Killing it by turning crack dens into safe housing

Innovative Strategies
7yFollow

Killing it by turning crack dens into safe housing

John Hickey
Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes

I’d like to share my strategies here to help others make money and turn the worst war zone, vacant areas into safe spots for families to live.

I’m by no means the only one doing it. It’s just hard to find people talking about it. 

I think if we talked about it more more people would take the risk and the worst crime areas could turn very quickly into homes.

Some of them aren’t going to be pretty. 

Some are pretty simple.

Welcome all to advise and share here.....

Especially those who have successfully taken stuff from war zone to secure housing.

So I’ll start it out.

Buy the worst house in whatever area your going to purchase. It might be useful to ask the cops what house they goto most often in the city.

Try to buy at least half a block. Getting a corner with 100’ in each direction is helpful.

See a bodega? Get that too.   Don’t let a single commercial or residential property within 500’ get sold to someone other then you or some one you can trust that will assist you.

32Reply
312 views

Most Popular Reply

Michael Ealy
Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
7y
Originally posted by @John Hickey:

I’d like to share my strategies here to help others make money and turn the worst war zone, vacant areas into safe spots for families to live.

I’m by no means the only one doing it. It’s just hard to find people talking about it. 

I think if we talked about it more more people would take the risk and the worst crime areas could turn very quickly into homes.

Some of them aren’t going to be pretty. 

Some are pretty simple.

Welcome all to advise and share here.....

Especially those who have successfully taken stuff from war zone to secure housing.

So I’ll start it out.

Buy the worst house in whatever area your going to purchase. It might be useful to ask the cops what house they goto most often in the city.

Try to buy at least half a block. Getting a corner with 100’ in each direction is helpful.

See a bodega? Get that too.   Don’t let a single commercial or residential property within 500’ get sold to someone other then you or some one you can trust that will assist you.

 Good strategy and kudos to you for having the guts to do it. Not many real estate investors, and specially newbies can do what you do.

Having said that, buying in the worst neighborhood by buying the whole block can be very profitable. One deal I did was in Avondale area of Cincinnati. If you do your research, Avondale has one of the highest crime rate in Cincinnati. I got 30 units - townhomes for only $450,000 - and only 3 were occupied. They were paying $300/month. You can research the address - 3561 Eden Ave, Cincinnati.

Got everyone out and renovated the units (it's still going on). When I did my estimate, I projected the rents can be increased to $850/month. But I made a mistake.

It was way lower than my projections. My leasing agent was able to lease it for $1,250/month. And there was a waiting list. My partner and I will make $2 MILLION by the time we sell it or if we decide NOT to sell and just refi, we'll get $1M cash on top of our initial capital and keep it for cashflow.

Here are the pictures: (I will dig up the before and post a before and after in a different post)

Here's a video: 

If you ask the folks here on BP who lives in Cincinnati if they will buy in Avondale, 99% will say "NO way!" That's why 99% will never make $2M on one deal. Again, not a strategy for a newbie BUT, doing this improves neighborhoods and the real estate developers and investors who are willing to do this, can get rewarded handsomely.

18Reply
See this reply in the discussion

133 Replies

Jump to latestLatest
  • Alan G.
    Investor · Newtown Square, PA · Member since 2015 · 132 posts · 149 votes
    7y

    @John Hickey John I love the strategy and am doing almost the same in my area just west of Philadelphia. I looked for a block with many board ups and foreclosures and bought all of them. Renovated everything now I control who lives there. Once the neighbors started seeing our nice homes they start fixing also.

    Doesn’t happen overnight since I’m buying 1 by 1 as they come up. Although I’m never selling. By controlling most of the tenants on a block I control who lives on the block.

    Love your idea.

    3Reply
  • Pat GoodyearPro Member
    Syracuse, NY · Member since 2015 · 77 posts · 48 votes
    7y

    @John Hickey

    I live in Syracuse NY. Own 311, 401, 417, 420, 601 and 608 Beattie. I live on the street. Yet i can't keep kids from dragging hoops into the street and annoying my tenants. I see teenagers hanging on the porches of the abandoned houses. They have even hung on one of my porches!

    So my questions:

    Houses foreclosed banks are slow to offload and they are eye sores.

    Drug dealers, kids, hoodlums how do you get rid of them? If there are still drive by shootings NO DECENT tenant will rent there

    1Reply
  • Troy BaileyPro Member
    clayton, NC · Member since 2017 · 99 posts · 38 votes
    7y

    @Brian Brusich do you invest in flint? I have it on my radar for a research visit

    0Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @John Hickey:

    I’d like to share my strategies here to help others make money and turn the worst war zone, vacant areas into safe spots for families to live.

