What would you do with 18 small houses on one street?

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What would you do with 18 small houses on one street?

Mat O'Grady
Investor · North Stonington, CT · Member since 2014 · 393 posts · 228 votes

Hello Everyone,

I recently came open 18 houses for sale on one street. They are all currently being rented out. They are all on separate deeds. There is also 22.5 acres of land. 

I was trying to come up with options of what do with it. Let your ideas fly. I don't care how crazy they sound.

Here is what I have thought of so far:

1. Continue renting them out forever.

2. Continue renting them out and fix the houses up one by one and try to sell them.

3. Continue renting them out and save or get a loan for building more houses on the property. 

4. Try to change the entire thing to some kind of condo association, sell the houses as condos and get money from the lot fees. 

5. Bulldoze them all and subdivide and sell lots.

6. Bulldoze them all and build houses and sell them.

What are your thoughts?

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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
8y

No way to answer without knowing the street, the condition of the homes, the local market for rentals & new builds, the access to capital you have, etc. Way too many variables.

What's your goal? Hold a bunch of rentals? Be a developer? Flipper? 

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    8y

    No way to answer without knowing the street, the condition of the homes, the local market for rentals & new builds, the access to capital you have, etc. Way too many variables.

    What's your goal? Hold a bunch of rentals? Be a developer? Flipper? 

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  • Mat O'Grady
    OP
    Investor · North Stonington, CT · Member since 2014 · 393 posts · 228 votes
    8y

    @JD MartinThanks for the reply

    The street is off a busier road, but it is a rural area. The only houses on the road are the ones that are for sale. It is a ten miles to the nearest city area with jobs. There are currently two similar sized places available for rent in the area. At asking price, each house would cost 72k. Bigger houses go for 150k. Really nice bigger houses go for over 200k and sometimes 300k. 

    I was more just asking the question to see what possibilities people could come up with that I didn't think of. 

    I currently have 17 units and just looking around for opportunities. 

    0Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    8y

    I really dont understand what your goal is here. There not enough information to make even wild guesses. 

    Is the 22.5 acres of land separate from the houses or is that what all the land totals up to from the 18 houses? 

    Renting is completely different from flipping which is completely different from bulldozing and re-building. 

    You should decide on one thing and see if that works out. If it does or does not doesnt matter. Work the numbers for as many different scenarios as you'd like to find the best one. Like you said, theres lots of options, but you need to be the one that narrows it down not the BP community. 

    1Reply
  • Cindy L.
    Investor · Del Valle, TX · Member since 2015 · 19 posts · 7 votes
    8y

    My simple take: If return and occupancy on rent houses are good and they are in decent condition, my first inclination would be to keep those rented out for the cash flow and to create more borrowing leverage.  If you are getting a smoking deal because they are all being sold together, then 6 months down the road, you could cash out refinance on the higher "real" value of the property and get all of your initial investment back....  or renovate a few to resale and get all of your investment back that way.  It would be great to have a clump of rentals all in one area for ease of managing and maintenance.  Then I would work on what to do with the rest of the land and then work backwards on the houses that are renting to determine what to do....  keep the cash flow coming in until the entire plan comes together.

    1Reply
  • Mat O'Grady
    OP
    Investor · North Stonington, CT · Member since 2014 · 393 posts · 228 votes
    8y

    @Cindy L. 

    Thanks for the input! I didn't think about updating and then refinancing.

    @Nik Moushon

    Thanks for your input. I know that the ideas are different, that is what I am looking for. I wasn't looking to narrow anything down yet. I was looking to get ideas that I may not of thought of. The 22.5 acres includes the land the houses are on. 

    0Reply
  • Peter M.
    Rental Property Investor · DFW, TX · Member since 2013 · 953 posts · 910 votes
    8y

    I own a property across the street from a row of 4-plexes (probably 24-36 units in total) that some out of state lawyers bought years ago. They turned the whole thing into an assisted living compound for people with neurological problems. They have buses that take the patients back and forth from the hospital that is close by. I have no idea about the financials but I would be willing to bet it makes them a killing. How't that for out of the box?

    8Reply
  • Jim C.
    Investor · Soldotna, AK · Member since 2015 · 103 posts · 64 votes
    8y

    Take the house(s) with the most land, fence it in and then rent the land for vehicle storage. The house will be used as an office/living quarters for on-site manager. Your only out of pocket cost will be the fence. You can add security cameras if needed. 

