I only own one other property which was a condo that was my primary residence up until a year ago when I decided to lease, so I consider myself still pretty inexperienced.
Since then, I've learned a lot about Dallas, learned about ongoing and upcoming development in the area. I've been eying properties in the East Dallas area for the past few months. Just today I came across this gem: https://www.redfin.com/TX/Dallas/4638-San-Jacinto-St-75204/home/30793354
Something like this scares me, but I'd still like to hear thoughts about it.
Pros: - Great Location: Less than a mile north you've got two separate roads (Henderson Ave and Greenville Ave). Both have been rapidly gentrifying for the past 5-10 years. About 2 miles south you've got Deep Ellum which has a lot of history in our city and is also in the process of being redeveloped. Less than 2 miles west you've got Uptown which is one of the hottest areas in the country in terms of development currently. To the east you've got some older houses than start at about $500K and go up to the millions. The actual property is in a pretty rough patch of East Dallas, and there are quite a few rough patches in the area, but that's slowly changing and this particular property is boxed in by an immense amount of wealth. - Cheap
Cons: - Building condition: Have only seen pictures, but this thing will need a TON of work and, even though the property is 'cheap', it will end up costing me a ton to get it up and running, and I honestly have no idea how to even guesstimate the amount of money it would cost. - It's more than a 4-unit, which means it would be classified as commercial.
Ideally, I'd like something in the same area that appears less risky and is a 4-unit or less. I actually don't plan on buying anything until next year just to have more of a financial safety net, but it would help me a lot if I could maybe talk out some of the pros/cons of a building like this with some experienced investors.
If I don't have the money to fix up the place now, is it risky to simply buy it right now, and just let it sit. The mortgage wouldn't be all that much to be honest, and I'd be okay with just sitting and holding with it remaining empty, or are there risks in doing this that I am overlooking? If I were to buy it, since the timing is wrong for me, I'd buy it now, hold on to it for a few years, then re-do the entire place when I have more money and when the area around it has developed more. I've not really researched exactly what this plan would involve, so that's why I'm not jumping on this deal, but it's possible a similar deal will come up in the near future that I might actually consider.
IMO if this is your first deal, find a partner or mentor to go walk through the building. I see several issues just from the pictures alone. Electrical, plumbing, HVAC, and vandalism. this doesn't include what you don't see in the pictures. Does some work only mean the one unit?
The price is low, but it may not be low enough, get comps.
I looked at that property yesterday and agree that there is definitely potential money to be made after a significant amount of renovation and long term appreciation as it is squarely in the redevelopment path. That being said, It is too big a project for me to take on. I did note that 5 other investors were there in the 10 minute window that I was at the property, so there will likely be incredible competition. I am interested to see how far above list this complex sells for.
It sounds like you need to stay on the sidelines on this one. See who buys it and ask the new owner if you could learn from what they are doing. Ask them how much they paid for it and what they think the rehab will be. Drop by every few days to see what they are doing. Use it as a learning experience that you dont have to financially be a part of. It looks like a project that should NOT be your first. Some mentors charge 1000s just to be a part of something like this that you can get for freeeeeeeee.
There are and will be other deals out there. You dont want your first one to be such a huge monstrosity that can go REALLY bad quickly on you. Stay on the sidelines, but keep looking.
Thank you guys. That was my gut feeling on this one. As tempting as it is, I think it's way too big of a project for me. It would be an incredible learning experience though.
I literally lived 4 blocks from this place (Grigsby & Swiss) and drove by it every day. I was there, when the original demo work began. The complexes next to it and across the street are really rough, and there is currently some sort of 1/2way house or transitional living facility at the corner of Grigsby & Ross. That section between Live Oak & Ross has just been really slow to turn, and I'm not sure why or how long it will take. However, I would guess it has to do with the number of small multi-family properties that are in very poor condition, but are clearly cash flowing as is. Those owners have no incentive to upgrade the properties or quality of tenants.
Unless you can get something like this to cash flow, understanding you will not get top rents, because of the surroundings, where you are at least neutral as the area turns, I wouldn't touch it.
I like some of the ideas tossed around here. Especially the "free" experience from checking it out. Do (due) diligence is part of the experience. You may have to look at 5 or 10 of these types in depth to find that one beauty. (sounds a lot like dating?).
With the amount of old apartment buildings right around there being converted from all bills paid slums to $1500 a month yuppie apartments with a bit of lipstick and landscaping, that place will be snatched up quickly for sure.
This sounds good for someone with more money and more experience. Like everyone said you should look around in that area because it sounds like it is on the way up and find something that you can handle, and that will give you a little bit of cash flow and wait for the property to appreciate.
This post has been removed.
I now use Trulia.com Crime Map as my first screen for rental property. I don't care if the numbers are good anymore if the location is in a red zone of high crime. I don't want the added risk of a crime occurring to one of my tenants, their property, or my property. The Crime Map has maybe caused me to miss "a deal", but I'm sure it has caused me to miss "a crime" too. Crime zone is a deal breaker for me.
Interested to see how this works out. Maybe we can invite the eventual buyer to BP ;)
We are looking at a duplex in a town that is known for a high crime rate but the street is a family street with a mix of single family and duplexes. It is a fairly new duplex BUT one side is water damaged because the pipes froze and burst. The bank owns it and they turned the heat off in the empty apartment. The other side is in excellent condition and rented to a long term tenant who pays $1,350.00 We are thinking about this as BRRR but are concerned about the probable lack appreciation, about the crime statistics, about not owning anything else in this town and the high taxes. With all these negatives the house would still have a good cash flow. So we are considering it. What does everyone think. Should we try to buy it?
Join the Largest Real Estate Investing Community
Basic membership is free, forever.