    I’m by no means the only one doing it. It’s just hard to find people talking about it. 

    I think if we talked about it more more people would take the risk and the worst crime areas could turn very quickly into homes.

    Some of them aren’t going to be pretty. 

    Some are pretty simple.

    Welcome all to advise and share here.....

    Especially those who have successfully taken stuff from war zone to secure housing.

    So I’ll start it out.

    Buy the worst house in whatever area your going to purchase. It might be useful to ask the cops what house they goto most often in the city.

    Try to buy at least half a block. Getting a corner with 100’ in each direction is helpful.

    See a bodega? Get that too.   Don’t let a single commercial or residential property within 500’ get sold to someone other then you or some one you can trust that will assist you.

     Good strategy and kudos to you for having the guts to do it. Not many real estate investors, and specially newbies can do what you do.

    Having said that, buying in the worst neighborhood by buying the whole block can be very profitable. One deal I did was in Avondale area of Cincinnati. If you do your research, Avondale has one of the highest crime rate in Cincinnati. I got 30 units - townhomes for only $450,000 - and only 3 were occupied. They were paying $300/month. You can research the address - 3561 Eden Ave, Cincinnati.

    Got everyone out and renovated the units (it's still going on). When I did my estimate, I projected the rents can be increased to $850/month. But I made a mistake.

    It was way lower than my projections. My leasing agent was able to lease it for $1,250/month. And there was a waiting list. My partner and I will make $2 MILLION by the time we sell it or if we decide NOT to sell and just refi, we'll get $1M cash on top of our initial capital and keep it for cashflow.

    Here are the pictures: (I will dig up the before and post a before and after in a different post)

    Here's a video: 

    If you ask the folks here on BP who lives in Cincinnati if they will buy in Avondale, 99% will say "NO way!" That's why 99% will never make $2M on one deal. Again, not a strategy for a newbie BUT, doing this improves neighborhoods and the real estate developers and investors who are willing to do this, can get rewarded handsomely.

    18Reply
  • Brian Brusich
    Rental Property Investor · Grand Blanc, MI · Member since 2019 · 40 posts · 17 votes
    7y

    @Troy Bailey no but I grew up around flint before it had declined and have been in mid Michigan since. There's probably opportunity but I am not sure on specifics

    0Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Not sure what happened but here's the video link:

    https://youtu.be/zLf8AI76N_k

    3Reply
  • Ryan Proffit
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    7y

    @Michael Ealy way to be brother!!! I’m still trying to get my foot in and get discouraged, then you post something like this and it pumps me up!

    4Reply
  • Davido Davido
    Rental Property Investor · Olympia, WA · Member since 2012 · 543 posts · 311 votes
    7y

    @Michael Ealy,  Thank you Michael. Wonderfully helpful post.

    2Reply
  • Davido Davido
    Rental Property Investor · Olympia, WA · Member since 2012 · 543 posts · 311 votes
    7y

    @Michael Ealy  Impressive rehab and excellent job on the video.  Did you have a professional do your video, or are you just that good?

    1Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Davido Davido:

    @Michael Ealy  Impressive rehab and excellent job on the video.  Did you have a professional do your video, or are you just that good?

     Nah - I had a pro do it. I suck at many things (all you have to do is ask my wife) and good with just a few things - real estate investing being one of them 😊

    5Reply
  • Bryan Clement
    Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
    7y

    @Scott Mac the only people that can solve their problems are themselves. So, since you can't solve their problems, might as well solve the area. Plus, usually, they can choose not to be terrible people, they just don't want to choose. Thus, I have no problem with gentrification.

    4Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Alan G. If you don’t mind sharing how you got started and some tips and basic numbers that would be awesome.

    0Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Michael Ealy

    That is what I’m talking about. Thank you.

    1Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Pat Goodyear keep the kids. Yes you need to get the drug dealers to move...or at least cooperate with you and move far enough away that ppl with kids will move to the block.

    Yes drive bys happen on drug areas and that’s not what you want.

    Move them and no one will drive by.

    0Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Henry Lazerow

    Sounds like you like your strategy. I’m not trying to convince anyone to do what I do.

    I want to show those suited to my strategy or already doing something along these lines what I do........

    so we can exchange info and perfect our processes.

    I did this in NYC on a smaller scale I’m pretty sure your Labor rates won’t be too different then mine,,,of course depending on the level of finish each of us chooses.

    0Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Henry Lazerow

    I never mentioned cutting corners tho. Think you read me wrong.

    I Reno when it makes sense for me.

