Great numbers but high crime in hartford area. Any thoughts

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Great numbers but high crime in hartford area. Any thoughts

James Denon
Investor · Westbrook, CT · Member since 2016 · 79 posts · 27 votes

I am contemplating this deal. It is bank owned rehab in Hartford CT Connecticut Asylum Hills.

https://www.trulia.com/property/1045642098-314-Sar...

On paper it is awesome 80K for 6 units. After rehab, you can charge 1000K rent each.

All 6 units are large 3 bed 1 bath.

However this is the downside:

1. The deal is "site unseen". There was some drug activity so the bank decided board it up. They wont let you in for inspection. They wont even let you inspect before closing. So, I dont know if it needs major repair or not. I know it needs new kithes, appliances and roof. I dont know what else. Is it 50K repair or is it 250K repair? Looking at the photos, it doesnt seem too bad. Looks like 100K. The after rehab value will be 360K based on 10CAP. This is a huge risk.

2. The neighborhood is rough. There is a fish joint right next door. There is a full time fried fish smell coming to the sixplex. Just as I was there for 10min, there were 2 drug deals that went on in front of the place. I thought trulia's crime map was faulty but now that I have seen the deals, I think it is correct. Does everyone agree trulia's crime map legit?

3. The complex does not have parking. So, people would have to park on an unsavory street at night. Even if I did a decent job in rehab. Make it nice, I dont think I will be able to attract good tenants given the crime rate on the street, lack of parking off street and constant fish smell..

Bottomline is, although the deal looks great in numbers, I will pass. Thoughts?

If anyone local to the area thinks this can be workable, I am willing to work together partner up.

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Scott Hollister
Rental Property Investor · CT · Member since 2015 · 400 posts · 432 votes
9y

@James Denon

You have a lot of unknowns going on with this potential investment. You have already told us why not invest in this:

  1. It is site unseen. Not even a walk through contingency... 
  2. "50k repair or is it 250k repair?" I don't see how you can make a realistic offer unless you budget for everything new on the inside, down to studs. But what if there is a structural problem? 
  3. Neighborhood is rough
  4. Fish joint next door
  5. Drug deals
  6. Crime reports
  7. No parking
  8. Not being able to attract good tenants

My advice would be to stop trying to talk yourself into this "investment". Even if numbers look great, you still have to factor in the above mentioned. 

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  • Tony Velez
    Hvac · North Haven, CT · Member since 2015 · 298 posts · 79 votes
    9y

    @James Denon we've been contemplating investing in Hartford as well. There's so many properties in Hartford that look like the numbers work. But we have been reluctant to invest in Hartford just for that reason. I would call property management companies that serves Hartford and pick there brain. 

    Tony V

    3Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    An old school Hartford "split six" I spent a lot of time working with the Housing authority doing rehabs for the ones they own (repointing, windows, etc..). These were all section 8 properties though (from memory). I was followed on foot, followed in the car, and even threatened on a few occasions while measuring buildings. A bad area of Hartford is a bad area of Hartford. I can't imagine someone paying $1000/month to live in a bad area of Hartford, but I honestly do not know the rents. From the ones I did work on, they needed a lot of work. Do you know if it is gas/oil/electric heat, steam/hot water, if the electrical panels are ok, etc. if it needs repointing, roof, windows, mechanicals as well as cosmetics, your looking at a lot of rehab costs. Not to mention it has been on Trulia for 2 months with no other investor interested...

    2Reply
  • Carl Schmitt
    CT · Member since 2010 · 135 posts · 100 votes
    9y

    I live in the West End of Hartford and the north end properties always look tempting.  Then I consider the fact that I won't even drive down Albany ave after dark.  I'm not sure I'd want to be showing up in the middle of the night for a tenant issue.  

    I also worry about Hartford's finances.  While all of the surrounding towns have mill rates in the 25-40 range, Hartord's is over 70.  A lot of the properties I see seem to have artificially low assessed values.  For example, smaller multi family properties on the market for 150k and assessed at 50k.  I haven't done a ton of digging as to why that is but with the city in as much trouble as they are, I worry that a property's taxes could easily double from one year to the next.  

