Virginia Quadplex Too Good To Be True??

Question

Ok BPers, I am in Norfolk, Virginia on a work trip and I'm taking advantage of my time here to check out the local real estate for future out of state purchases. I live in California and my income will go a very long way in a low priced market like Virginia. I also come here a lot because I work for the Department of Defense and Navy. I was eating dinner today and browsing listings on Redfin and I came across this quadplex in the Ghent/Park Place neighborhood of Norfolk (don't quite know the neighborhoods yet).

This listing looks too good to be true. What am I not seeing???

227 W 27th St, Norfolk, VA 23517

6 days on Redfin

List Price: 119,900

6 bedrooms/4 bathrooms

2,734 sqft living space

Total Current Rental Income: $2300 ($625x2 and $525x2)

Calculating with 20% down, 10% vacancy, 10% maintenance, 10% capex, and 10% PM

Monthly PITI=$638 and it comes out to $740 cash flow per month.

For Virginia investors, are these normal numbers????

Marshall M. · Answer

I researched both Ghent and Park Place in Norfolk for many months before deciding not to invest due to crime, flooding, etc. Most people  consider Park Place to be in the midst of gentrification and Ghent to be more upscale. I would watch out for slow turnover. There's also a lot of Section 8. That said, I do know two folks with experience in Norfolk I can connect you with if you are still interested.

Kevin Phu · Answer

@Jason K., I was just searching Redfin and Zillow how @Marshall M. suggested. I have no idea on this market so I started by browsing the listings to give me a starting point for exploring the area.

Kevin Phu · Answer

@Irina Belkofer @Doug Woodville That makes a lot more sense now. I also spent the afternoon driving around the Park Place neighborhood and yeah...no thank you. Lots of rough looking homes and lots of people hanging out on the stoops. If I were to grade it on my A to D scale, it would be a solid D.

The listing says its 4 units and so does the tax roll. Where did you see 6 units? Did I overlook something?

Thanks for all the input! I don't intend on buying soon. Just researching the local market.

Irina Belkofer · Answer

@Kevin Phu it's not just location - you have to see the house inside.

It's built 111 years ago, still original windows, no central A/C, even exterior is shubby - you can only guess how much deferred maintenance you'll see.

After you replace 4 kitchens, 4 bathrooms, all windows, paint all that monster - your numbers won't make sense at all.

BTW, it's already not that attractive - it's Midwest, not Cali - you get much better ROI here, but not so much appreciation.

This house is not a good buy - it's losing value every day and needs tons of money to become cash producing asset. Now it looks like run down slam ........priced too much.

John Leavelle · Answer

Howdy @Kevin Phu

It currently is a High Crime area compared to the rest of Norfolk.  Do some more research to verify before investing.

Kevin Phu · Answer

@Dylan Vargas blows my mind! I'm excited to start learning more about the local market here and honing in on a criteria.

Dylan Vargas · Answer

@Kevin Phu Welcome to the cash flow outside of California! Its amazing huh? Crazy when you see it in person and its actually real. Hope someone chimes in about the neighborhood etc. Good luck and keep us posted.

Kevin Phu · Answer

Account Closed from the local investors on BP, Norfolk and Portsmouth are strong rental markets with good cash flow. Lots of gentrification going on and incoming businesses like IKEA in 2018.

Jason K. · Answer

Will set new queries now @Marshall M.

Thanks!

Marshall M. · Answer

@Jason K. redfin lets you filter multifamily when you search, same way they let you filter detached homes, condos, townhouses, etc.

Virginia Quadplex Too Good To Be True??

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