I live in a town home association just north of Minneapolis, MN.  There are 47 total units, and all of them are no trouble, except for one particular neighbor.  The owner is older, and does not live at this town house.  Instead, his daughter lives there with a handful of young men who are selling pot and other drugs.  The police have tried to raid them multiple times, to  no avail.  They break numerous association rules, and while we fine them diligently (I'm on the association board of directors), they always pay the fines (to the tune of $3000+ per year).  As an association, we have no legal recourse to evict them as long as they keep up to date on their dues and fine payments.  And since they are not technically renters, they can't breach a rental contract and be evicted that way.

After dealing with this for years now, my wife approached me with the following idea: We offer to buy the town house from the owner and turn it into a rental property and evict the troublesome neighbors living there.  The owner will never be able to sell the property at market rate without numerous interior repairs.  It is a 3 bed 2 bath unit, and would sell for around $185K if it were in decent shape.  Our idea would be to offer to buy the owner out of his remaining mortgage (I'm thinking $125K), telling him that he then won't have to pay for his daughter's housing, and he won't have to go through the hassle of rehabbing the place when he does need to sell it someday in the future.

My questions are:

1. Is this a good idea in general?
2. As long as the numbers work out on my end, what are the potential downsides of this approach?

Thanks in advance for any advice.

Definitely wise idea.  Get rid of the headaches and negative vibes caused by these individuals.  These trouble makers are causing a negative impact in terms of rental and condo values for your building.  No one wants to deal with criminal activity in their backyard.

Thanks for the reply, @Sami Davis .  If it were just me living here, I wouldn't be as concerned, but I've got kids, and this isn't the environment I want for them.  I feel like it could be a win for everyone except the offenders, you know what I mean?

Worth a shot. However, I wouldn't go into this expecting to get a great deal on the property. Keep in mind that you're not necessarily dealing with a motivated seller. However, sometimes you gotta do what you gotta do to lead a happier life.

Thanks, @Kristina Heimstaedt .  I'm hoping his motivation to sell would be to get out of a property that is costing him thousands of dollars a year in fines, as well as numerous letters and headaches from the Association Management Company.  But you're right, it could be that he's fine with the current setup because it keeps a problem child out of his hair.

No harm in asking, but I would not be surprised if they held onto it since they would then probably have to find a new place for their daughter.  Offering them undermarket also might not work, if they are not planning on selling, their daughter is living there, why would they sell for undermarket?

I am not saying you should not offer, but I would not expect them to just knock 60k off the price so that you can get rid of your problem and make it their problem again. I certainly would not do that deal as an owner.

Hi @Jarrod Kohl .  I have the same thoughts.  It's a bit of a shot in the dark, but I'm hoping it could pay off.

@John Woodington Ummm I am thinking that he (home Owner) isnt paying for anything.  If I were selling drugs this is the best deal.  My name isnt on title and all I have to pay is some fines and possibly pay the house off and keep it in his name.  Do you really think $3000 is a hit to a dealer.  If you really want this out of your hood invest in cameras and start a neighborhood watch.  Capture the cars on camera and possibly invest in a directional mic.  Then submit these to the police regularly.  They can look at the plates on the cars and start leaning on the buyers to give up these guys as the dealers.

Good luck!!

@Sean Phillips. I agree with Sean here. If they are paying off the fines with no problem, they are also most likely paying the mortgage and HOA fees. The owner may be reluctant to sell because he's building equity without spending a dime. You may have to offer above market value to get him to budge. Even then, I would feel a little uncomfortable owning a property where drugs were knowingly sold. Call me paranoid, but i wouldn't want to own where someone could break in thinking they are robbing a drug house.

If the local Police are not giving you satisfaction, you have to get creative.  Make it uncomfortable for the drug sellers and the drug buyers.

@John Woodington Do you think pitching the idea of putting his daughter on the streets is appealing to his ears? So if not on the streets, where does the daughter go? Back to his house? Which is more convenient, paying a couple hundred to have her live somewhere else or she steals thousands of items in the father's house? You need to think like a dad. He can sell the house as is as well without the extensive rehab, of course, at a lower price, but what if he doesn't need the money? What about his monthly mortgage that he already paid, or the down payment? If it were you, why would you accept a deal where you already had dp and monthly mortgages, and probably equity, and entertain someone who doesn't want to pay the value of what you put in?

And yeah, 3k a year is nothing when you're making 3k a month net.

John,

The first thing I'll say is, since its an investment, as long as the numbers work. Doesn't seem like this owner would be motivated but you should def try. In the neighborhoods I invest in, this is my total strategy.  When I see homes that are not taken care of, used for selling drugs, or boarded up, I buy them. The more on the same block the better. I now control who lives there. Those dozens of  homes that looked horrible on the next block over? I own all of them now and all look beautiful and have great tenants in them. I found that by doing this, the neighbors started taking care of there own properties better. 

