I am just beginning my journey in real estate and am looking to buy a fourplex and live in one unit. I see in Mountain View there are many 4-plexes for sale in the $350k range. Plenty of them look updated with new cabinets, carpet ect. I know that this area is notorious for being a "bad area of town" but at the prices people are asking makes it look like not such a terrible deal. Does anyone have experience with 4-plexes in this area? Are you experiencing bad tenants, crime, non-payment, sub par construction, bad neighbors, low cash flow? Has anyone had good experiences in this area with 4-plexes? Any information is appreciated.
@Steven Bassler welcome to BP. Starting with a four plex and living in one unit is an excellent way to begin your real estate investing career.
You are wise to research the area for safety. It will determine the quality of the tenants you will attract. Better quality tenants can means less headaches for you the owner. But many investors have made a viable businesses serving lower income tenants. You would want to do this by choice not by surprise. I suggest spending time in area. Use programs like Rentometer to check and compare the rents to other parts of town. There are several programs you can use to check for police reports. I use crimereports.com. Then compare that to other parts of town. Also check out areavibes.com they usually have good descriptions of each area of town.
See if you can find an investor meet up in your area and talk to local investors about their experience in that part of town.
Final suggestion fill out your profile. The BP community is a good place to get input on the area in question but we don’t know where your at. For example I am form Mountian View, CA a four plex cost much more than $350,000 but there are no bad parts of town.
I know a few investors in that area. Some have issues, others don't. Tenant screening is the key as always. Construction shouldn't be an issue. Cash flows can be higher in the area due to purchase price being lower. But, it sounds like you already realize it's not a B class area. Just keep that in mind when deciding if you want to live there. Let me know if I can help.
When you run your numbers, be sure to price in the cost of management (even if you’ll do it yourself) and be conservative with your savings for maintenance and capex. I recently looked at a 4-plex in Mountain View where the owner had to move and he was so underwater he couldn’t afford to sell it. That doesn’t necessarily mean the building will never make money, but he had over leveraged it so much it was a nightmare. If you keep your debt load low enough you can find cash flow in any neighborhood... that being said we chose to invest in a different part of town..
@Steven Bassler - Mtn View is very intriguing - when will it "turn the corner"? I agree - tenant screening is #1. I know a 30 unit owner in the area there- and I know a SFH owner/occupant there - very different opinions of the neighborhood.