    2Reply
  • James Denon
    OP
    Investor · Westbrook, CT · Member since 2016 · 79 posts · 27 votes
    9y

    @Brian Pulaski, If you look at the market rents around, you can charge 900-1150 in that neighborhood. It  probably is all section 8 though.

    Why were you followed and threatened?

    I dont know any of the rehab details. I have been told the heat and hot water are all seperate utilities. I have been told it needs a new roof. However, I cannot see the inside of the property to make an estimate at all.  It is boarded up and site unseen.

    It was under contract and it fell through. It just went back on the market. I think bank got multiple offers the first time and it took a while to respond. Zillow shows the under contract date of 1/31.

    0Reply
  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    9y

    I see you are relatively new to Bigger Pockets. Welcome! It will help you to know there are many forums available on a wide variety of subjects. Glad you got an answer to your question, but you posted in the Renter's Discussion forum, which isn't the best fit. Many people erroneously post in the Renter's Discussion forum.

    Renter's Discussion: "This is the forum for renters who are looking for advice in dealing with their landlord. Ask questions about dealing with landlords, leases, tenant rights and other important issues."

    Under the Community Tab you will find Forum Categories and you can check them out to find the best forum for your questions.

    2Reply
  • James Denon
    OP
    Investor · Westbrook, CT · Member since 2016 · 79 posts · 27 votes
    9y

    @Marcia Maynard Thanks. If you are an admin, can you please change it to analyze deals category?

    I could have sworn, I categorized it as such.

    0Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    @James Denon I do not know why I was followed, but it happened 3-4 times where it was obvious the certain person was following me around the properties I was looking at.

    I was measuring a property for new windows (HHA owned) when I worked for a design/construction admin firm and was told to not measure windows on an apartment or I would be shot. No window measurement was worth that so I left. Lots of drug deals and crazy things I saw while we oversaw the construction projects.

    1Reply
  • Rick SantasierePro Member
    Real Estate Broker · Granby, CT · Member since 2015 · 695 posts · 317 votes
    9y

    @James Denon. I am just copy pasting this from the site (trulia) you back linked to:

    02/13/2017RobberyArmed Robbery. PD o/s of a robbery at 7-Eleven. Hispanic male with a handgun fled on foot.
    02/06/2017AssaultShooting/Stabbing. PD o/s with a victim stabbed , FD & EMS enroute
    02/03/2017OtherCRIMES AGAINST THE PUBLIC. DIS-CONDUCT. NEIGHBORHOOD: FROG HOLLOW
    02/03/2017OtherMISC. CRIMES AGAINST PROPERTY. CR MISCHIEF 3. NEIGHBORHOOD: ASYLUM HILL
    02/03/2017TheftLARCENY. LARC4 SHOPLIFT. NEIGHBORHOOD: PARKVILLE

    This information is a matter of public record, and appears to be fairly consistent within some areas of Hartford.  With a building built in 1880, you may as well do a full gut rehab, because most likely, items that went wrong in the past were not handled properly (yes, this is an assumption).  Doing a full gut rehab won't make sense either, because that would cost more than the property can support.  Even at $1,000/month, your putting yourself at risk, physically, as well as financially.  We manage property and work with investors, and this does not seem like a good deal, at all. Buying something sight unseen you always need to assume the worst, but hope for the best.  In this case, hope, would even be far fetched. Linking up with some other landlords in the area and networking might be the best you could do to truly decide if you are up to the challenge of managing and renting Class C - C- property.  I have a pretty simple formula: If I need a bullet proof vest to collect rents, I don't bye (or manage for that matter) those types of properties. If I couldn't "stop by" with my wife after a Saturday afternoon lunch just to say hello to tenants, then I am out.  This IMO, is a definite pass.  If you ever want to link up and get some input from another investors perspective in the Hartford area, feel free to reach out privately.

