I'm considering buying a multi-family property (10 units) in a bad part of Miami (very low income, high crime). My realtor spoke to the rep for the seller and mentioned that some of the units are occupied by squatters but that he will get rid of squatters before closing. The current owner wants twice as much as he paid about a year ago and it does not seem like he invested any money for improvements, etc. I was thinking of buying it and making some improvements to attract more stable tenants. Am I looking for trouble in considering a run-down property in a bad part of town?
Raquel Singer Why? Why? Why?!?!?!? Even if it’s delivered “vacant” it sounds like they’ll be new to returning “squatters” within a week. So are you going to hire 24 hour security? Become best friends with the sheriff? I’ll go out on a limb and say the doors had locks before the squatters go in there the first time. Anyway, it sounds like awful pain to me, 3 am phone calls, destroyed units, and lots more fun. If you do go through with the deal you might get some good stories for a book 🤷🏻♂️
I'm considering buying a multi-family property (10 units) in a bad part of Miami (very low income, high crime). My realtor spoke to the rep for the seller and mentioned that some of the units are occupied by squatters but that he will get rid of squatters before closing. The current owner wants twice as much as he paid about a year ago and it does not seem like he invested any money for improvements, etc. I was thinking of buying it and making some improvements to attract more stable tenants. Am I looking for trouble in considering a run-down property in a bad part of town?
The old adage "Buy Low, Sell High" is in play here. The seller bought low and is selling high at your expense.
Walk away, particularly in a high crime area.
I'm not against profit in real estate, far from it, but buying a property that needs improvements in a high crime area that was worth half the asking price 12 months ago is not a good idea and if it's run down, you won't attract "stable tenants" in a high crime area no matter what you do. Sounds like the property is a loser to me.
Wow, that's a lot to digest! I think the answer is very dependent on your appetite for risk. If you've dealt with this type of property and this type of tenant before successfully then maybe this makes sense. At double the price from 12 month's ago is there still room for rehab and higher ARV? What's you're upside potential vs. downside risk and is it enough.
Maybe offer his 50% or less of the difference between his purchase price and the current ask - he might have screwed up and now he’s hoping to find the next sucker to pass it on it.
Do yourself a favor and get this property out of your mind and move on to a good property.
With all the great commercial loan programs out there, if it were me, I'd search different banks for a Stated Income ALT program up to 90% cLTV with rates in the 4 to 5 range
Questions:
Are you paying cash?
If not, what loan terms has your bank or lender offered?
I was thinking of buying it and making some improvements to attract more stable tenants. Am I looking for trouble in considering a run-down property in a bad part of town?
Keep in mind, unless you pay the contractor to live there during renovations, your upgrades will probably get stolen while they work on the place. That's one of the issues with high crime areas. Or you have to not put in appliances until closing and hold off on the A/C unit as long as possible.
Plenty of better investments out there, no need to risk it on a high crime area where someone is flipping it and its got squatters in it (not easy to remove either, the agent could be either uninformed or trying to get you to sign the deal asap) .
Raquel Singer Why? Why? Why?!?!?!? Even if it’s delivered “vacant” it sounds like they’ll be new to returning “squatters” within a week. So are you going to hire 24 hour security? Become best friends with the sheriff? I’ll go out on a limb and say the doors had locks before the squatters go in there the first time. Anyway, it sounds like awful pain to me, 3 am phone calls, destroyed units, and lots more fun. If you do go through with the deal you might get some good stories for a book 🤷🏻♂️
Raquel Singer
I noticed that about the lower end areas of Miami.
Prices have gone insane ,even from just 2015 it looks like prices are 3x what they were .
I noticed a lot of stuff is sitting on the market though .
How long has this been on the market ?
Like others mentioned this doesn’t sound like a good idea . As they say most important thing in real estate is location location location .
If it was a run down property in a good area you could have a good chance to do improvements and get better tenants/rents .
Andrew Johnson , or a reality tv show .
There seem to be a dozen or so flipping shows .. but I think it could be good entertainment to have a reality show based on landlording in the hood.
Lots of drama ! I haven’t seen one like that yet but maybe it’s out there.
You'll be fine assuming you've done your calculations correctly and take your time while screening tenants (there's a bunch of multiplexs in over-town that are currently being rehabbed with no issues - run really cheap.powerful motion sensored lights and install high fencing).
There was one multiplex that was rehabbed for 6 months and had a bunch of German shepherds (they were actually the owner's dogs and were super friendly lol people were just too scared to go near the property).
I grew up in the worst parts of Miami-gardens/Opa Locka and lived in Overtown in my early 20s.
The people who ran into trouble were the actual renters than the management LLCs (usually smart slumlords that used multi-structured shells to minimize liabilities).
I've witnessed more evictions in the nicer parts of Miami than in Miami-Gardens and Over-town ( the only time I've witnessed a low-income tenant being evicted in Over-town was when my neighbor was stabbed/beaten multiple times and the scumlord management company issued an eviction notice 1 day and 14 hours later).
@Raquel Singer if I were you I would turn around and run as fast as you can and not look back. High crime area is nothing but trouble. Even if you fix it up nicely being it in a high crime area you will have nothing but problems.