Real Estate Agent · Biloxi, MS · Member since 2020 · 28 posts · 22 votes
Hi BP Community,
I think I found a good duplex to purchase for house hacking that works number wise. This will be my first investment so I am trying to make sure it goes well to set me up for future investments. I discovered that the current owner has numerous complaints filed against him from tenants and it paints a vivid picture of him being a slumlord(numerous of post are saying don't do business with this guy!). One of the units appear to be in decent shape but the other unit needs some work. I don't want to purchase something and find out months down the rode that it has a ton of problems that were never disclosed and covered up.
Would you buy a property from a previous bad owner?
Rental Property Investor · Modesto/Stockton/Merced, CA · Member since 2020 · 456 posts · 214 votes
5y
YEs! this can be a great opportunity to buy at a discount! just make sure to get an inspection to give you an idea of current maintenance issue and possible future ones.
Rental Property Investor · Modesto/Stockton/Merced, CA · Member since 2020 · 456 posts · 214 votes
5y
YEs! this can be a great opportunity to buy at a discount! just make sure to get an inspection to give you an idea of current maintenance issue and possible future ones.
Chandler, AZ · Member since 2020 · 295 posts · 272 votes
5y
Sure... but things to consider:
How long has he owned the property? Slumlords are cheap by nature and the longer they have owned the property, the more damage they have done / allowed to happen to it. I've experienced them before myself as a renter in the past. Expect substantially sub-standard repairs that will fail sooner or later. Expect non-permitted work. Expect low quality and improperly performed work. If he has owned the property for 30 years for example, expect a lot of problems for years to come unless you do a serious remodel. Also slum lords are generally very resistant to let the property to sell at a low value based upon its deteriorated condition. A good inspection should reveal most issues, but the ones hidden in the walls will still surprise you.
If you are planning a major remodel, this may be a good opportunity for you as you can "make duplexes great again". Offer low expecting a lot of needed repairs. Good luck!
One thing to note is that you are only getting the tenant's side of the story. Consider that generally, tenants do not understand landlordering, or even home ownership. Possibly the tenants are a giant headache, and the landlord doesn't have the incentive to keep them happy.
Now i'm not saying that the owner is not a habitual slumlord. Definitely do inspections, scrutinize anything for questionable repairs and upkeep.
Often it is crapshoot. There are tell-tale signs of shoddy coverups. just be on the look out.
I purchased a duplex where the house next door's owner was thinking about buying. but was put-off by a tenant's warning of issues that were just untrue. They complained to me incessantly during my initial walk thorough and inspections. Possibly they had it out for the landlord, or just didn't want to be bothered with change in ownership. I ended up purchasing and kicking out the troublesome tenant.
but anyways yes, make sure inspections are completed. possibly question the owner about these complaints. Do your du diligence.
Good luck with your first purchase and make sure your skin is super thick!
Rental Property Investor · Stroudsburg PA · Member since 2020 · 119 posts · 74 votes
5y
Also with said duplex that I purchased, once said tenant was gone, i was able to slap on a fresh coat of paint. Do a few minor repairs. Then re-rent for +$225 /m.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
5y
Most of us buy properties with deferred maintenance and/or poor management and add value. You can make more profit in the first year of repositioning the property than in 5-10 years of monthly cash flow.
Paddock Lake , WI · Member since 2017 · 21 posts · 13 votes
5y
I am currently in the process of rehabbing a former slum duplex. The previous owner got it from auction with the intent of house hacking it, he owned it for five years and never got past the lower livingroom. He allowd the roof to leak for years and just shut off the rooms that had water damage, both upstairs and downstairs.
I got the property for what he owed in unpaid taxes and a lean on the house. My mistake was self financing the rehab, and trying to do all the work myself, after my day job.
Get good estimates from good local contractors. Assume any least one large miss when estimating.
If you have a good plan, and your numbers are good, don't be afraid of hard money lenders for the construction funds.
I have seen two approaches,
1) rehab to a better level, everything works, and fill the units to get cash flow. Plan larger rehabs later as units turn to get the rents higher.
2) do the bigger rehab right away to maximize rents in your neighborhood.
Get your units rented and refinance out to pay off the hard money lender.
Assume everything he touches had no permit and needs to be redone. Also assume you will get screwed business wise somehow. Something like... “oh we didn’t know about that buried oil tank” or “oh that 114’ concrete retaining wall was an eyesore so we removed it for you” etc etc
Do your due diligence with the inspection, current leases and make sure if you put in an offer you include transfer of the deposit and prorated rent. As others said you are only getting one side of the story and if these are posts on social media, they could be from a tenant that we evicted or not selected when there was a vacancy.
Investor · Greenville, SC · Member since 2016 · 163 posts · 108 votes
5y
I love to buy properties with the "right things wrong with it." Past understanding 100% of what you are buying through inspections, the key is ensuring that you have the ability to fix the problems that exist with the property. If its your first investment property I would meet 3-4 contractors at the property with your inspection report and get educated on both the house and of course the money its going to cost. (Education on the house is not a secondary component, several guys will just send their contractors out and assess the bids only, thats a move that only works for experienced investors)
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
5y
I bought a 4 unit apartment building as a Freddie MAC REO. Before it was foreclosed on the owner let druggies live there and did nothing at all in repairs. The druggies recycled the plumbing and even the electrical fixtures, anything. there were gone, but the mess was still there.
I bought it for $131k and the county just completed its 5 year reassessment. The County is pretty accurate in the assessments. The value they gave is $280k. Lots of work, but a $150k increase in value!
And as of Nov 1 all units are rented bring in that cash!
