Considering buying, bulk rental!!!!
Here is a question that I have for all the expert landlords out there.
My folks own roughly 50 rental units, in a small town of about 14,000 people. There is still a note on the rentals that has 4 years left, monthly payment is roughly $3,000.00. Theses rentals are not in very good condition. They need quite a bit of work in order to get them back in shape. What I am trying to figure out right now is if there is any hope for me to even get these houses back in good condition one at a time. They are creating good cash flow, but the value of the homes are decreasing since they are in not so good shape. I have access to good contractors, so I can get good deals, and I have been an insurance adjuster for the last 8 years. My folks bought the homes from my grandmother, after my grandfather past (my grandfather used to have 98 houses in my small town at one time and creating great income $30,000 to $40,000 monthly). So this has been a family owned business for the last 40 years, I have great experience in the construction side and landlord side. My folks don't put a lot of money back in the business (I know this is the first mistake), they also don't enforce lease agreements, and let renters fall way behind in rent.
Basically I was going to take the note over on half of the homes, so I would have roughly 25 properties with a $3,000.00 payment to make every month, and in the near future try to buy out of the rest of the rentals. The rentals are worth in the condition they are in is 600k to 700k, but well over 1 mil to 1.5 mil, if properly taken care of.
My idea for buying these is put as much money as I can back in the properties to bring the value up, better renters, enforce all legal documents, lease agreements, termination notices, Ect., and buy more rentals. (I am also going to flip properties at the same time).
The main reason the rentals are in such poor shape is lack of labor, and not fixing items properly the first time. I know you can't make a rental a brand new home everytime, but you can take better care of them and rent to good tenants.
I guess I am just looking for advice, as if this is a good deal, should I move forward and take my approach?
Oh and ill throw this in, aswell
They get hit with big time property tax, and income tax at the end of the year. I myself, explained to them that if the homes were fixed up better, they can start doing pre inspections and post inspections on the homes and find out what was left damaged. Charge the tenants for the damage, and if going to court doesn't get any monies back for the repairs, they can then estimate the damages, and depreciate by age and write of the loss for the repairs, and rent, as repairs are being made. Also there is alot of other ways to get a break.
So if you guys or gals can give me any input on what your thoughts are I would appreciate it a lot.
I hope I made sense here
Thank in advance
RD