    1Reply
  • Mat O'Grady
    OP
    Investor · North Stonington, CT · Member since 2014 · 393 posts · 228 votes
    8y

    @Peter M.@Jim C.

    Thanks guys. Both ideas I never thought of. 

    0Reply
  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    8y

    1. Continue renting them out forever.

    I'd go with this, but I don't need a zilliion dollars. 

    Unless you have some ideas of World Domination or something. 

    LOL.

    2Reply
  • Gene Guarino
    Residential Assisted Living · Tempe, AZ · Member since 2015 · 162 posts · 98 votes
    8y

    That depends on the area and the demographics.  It could be a good fit for independent living and senior housing.

    Gene

    3Reply
  • Jorge Leon Jr
    Rental Property Investor · Corpus Christi, TX · Member since 2017 · 36 posts · 20 votes
    8y
    @Mat O'Grady newbie investor here but lots of experience in resturants... Can you do commercial in any corner lot you can build a shopping center and rent out for a good chunk of change since you own land... That or rent forever and add multi’s if possible, thats what i would do (i have a buy and hold mentality)
    1Reply
  • J M Dejean
    Rental Property Investor · Hollywood, FL · Member since 2012 · 1 post · 0 votes
    8y
    @Mat O'Grady Continue to rent forever.
    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    8y
    @Mat O'Grady I’d cash out- refi the dead equity you have in those house and use it to buy more little houses on quiet rural streets in the same area .
    1Reply
  • Teri Feeney Styers
    Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
    8y

    @Mat O'Grady I'd create a neighborhood everyone wants to be in... (via HOA funds) a park, a community garden (and chicken yard? and a duck pond stocked with fish?) some smaller cottages for elderly, a small community center for party rentals, an exterior pavillion for summer picnics, RV parking? sure... Improve the houses renter by renter and then maybe start paying them off one at a time and then do owner carry finance on them to eventually sell off all the units but collect interest for years. What an opportunity! Jealous...

    3Reply
  • Ellis HammondPro Member
    Investor · Leawood, KS · Member since 2017 · 178 posts · 108 votes
    8y
    @Mat O'Grady Buy them all, open them up for 5 straight days and host the biggest to date BP community block party. Charge $200 per person and provide free bud light. You will forever be a legend. Cheers 🍻
    5Reply
  • David Jessee
    Member since 2018 · 6 posts · 2 votes
    8y
    @Mat O'Grady owner finance them all out. Raising the property value1 by 1.
    2Reply
  • Jack P.
    Columbus, GA · Member since 2017 · 88 posts · 115 votes
    8y

    Similar to what @Teri Feeney Styers said, if the properties are all contiguous, then I'd develop a master plan for the street, similar to making it just one big complex. Capitalize on economies of scale with landscaping, trash, community pool, playgound, etc. If they aren't contiguous, then I'd look at acquiring the ones in between too. After establishing the master plan and stabilizing the rent, then I'd found an HOA for the options of parceling out the units if I need to raise cash for something else.

    All this is of course contingent of the financial viability of the project, of which I have no idea.  A community 10 miles from the nearest jobs doesn't sound like it would attract any more than bottom-dollar renters.  

    1Reply
  • Mat O'Grady
    OP
    Investor · North Stonington, CT · Member since 2014 · 393 posts · 228 votes
    8y

    @Jack P.@David Jessee@Ellis Hammond@Teri Feeney Styers@Dennis M.@J M Dejean@Jorge Leon Jr@Gene Guarino@Lee Bell

    Thanks for your thoughts!

    0Reply
  • Teri Feeney Styers
    Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
    8y

    @Mat O'Grady I agree with a lot of what @Jack P. said except the "bottom dollar rentals". People will accommodate a drive of 10 miles for the right neighborhood... and I had one more addition: some storage units available only to residents... 

    1Reply
  • Jack P.
    Columbus, GA · Member since 2017 · 88 posts · 115 votes
    8y

    @Teri Feeney Styers, true that people will make the drive for the right neighborhood, but they are generally limited to homeowners.  People generally settle in a rural area because they want the extra land and solitude, and/or lower prices.  The vast majority of residents in rural areas are homeowners, and people probably don't want to move to a rural area just to rent in a master-planned community.  How many apartment complexes have you seen 10 miles from the nearest job center?  There is a limited market for renters looking for nice houses in rural area.  For the scope of this thread, I'm not sure I'd try and develop a B-class commercial property in a rural area.  

