The Strip Joint Deal!

8 Replies

BP!

I have this area I think will be a great area in 10 years. Close to down town in my city, new public transportation (trains) and new corporate business like Target, Walmart, Wendys and Lowes have new business in the same area. The area has a nice urban feel to it. New boutique coffee shops and restaurants. Lots of apartment building development.

Anyways, I find a listing in this area for about 1/2 the usual price, great pictures the whole place redone, wouldn't need any work. I think! "This is my first deal!!!".

Details are:

SFH 3 Bed 1 Bath

Listed $114,000

Purhcase Price $100,000?

Rent $900 to $1100

The catch is the house is on a busy street and across the street from a strip joint! It is also squeezed in the middle of a BBQ restaurant (good food) and a large warehouse. By the way, in my area, numbers like this are REALLY good.

I like the deal I am just worried about finding responsible tenants that are willing to live so close to a strip club. Im trying to think of the potential tenants and Im not sure who they would be. Not a family or young professionals. Would have to be a single blue collar male?

Anyone have any experience with properties not necessarily in a bad neighborhood, just next to a bad business?

Do you take a deal with good numbers and great long term potentials but risky tenants?


Appreciate your ideas



Yes, many times, you may have a tough time in the secondary, I'd suggest a portfolio lender.

What are you doing with it? Renting by the hour?

Never can tell who would want to live near a BBQ joint and evening entertainment!

Not enough neighborhood info to say. :)

@Bill Gulley Ha! just buy and hold. Would look for a year lease.

I'm not that worried about financing the deal at this point. Was planning to put 20% down.

I would say if you price it right you can find the right kind of tenant. That being said what is your long term goal. I personally would worried about resale. Are you hoping to sell it for commercial development?

@Elizabeth C. To be honest, I haven't thought that far ahead. I would look to buy/hold it, well, forever. In my state, I can't imagine a Strip Club staying in business so close to down town for that long. There are some other houses on the street, a Mexican restaurant and a hotel near by too.


The house was built in 1900 which always concerns me a little.

Many times (although not always!), areas that start becoming "gentrified" with coffee shops, boutiques, restaurants, etc., plus housing that caters to families, couples, etc. will tend to eliminate businesses like porn shops, strip clubs, pawn/we-buy-gold, etc. It may take a while & will depend on the economic growth of the whole area, but it could be a decent property in the long run. You might check with the city planning department & see if there's any long-term strategy for the area that might influence your decision.

Dj's & Dancers need to live somewhere too.

So this morning I put in an offer at 90k and the seller said he would counter. Im thinking maybe 100k and we settle on 95k. Cash flowing around $350 at those prices close to the 50% rule. I'd do it.

Days goes on and it rains hard, really hard. This afternoon I go to see the property for the first time and the rehab the seller has done looks great. However the roof is leaking and there is sitting water in the bathroom from the rain early in the day. Hallway carpet is soaked. The bathroom and hallway ceilings are sagging with dripping water and two walls are visibly wet.

Thank you God for the rain!

I drive around the neighbor a little more and continue to see encouraging things. Two lots on a street two blocks away have signs from the city for subsidized developments. Really like the area.

Does anyone have any advice for the bad roof, the water damage and maybe any ideas on how I can leverage that to make this a really great deal?

Also, my agent is almost sure the pipes are galvanized. How much of a headache is that?

Thanks,

Bryce

@Kathleen Leary Thanks for your idea and look what I found!

The Granary District (“GD”) Project Area comprises approximately ten city blocks of older industrial and commercial development, with
isolated residential uses. According to the RDA, the Project Area contains 95.8 acres of land area. The Project Area was created in 1999 and will terminate in 2023.

My house falls in these 10 blocks.

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