Killing it by turning crack dens into safe housing

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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.

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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.

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

    @Desiree Wrencher @Mattaniah Yip @Adam Fiore @William McCartney lll @Ori Skloot @Soniel Estime thanks for checking in.  

    Stick around I’ve asked a few people that do what I do to post here as well....my way and me personally I have a ton of fleas.  Certainly ppl that do this better then I.  

    But even with my flaws I am happy with what I have accomplished.  Houses that used be filled with trash, junkies discarded neeedles now house people with families.  Kids have a safe clean space to live.  The money for me isn’t all I do it for...but I’m also not doing it so ppl think I’m sort of saint.  

    I mostly do it because Ppl think it’s so hard......sickly enough I like them to know that I can do what they can’t.  

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ 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.

    Great post & conversation starter.  When we first started purchasing in Chicago we'd find a property we liked on a semi-problem block. I say semi-problem because if it was a big problem block; i.e. too much activity, then it was too much work for our business plan. For us a semi-problem block was one with a block captain and people who cared but there were a few problem properties, either vacant or being used by undesirables.  Once we controlled one of the problem properties we'd work to control the remainder, then make a deal with the block captains and neighbors. Even considered giving them some equity in one of our deals if they watched out ($ talks.) We were flipping homes. Renovated a playground once. Gave key people on the block our personal phone numbers along with the numbers of our lead contractors if something untoward was happening.  Discovered DAWGS pretty quick to keep the undesirables out. So we used a derivative of your plan.

    312-681-7487
    7Reply
  • John Hickey
    OP
    Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    7y

    @Crystal Smith thanks for pointing a lot out! 

    Folks pay attention. Crystal juts shares some of the big secrets.  

    Control the block.  100% you need to secure your property.  DAWGS is a pint of access controller.  Maintain your vacant property while you are in the process.  Juts don’t walk away for 10 years then your sort of the problem.  

    Crystal mentioned money talks.  

    Spread the resources where they work best.  Don’t give every vagrant on the block Block money but if you have a druggie leader....someone the others follow sometimes you can make deals.  

    Control.  On drug blocks who controls the block? The most violent person that’s not locked up.  In some cases....take it easy here folks don’t rush in.  You can make alliances.  

    Example. Cops were giving my block tons of patrols at one point. 

    At the time We had at least a dozen sometimes 25-30 live in junkies shooting up smokokg crack stealing, peeing and pooping everywhere. 

    Cops patrolling was good but basically they would come around roust druggies leave and druggies come back minutes later   Not really solving my problem

    So I walked down to the guys that run the block and had a very simple Discussion.  Went like this. 

      These addicts mess this block up. Agreed. 

      These addicts being on my block 24/7 are bad for my real estate biz. Agreed. 

        People are complaining.

        Cops are coming around non stop and harassing everyone. Agreed. 

        these addicts could visit the block and see whoever it is and then move on. Agreed


          Someone suggested I speak with a guy they knew.  I met with him. He  Needed work. He was very well respected in the area by street people...He said he could keep the block clean.  

          I approached residents and landlords and procured funds. $40 a month per house. Few hundred a month for me.  Time went by things got better.  Step by step  

            After a while block got more populated.  There were no vacants.  Eventually the dealers and junkies move on.  

            2Reply
          1. Anthony Rosa
            Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
            7y

            This goes to show everyone that People make the difference!

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

            Money.  It took a lot of money. @Davido Davido asked how much.  

             5-7 partners depending on where in the process put up close to 3m.  That’s across 14 deals it’s a little more complicated then a post could show but similar to @Michael Ealy showed in his post it wasnt pennies

            I do think I learned enough that I could do it next time with a lot less upfront cash....just purchase all up front and recycle the Reno funds.  But def def def keep plenty of money in reserves.  Thea are tough areas.  You don’t want to be stuck owning property in these areas and trying to make a living.  You’ll be an accidental slumlord.  

            1Reply
          3. Ola Dantis
            Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
            7y

            @John Hickey Reading all the comments, I can stop but think WOW...

            What you are doing is definitely interesting and strategic: There is a method to the madness. 

            Yes, most people might not have the stomach for it; however, others who have the personality and risk appetite can do this, for sure. 

            I Google Mapped your Brooklyn case study and that was pretty interesting to see what that area looks like now. 

            You made mention of the 2-mile range to nicer areas, and we have those STARK TRANSITIONING areas here in Baltimore (where you go from Utopia to WoW), and I think investors can make this approach work in those areas actually. 

            I watched a documentary called Land Grab on Amazon (you should check it out) and this investor in Detroit, Michigan bought a lot of abandoned homes with interesting characters in them and tore down and built trees. Fascinating documentary.

            So thanks for talking about this. At the end of the day, some of us, as investors, should think about the impact of vacant or boarded homes in our communities. 

            3Reply
          4. John Hickey
            OP
            Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
            7y

            @Ola Dantis best case scenario is ppl who Grew up on a block or live close by see the strategies and put them into practice.  

            It’s not 123 the way I do it bc block by block city by city things change, ppl change.  

             But some of this info might benefit some guy out there trying to change a block for the better.  I could care less what most ppl think.  But that guy? I want to help him out bad.  And I would love it if ppl that experience doing this would weigh in here. 

