What's everyone's take on a multi home great ROI 18-20% cap but not the greatest of areas. I know the exit isn't going to be much but cash flow is awesome. Is it worth the risk?
For me that would depend on several factors, mostly is the area going up or down, and how long I was planning on holding it. Tenant quality is important to me, so for me unless the area was improving I would pass.
However, your ROI is really good, so just look at all your numbers and if it makes sense to you, that's what counts.
Not worth it. If I don't feel comfortable sending my girlfriend to the property after hours to pick something up or drop something off, I stay away. That's how I gauge the areas I want to be in, at least partly.
I don't care how good the returns are, if I have to pack heat to do maintenance calls, I'm not buying it.
Are you going to self manage it @Chris Snyder ? If you aren't, make sure you can find a property management company that will. Some property management companies will stay out of certain areas because of how rough they are.
Is not worth it send it to me haha!! In all seriousness, I think you should do it just do not send your girlfriend there by herself. good luck to you.
@Chris Snyder after owning multifamilies in both good and bad areas, I’d much rather buy a 4-5 cap in a nice area on the upswing. I’ve had much better overall returns on our nicer properties: less turnover/tenant damage/management costs, more substantial rent increases, more principle pay down, more appreciation, much less headaches.
This property is more in a rural area then high crime area. What's a good website that has good data about a specific area ie: migration, employment etc etc
It depends. Keep in mind that rough areas can look great on paper, but the reality is far different. A great ROI for a rough neighborhood is assuming things go smoothly, ie low vacancy rate, consistent rent collection, and normal maintenance/repairs. But the reality is that C and D-class areas are generally more problematic with rent collection and tenant-caused damage. Sometimes purposeful damage. Sometimes damage because they either don't know how or don't care about how to properly take care of a house.
I had tenants in a C-class, though safe, neighborhood earlier this year who completely ruined the kitchen counter tops because they put hot pots/pans directly onto it and would also cut directly on it without using a cutting board. I'm sure they did not mean to cause all that damage. Especially after I subtracted it out of their security deposit. But that was some pretty obvious stuff they didn't think about and/or couldn't be bothered with. And you're more likely to get those types with C/D rentals.