    2Reply
  • Scott Hollister
    Rental Property Investor · CT · Member since 2015 · 400 posts · 432 votes
    9y

    @James Denon

    You have a lot of unknowns going on with this potential investment. You have already told us why not invest in this:

    1. It is site unseen. Not even a walk through contingency... 
    2. "50k repair or is it 250k repair?" I don't see how you can make a realistic offer unless you budget for everything new on the inside, down to studs. But what if there is a structural problem? 
    3. Neighborhood is rough
    4. Fish joint next door
    5. Drug deals
    6. Crime reports
    7. No parking
    8. Not being able to attract good tenants

    My advice would be to stop trying to talk yourself into this "investment". Even if numbers look great, you still have to factor in the above mentioned. 

    5Reply
  • Ian R.
    Real Estate Investor · San Antonio, TX · Member since 2016 · 143 posts · 167 votes
    9y

    What @Scott Hollister said.  I agree, you've pretty much already answered your own question and several other local investors have confirmed.

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    This is a type of area where a experienced professional landlord/investor could make a excellent return but likely far more than any novice landlord should ever consider. C/D class properties are excellent money makers based on having welfare tenants but it requires intensive hands on management not intimidated by the area. If you are reluctant to enter the area you do not have what it takes to be a landlord in that area.

    I would not even consider a PM, this is a area where only a owner should be overseeing the properties. 

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    we never let ( can't go in for an inspection ) keep us from busting in.. who is going to risk buying a shell site unseen.. I am about as aggressive as they come.. buying many courthouse steps props.. but the only ones we can't get into for vanilla little SFR's a multi NO way no how.

    also unless your really up for the challenge PM in this type of area is something that only a landlord that lives it and works it for a living and understands the tenant base and always has their glock on them..   And I know plently of those folks been funding them for decades... its what they do.. but if your not up for it you will get hosed financially and could get hurt physically.

    one of my hood landlords just got robbed at gun point..  teenager walkup behind him stuck a gun in his back and took his wallet... problem is sometimes these evil people will just shoot you for 100 bucks.

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    1Reply
  • Mark Proctor
    Investor · New Britain, CT · Member since 2015 · 26 posts · 12 votes
    9y

    Hartford's mill rate scares me as they have current breaks that assess at 30% value not the 70% that is standard in CT. I don't know how long those will be kept low for. as per the other reasons you mentioned I would walk away. Unless you have bullet proof skin and dont mind deealing with the tenant selection and calls at all hours of the day or night then i would suggest to skip and find better deals. I am finding 12 caps all day with little to no rehab work.

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    I read through the thread, and generally agree with everything that has been said. Also take into consideration that because this is a non-liveable REO (in it's current state) you would likely need to bring it up to code in regards to fire escapes, fire suppression systems, fire rated door$, etc. $$$$ It's my understanding that if the property is currently being lived in, then it is "grandfathered in".

    I wouldn't touch this with a 10 mile pole. My $.02.

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Rick Santasiere shared this on social media today. More evidence...pun intended!
    http://fox61.com/2017/03/08/16-people-charged-as-part-of-fbi-and-police-investigation-into-hartford-street-gang/

    0Reply
  • Iverem Rose
    Real Estate Agent · Brooklyn, NY · Member since 2014 · 250 posts · 60 votes
    9y

    @James Denon

    Id pass on the deal too. There's too many red flags. Given the location, you are going to have a difficult time attracting good tenants.

    1Reply
  • Craig Bellot
    Property Manager · CT · Member since 2014 · 687 posts · 329 votes
    9y

    I would pass as well.  Neighborhood is too rough and to me not worth the headache. 

    Also looks like you'll have to do a full rehab.  That will take at least 6 months start to finish for all 6 units. 

    You won't be able to find the right tenants to keep the rent stable unless you go with section 8. 

