large apartment complex affect the amount that I'd be able to ask for in rent? (Absolutely it will affect the price you charge in rents. Simply put yourself in the tenant shoes. Ask yourself would you live there? If the answer is no, then what quality of tenants would say yes. You may not attract the best tenants regardless of the area.)

And any advice on making an offer? (Make an offer that's in line with other comparables in the area similar to the number of units, sqft and condition the property is in)


Thank you all for the advice. I think it I may just avoid this one despite the price due to the exact location. It's in a good neighborhood and a good part of town, but due to the immediate surroundings I don't think it may be a huge headache to keep rented.

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