            1Reply
          5. Ewa RezaPro Member
            Real Estate Agent · Los Angeles, CA · Member since 2009 · 146 posts · 75 votes
            7y

            @John Hickey maybe we should jump into this sooner then later. So we're not late to the party as we were with crypto :))

            2Reply
          6. William Durel
            Rental Property Investor · Cincinnati, OH · Member since 2019 · 51 posts · 39 votes
            7y

            @John Hickey this started happening in Cincinnati about 10 years ago in one of the worst areas in the tristate (OH,KY,IN). Over-The-Rhine which was a booming neighborhood in 1940’s-1970’s turned to crap in the 80’s with drugs and violence.

            Around 2007 a group of investors started buying up the vacant buildings and empty lots. Slowly accumulating over the years.

            They tore down and revitalized entire blocks over a two year period and were able to bring back businesses and build fantastic condos for your couples and business people.

            Now the building that sold for $30k is selling condos for over $300k. Granted lots of work had to be done. But, a $30k building now has 9 condos going for over $300k each. And people are flocking to the area!

            It can be done! And someone is going to do it!

            4Reply
          7. Chad Houston
            Rental Property Investor · Buffalo, NY · Member since 2018 · 10 posts · 4 votes
            7y

            @John Hickey ever bought anything in Niagara Falls, NY? I’m closing a 60-property, 117 unit deal with everything from vacant lots to 6-unit buildings.

            In NF, it seems like it goes block by block. A decent looking street could be RIGHT next to a street with HIGH drug traffic.

            I drove the properties this weekend and noticed the dynamics of the neighborhood. I was ready to write off the war zone properties before I read this post.

            What you’re saying makes sense and is inclusive of the existing community.

            Best of luck. Thanks for the insight.

            2Reply
          8. Michael Ealy
            Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
            7y
            Originally posted by @Jon Penton:

            @Michael Ealy I’m a real estate photographer - loved the video! The lighting, color, transition between rooms, even the slowmo fans 👌🏼 Did you do that yourself?

             Nope. We have a professional photographer/videographer did it. 

            1Reply
          9. Ryan Proffit
            Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
            7y

            @Michael King nobody could call you a coward, that’s for sure.

            0Reply
          10. Michael King
            Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
            7y
            Originally posted by @Ryan Proffit:

            @Michael King nobody could call you a coward, that’s for sure.

            LOL what if I said I'm not gonna go there? If I plan my life to remove as much physical risk as possible by not going there, does that make me a coward or strategist? 

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

            @Angelo Mart are they in Newark?

            I met a big guy that does what I do last year. 300 units. Very cool guy. No bs. He was Albanian I think.

            Thanks Angelo.

            Yeah, I met guys that do it in Newark, Elizabeth, Irvington and even Trenton (Trenton really rough). People have their opinions about this but most of them don't know ****. ITs CRAZY that the biggest naysayers never even invested in real estate (some of them area my own family members)

            3Reply
          12. Mattaniah Yip
            Investor · Los Angeles & Detroit · Member since 2014 · 52 posts · 17 votes
            7y

            @Ewa Reza lol! Yes, we’ll chat.

            1Reply
          13. Ryan Proffit
            Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
            7y

            @Michael King you won’t know for sure unless it all gets looted and burned down again lol. Roll them dice!!

            1Reply
          14. Cory Finniss
            Rental Property Investor · Raleigh NC · Member since 2015 · 90 posts · 30 votes
            7y

            Investors have done this in Durham NC. The demographics are much different of course. But surely can be done. Good luck!

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

            @Ryan Proffit 

            @Michael King

            This is a forum for investors.  Sounds like you guys don’t do what we.  No need for you too move on but if you do I wouldn’t mind.  

            2Reply
          16. Linda S.
            Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
            7y

            @John Hickey,

            All I have to say is it takes a special person, with a strong personality and a heck of a lot of street smarts  to do what you do-- so props to you for using your talents for good (and profit!)    We normally love buying within a few blocks of our houses, to control the area.. but we look for C/D+ areas, whereas you go for the D-!   Keep doing what your doing!!!   I wish more people had the guts what you are doing!   A lot of areas need to be cleaned up!   

            2Reply
          17. Landon Brown
            Member since 2019 · 1 post · 2 votes
            7y

            @Michael Ealy Being from NKY and working downtown I can attest that Avondale among others are areas of hesitancy of many investors. Doing the research prior to investing in my first property, I just wanted to take a moment to acknowledge your success. Turned out amazing!

            2Reply
          18. Michael Ealy
            Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
            7y
            Originally posted by @Landon Brown:

            @Michael Ealy Being from NKY and working downtown I can attest that Avondale among others are areas of hesitancy of many investors. Doing the research prior to investing in my first property, I just wanted to take a moment to acknowledge your success. Turned out amazing!

             Thanks Landon

            1Reply
          19. Ryan Proffit
            Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
            7y

            @John Hickey he was asking about utilizing your strategy in Ferguson MO. Which would be a perfect area. I was responding to him. It’s sounds like we think it’s a good idea. Not sure what we did to offend you.

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

            @Ryan Proffit your making a joke out of ppl getting killed rioting and looting.  

            This is biz here.  Pay attention and make money or be laughed at and ridiculed.  

             stay or move on.  I could care less but why waste the space.  Ppl are contributing here.  

            What have you contributed.  

            Zero.  

            2Reply
          21. John Hickey
            OP
            Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
            7y

            @Chad Houston that sounds like an awesome thing your doing.  Big deals can make big things happen.  

            You ever read crushing it in commercial and multi family investing....Brian murray.  I might have butchered the title. He’s an upstate investor.  

            0Reply
          22. Jared Michael Rollins
            Southern California · Member since 2019 · 10 posts · 4 votes
            7y

            @John Hickey are you Brrrring or flipping?

            1Reply
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