    1Reply
  • Cosmo Iannopollo
    Investor · Wakefield, MA · Member since 2016 · 107 posts · 71 votes
    9y

    Hard pass. I lived in Hartford for 6 months in a place like this. Was a renovated building in a C neighborhood and the PM told me they were renting units for $500 to try to attract tenants like myself (good credit, stable income, no arrests, etc.). I signed a 6-month lease and left right after. Never felt comfortable there. 

    Most likely scenario, you spend a ton of time and money fixing this place up only to have section 8 tenants to choose from. Your PM may charge a premium for having to work a rougher area, and your tenants will most likely undo your hard work. Not to mention, you can't change your neighbors and that fish smell likely isn't going away. 

    Cheap does not always equal deal. Unless you see the neighborhood turning around dramatically in the next year or so, I'd let someone else take advantage of this "opportunity". 

    0Reply
  • James Denon
    OP
    Investor · Westbrook, CT · Member since 2016 · 79 posts · 27 votes
    9y

    Thanks everyone for the insightful responses. This deal was DOA for me. The reason why I posted was, I was hoping someone would come out and say, I am being a wuss and people make money off these type of properties all the time :) When the discussion involves carrying a glock, I guess thats where one should draw the line..

    At this point, I am looking for either one of the 3:

    1. 35-40% Cash on cash return properties with none to little deferred maintenance in CT market as @Rick Santasiere and @Filipe Pereira stated that kind of cashflow would beat any appreciation.

    2. BRRRR in CT market

    3. BRRRR service provider who will get me instant 20-25% equity after refi good markets in US. This would be tough to remotely oversee a provider from a distance. Not sure if anyone successfully done that.

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    I'm curious - why is the deferred maintenance an issue? Are you concerned you won't have the capitol to have the improvements done? @James Denon

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    9y

    @James Denon

    1. 40% cash on cash on a property that needs no work? Are you buying with a conventional loan or FHA?

    2. BRRRR in CT. Definitely possible, but do you have your financing lined up for this or are you planning to pay all cash?

    3. Never even tried this one. Sounds awesome though. 

    0Reply
  • James Denon
    OP
    Investor · Westbrook, CT · Member since 2016 · 79 posts · 27 votes
    9y

    @Filipe Pereira As an example if the furnace is 20 yrs old rather than new, it is more likely to need repairs on a consistent basis and increasing the maintenance costs. I also may need to take into account more the 5% capex assuming that I would need to replace it in the next 5 yrs.

    I am flexible though. If know it is hard to find the perfect property.

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    Get a good PM and all it will take is money. :) No "stress". 

    0Reply
  • James Denon
    OP
    Investor · Westbrook, CT · Member since 2016 · 79 posts · 27 votes
    9y

    @Michael Noto 

    1. I can do either type of loan. I am prequlified for >500K loan

    2. Deals seem scarce. I can do all cash or finance it whatever makes sense. Do you have anything that comes close to 20-25% equity after refi after I pull all the initial investment(purchase+rehab) out? Preferably multi family..

    0Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    @James Denon,

    I must say, it looks very tempting!  If you are at a point, where you can pay everyone, and never have to go there yourself,  then logic should override emotion IMO.     If you can hire a PM to do everything, and you just collect rent checks, then why not?    My mentor buys properties like this, and he just goes off the section  8 check list of what needs to be fixed, does the minimum fixing required and rents them out.   I don't agree, but just saying--it can be done, but it does take cold and thick skin.   The quality of your product will reflect the quality of your renter.  

    If you don't have all the $$, I would run for the hills.  It's also kind of a moral/ethical question-- why would you put someone in a house you know is unsafe, especially if you think of kids?  When people don't have anything to lose, you're guaranteed problems, and you gotta know how quickly they'll run to the news station and you'll be publicized as a slumlord.   Personally, if the whole area is bad.. you're looking at a bigger problem than 1 building, or 1 block,  if the jobs and growth are there, it'll only go down hill.   

    Lastly,  if you buy.. definitely agree with @Jay Hinrichs, go ahead and bust in, bring the tools and board it back up when you leave. ...  Just be wary, if there was any meth in this place, you have a lot bigger problems! 

    0Reply
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