    However, looking at your plan again, I kind of like the idea.  It's unique and offers something that others don't.  But at a huge risk. 

    0Reply
  • Elizabeth Luchenbill
    Real Estate Agent · Marietta, GA · Member since 2018 · 10 posts · 0 votes
    8y
    @Mat O'Grady:

    Ok--you are describing my dream find! So many options in this ONE transaction that can grow right along with your level of investing and personal goals for many years to come! Obviously, there is some vital info missing from your post to properly qualify this property---but if you are already thinking of what to do with it--it must be a win!

    If it is already producing cash flow--I would go in, make any small improvements necessary, be sure rents are up to market, and cash flow that puppy for a bit while you decide your best course of action. (which may be to keep as is) So #1 seems to be your worst case scenario---which is really not a proper description since its a pretty good option!

    #2 You could. But if they are flowing, may be worth holding on to for a few years! Maybe down the road you can lease purchase---that way if it falls through you have the money down AND the rents that have been coming in all along, and it should provide more security in the fact that if a tenant is willing to buy the property, then they are likely taking better care of it then perhaps your average guy.

    #3 Absolutely an option! You could build your very own "Mat O' Grady subdivision! Complete with Mat O'Grady Drive! :)

    #4 I hear what you are saying, not sure this would be the most lucrative.

    #5 & #6 Maybe down the road if you feel that would be cost effective! I suppose it depends on the surrounding neighborhoods and land values. Perhaps with the rise of land values in the upcoming years and if in the right area, that could be an option. I would definitely not start with that though. Again, this is my two cents based on the few details provided.

    Bottom line, you have OPTIONS! Not every investment will grant you that. With all the cash flowing units and acreage behind--sky is the limit! Would love to hear the outcome and what you decide to do! Good Luck!

    0Reply
  • Teri Feeney Styers
    Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
    8y

    @Mat O'Grady and @Jack P. I think Jack and I need to agree to disagree... except for the fact that there is opportunity there. It is up to you to determine the local vibe and discern what is needed/wanted. There is a community in Jack's home state you may wish to read about. http://serenbe.com/   Granted it is much larger and more upscale - but it does accommodate both rentals and ownership, big houses and small, etc. It describes itself on the "outskirts" of Atlanta. I don't know what that means in terms of jobs, but I have heard that Atlanta has quite the traffic issue. 

    0Reply
  • Michaela G.
    Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    8y

    There are a lot more variables that can play into the "should I or shouldn't I?" scenarios.

    Something I've done is bought assemblages in a low income neighborhood, which I knew was in the path of development, but not yet there. So, prices were still low and the tenant pool was very difficult (still same tenant pool, but prices have doubled and buyers are very different)

    I had 4 duplexes and found another investor to buy 2 more (I have since bought those 2 from him), since there was a total of 7 duplexes on the lot. We thought the owner of the 7th would pull along, but he didn't. 

    So, we renovated and advertised it to be only for creatives. Creatives love to hang out with other creatives, because bankers and corporate people tend to not get the right brain mindset. 

    It turned out great. Rents in the area were cheap and we were able to get more than what was average in the area, but lower than the rest of Atlanta. Especially considering that we are about 2 miles south of Downtown. 

    Potential tenants were drawn by the creative aspect, but probably would have never looked in this area for a home. They feel safe, because everyone in our compound knows everyone. DIfferent people do different projects together and they party together. They don't want to move, because their friends are here now.

    2Reply
  • Julie Dike
    Manassas Park, VA · Member since 2017 · 37 posts · 21 votes
    8y

    Having lived in a rural area, I'm immediately suspicious about a whole neighborhood for sale at once.  Is there a pollution problem?  $200+ sewer bills?  Factory shutdown?  No internet service?  School district rebuilt further away and now the bus ride takes an hour each way?  

    Hopefully I'm wrong and it's just a landlord retiring.  

    3Reply
  • Shawn Psenicnik
    Las Vegas, NV · Member since 2015 · 5 posts · 3 votes
    8y

    Im wondering why every house on the block is for sale? The only time I've ever seen  every house for sale is a new development. Is the area ok

    2Reply
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