Make an offer, talk to the owners, it doesn't cost anything to have a conversation.

Just try it and be prepared to follow up periodically. It's not worth speculating on what he might do. Worst thing he can say is no.

Originally posted by @Sean Phillips :

@John Woodington Ummm I am thinking that he (home Owner) isnt paying for anything.  If I were selling drugs this is the best deal.  My name isnt on title and all I have to pay is some fines and possibly pay the house off and keep it in his name.  Do you really think $3000 is a hit to a dealer.  If you really want this out of your hood invest in cameras and start a neighborhood watch.  Capture the cars on camera and possibly invest in a directional mic.  Then submit these to the police regularly.  They can look at the plates on the cars and start leaning on the buyers to give up these guys as the dealers.

Good luck!!

 Just keep in mind before doing this, that many states do not allow for sound recording without prior consent. Video recording of the condo association common areas should be easy enough to get set up though.  Get cameras in all of the common areas and near the entrance points that they end up using.  That alone might convince them to move along.

I would start with the common area camera approach. I serve on my HOA's board and believe it would be an easy sell to my group if you have reasonable suspicion that they're selling drugs out of the house. I'd even be willing to put up for a special assessment if it were that costly and you didn't have the neccessary funds.

Good luck with the father/owner. He's either in denial or going to do whatever it takes to keep his baby girl off the streets. Even if it means allowing this to happen at his property. 

You guys are assuming a lot about the success of their drug dealing operation lol. Most drug dealers don't really make very much at it. Dad is probably paying all the fees and mortgage. 

@John Woodington first, look at the numbers and see if they work as a rental. If not, then it's a bad idea right out of the gate.

Also, the dad may not know that his daughter is doing what she is. I haven't met a father yet that says stuff like, "Yep, that's my girl. You should see the parties she has. And all the guys she lives with are real good people too. I can't believe she pays lower taxes than I do!" He may be 100% clueless. You can send a letter and mention why you want to buy. He'll either get in some @$$, or be mad at you for interfering. I like the camera ideas. My friend had an issue with a detached parking area being the place for deals and ditching stolen cars. They put up a couple of blinking camera look-alikes and no more problems.

Lots of options, not lots of details. Best of luck though. I moved to this place 1.5 years ago to get my daughter out of an area that had lots of drugs and crime.

Thanks to everyone for the advice here. I got a note from our local police officer asking if any of us on the HOA board would be interesting in meeting with the father to discuss ways to prevent the daughter/others at the house from causing so much trouble. I figured that would be as good a place as any to broach the subject of buying the place from him if it came to that.

I also think the point about them being able to pay $3000 in fines when their selling drugs is spot on. These folks have at least five SUVs in their names at this property, which tells me they're making at least some money. One thing I have been pushing is to get our top tier fines raised, as right now the most we can fine for a rule violation is $100. If anyone has any info about their HOA fining structures work that they have found successful, I'd be interested to hear about it.

Wouldn't it be easier to either A) raise the fines so that they have an actual impact vs cost of doing business or ... stay with me here.. take legal action. Now you claim they are doing things illegally and the police can't successfully raid them... so what about something outside that? Can they be banned from the property for violating HOA rules habitually ? Can you sue the father or whoever owns the property for something like disturbing the peace etc? Even if that's not successful it'll be entirely more effective than measly 3k yr (that's 250 mo, that's nothing).

oh and if they have 5 cars... what's the parking policy? Start towing cars...

I'm curious to know what eventually happened here? 

Hi @Annetta B.

Nothing ever happened here for a few reasons.

1. The numbers didn't work as an investment.  Home values in our neighborhood have jumped 25% in the last 18 months, and while that's great for me as a homeowner, it made the other homes in our area too expensive to work as good investments.
2. The neighbor who was dealing drugs got caught by the cops and was gone for quite a while (he's back now, but so far very few problems), so my immediate need to get rid of the problem got rid of itself, at least for a time.
3. Even as a not-great investment, I would have gone for it if I had the right amount of cash on hand.  With two kids in daycare, however, I didn't have enough in savings to make this work and still have a savings buffer in place.

They still have a number of cars (six?) but we did change our HOA fining structure to allow for much heavier fines in the future, so hopefully the worst of the problems are behind us. That said, this was a good lesson for me, and in the future I plan to be better financially prepared to attempt to take control of situations like this.

I see. Yes the drug thing is hard to work around. Thanks for the update. 

I bought my neighbours house in order to get rid of problem neighbours and i've put a lot (too much) money into the house. Bigger pockets would not approve! This week one of the members of the family parked his trailer in the park on the other side of me and started hanging out with another neighbour. I thought he was moving back in but the police told him to move on. He's a known drug dealer and thief. He might be back in the future.