    Sometimes I’ll buy and Reno the vacants while I’ll hold the ones with tenants as is. Then when someone screws up I’ll Reno those one by one.

    But most of what’s listed above wasn’t gut Reno.

    0Reply
  • Pat GoodyearPro Member
    Syracuse, NY · Member since 2015 · 77 posts · 48 votes
    7y

    @John Hickey

    I am interested in hearing more of what you do, but from my own experience wonder how you "manage" issues like drug dealers, bedbugs, etc.

    Yes if you can buy the whole block that changes things but in my experience seldom is the whole block up for sale. What i do and have done is buy distressed properties, fix them up and rent them to decent tenants.

    My experiences branching out has not served me very well. I tried high end but taxes are killer and the rent range for my medium sizedtown is 1000 to 1400. So the profit isnt there

    There is someone here whose strategy is to buy give away houses in the worst section, minimally repair and rent to section 8/PA.

    I dont have the energy for class D tenants. Would love to hear more.

    0Reply
  • Brionne Smith
    Member since 2019 · 9 posts · 1 vote
    7y

    Is there anyone here that can give tips about how to balance being an educator and starting to invest? I’m passionate about what I do, but really want to begin investing.

    1Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Pat Goodyear sounds like your in a half bad area.

    It needs to be the worst area.

    Whatever state your in look up the most dangerous city. Then go there ask the cops what the worst area is. Then look for vacants.

    If you have the worst area and lots of vacants say 50% that is what you need to start.

    0Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Pat Goodyear and the reason I say worst is that you can’t usually buy half a block or 500’ of buildings in an inner city if it’s decent.

    When you can buy 5-10 in a row it usually means the area is interesting.

    0Reply
  • Ivan Terrero
    Investor · Naples, FL · Member since 2016 · 256 posts · 75 votes
    7y

    @John Hickey

    I was under the impression that the town of Newburgh was turning around or head turn around after 2010

    0Reply
  • Account Closed
    Contractor · San Diego, CA · Member since 2018 · 432 posts · 221 votes
    7y

    Heck yeah @Michael Ealy

    1Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    7y

    Would Ferguson MO be a good area?

    0Reply
  • Angelo Mart
    Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
    7y
    Originally posted by @John Hickey:

    @Will Barnard

    Your first sentence is 100% correct. Yes what I do is high risk.

    This is not a “hey I have a new investment strategy that’s fine and easy and anyone can do it post”

    I do not suggest this for someone that is just getting started in RE. There are plenty of other folks this will not appeal to.

    Although for the right type of person this can be your first stab at RE  

    People that have specialized skills.  

    But if you think your juts an average type, looking for minimal returns keep moving   

    This is  not for everyone....although I personally think anyone can do it   

    But not everyone will.

    Unless they have stones.

    The words i write here are not going to give some spineless loser the intestinal fortitude to walk down the most dangerous blocks in the world buy houses and turn crack dens into Disney land for hipsters.

    if you have the stomach for what I do I will devote myslef to help you turn war zones into safe zones.

    And if your tougher then I am have and have experience in this arena pls share your info.

    I will return the favor in some way.

    If not move one check out Zillow mls auction.com....cruise loop net. There are plenty of 5 caps about there......

    This stuff I want to share is not average guy stuff.

    You said.....

    This is a high risk strategy that requires boots on the ground, lots of capital to back you and is not for everyone, particularly someone just getting started. It can also be dangerous, personally, I’m not risking my life just to make a buck in a cesspool, I can make money in better areas without the risk or headaches that come with this strategy. That said, I am certainly not discouraging you, just pointing out to others the risks involved. 

     I love this strategy. As long as the population in the city is stable and/or increasing it works great. I know guys in tough neighborhoods in Jersey that make a killing doing this. The first few years were the most challenging but within no time they made so much money that Security was no longer an issue. They always placed steel doors windows on the homes while under construction, rehabbed them, hired pro property managers to manage and also had armed security watching the apartments buildings if things got crazy i.e. drugs, gangs, etc. My first home was in a messed up ghetto area and this worked for me. The Section 8 tenants are great, its like an insurance policy getting the section 8 direct deposit

    1Reply
  • Jon Penton
    Specialist · Denison, TX · Member since 2017 · 22 posts · 17 votes
    7y

    @Scott Mac It would seem that the OP’s primary goal is to create 1 thing: a profitable Deal.

    His vehicle is not his mission. His vehicle is problem areas, that can benefit the community by being gentrified and made safer than before.

    I’m not so certain that he’s leaning too heavily into “fixing people”, with that in mind, his strategy proposal still has my attention.

    3Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free