Buy your duplex with eyes open, and plan on major repairs, and take that money!
I think I found a good duplex to purchase for house hacking that works number wise. This will be my first investment so I am trying to make sure it goes well to set me up for future investments. I discovered that the current owner has numerous complaints filed against him from tenants and it paints a vivid picture of him being a slumlord(numerous of post are saying don't do business with this guy!). One of the units appear to be in decent shape but the other unit needs some work. I don't want to purchase something and find out months down the rode that it has a ton of problems that were never disclosed and covered up.
Would you buy a property from a previous bad owner?
If the price was right. Can you buy the property at a nice enough price and are good terms? If you can answer yes to the previous sentence then get after it.
Real Estate Agent · Prior Lake, MN · Member since 2015 · 42 posts · 63 votes
5y
If the price of the property makes sense for your goals I would suggest that's only a good start for assessing it's future value. All of the insight offered by others is spot on. I would add a couple things for clarity. If you have concerns about the property I would go deeper with my inspections than the standard inspection. For example.... You could have the sewer pipe, chimney and HVAC inspected. These are high ticket items that could make a good deal today a bad deal tomorrow. A little insurance with thorough inspections could save you a big headache in the future.
If I were in your shoes I would also talk to the neighbors. While it's possible the neighbors could have an axe to grind with the landlord, they could also point out legitimate issues that you would want to know prior to purchasing. Every little bit of insight will reduce your financial risk for unexpected issues later. The last thing I would check is whether any permits have been pulled in the last couple years. This could valid what you've previously heard or make you pause with concern if you know of work that was completed by the landlord that wasn't properly permitted.
A little expense and research upfront here could save you a lot later. Good Luck!
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
5y
@Jeromy Jordan
100% yes! I do this all the time. Just make sure you set clear expectations with your tenant when you take over! Also make sure you inspect the property well to handle any repairs that could get you in trouble.
Since it’s your first deal make sure you either have time for it, or hire a management company. They can be tricky deals.
Absolutely! Do your due diligence.... Find a GOOD inspector that has a lot of experience and go through it with them. Not only will you get the info you need for the duplex but you will make a contact that will hopefully have good advice and possibly introduce you to other contacts for renovation/construction, electrical, plumbing, etc for this and future projects.
Investor · Minnesota & Kansas · Member since 2020 · 176 posts · 75 votes
5y
@Jeromy Jordan-I'd do it as long as the numbers work. Do the due diligence before pulling the trigger and look at the neighborhood for appreciation. If current owner wasn't able to pull it off I'd find out where was the issue-is buy and hold not his niche (builders at times have this trouble running 2 businesses), Are the tenants not complying with the owner, Age of the property (older it is more maintenance to keep in reserve) etc. if you want the deal then as fellow investors mentioned is to have an inspector complete a thorough inspection & run your numbers accordingly-as long as the big ticket items are taken care off then it comes down to on going maintenance/repairs & property management. If you are house hacking then may be doesn't make sense to hire a property management company. Hopefully this helps.
Real Estate Agent · Member since 2019 · 58 posts · 42 votes
5y
I would, but you have to make sure it's actually in a "good" neighborhood. During your Due Diligence phase, figure out what was neglected and try and leverage it in the negotiations. For example, if the previous landlord didn't update the appliances, try and get a reduced price.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
5y
There's really a pattern to duplexes. I've laid it out before, but it bears repeating. In my area, which is like a lot of areas, quite a bit of duplex housing was built earlier in the 20th century, from 1915-1965, and after that the trend went more and more to single-family. So what you see, typically, is that these places were bought by enterprising and largely competent working-class handymen some time in the 1950s-1960s, who lived in them and worked hard to maintain them well up through the 1980s-1990s.
Typically, by then, the buying handyman was aging out of the work force and had raised and educated his kids to be white-collar middle class. The duplex was completely paid off and printing money. So the handyman moved out to a retirement condo and passed ownership of the duplex to his kids (often with split ownership). The kids took over this fine asset and had no idea what to do with it other than calling up a third-party local contractor or handyman service whenever something went wrong. They also typically had followed jobs somewhere else in America and were trying to remote-manage the properties.
Time passed, and the duplexes aged, badly. Routine maintenance went by the wayside, the original owner passed away and with him the foundational knowledge necessary to keep the place going, but the kids struggled on with the property. Many of them continued to try to remote-manage the property and made various other bad choices.
Cue present day: these duplexes are always in bad shape, always run by incompetent aging LLs who wish their parents had just given them some stock in Ma Bell or General Electric, always need a lot of TLC from good handymen, who are fewer and fewer in number. Many of these places are in such need of so much simple rudimentary maintenance they simply can't be run profitably by anyone other than a handyman.
If you find yourself looking at this kind of duplex in 2020, the smart thing is probably to walk away.
@Jeromy Jordan I agree with a lot of this feedback, buying could be a good opportunity to be a great landlord to these tenants who have had such a poor experience so far. Just be sure to make sure there is no liens on the property and have a reliable home inspector check the place out (maybe even go with the inspector and shadow him while he evaluates to ask questions and get another good look at the place). Hopefully you can use the inspection report to negotiate a good deal. Best of luck!
Investor · Fredericksburg, VA · Member since 2019 · 37 posts · 17 votes
5y
@Jeromy Jordan I agree with @Dean Wells. We did his option #1 to buy, do light rehab to get it rent-ready, put tenants in right away, and now plan to do more updating next year. The former owner was a slumlord with a slum tenant in place but they are both gone. What went into our decision was the fact that this property is in a PREMIUM location and we were confident of its inherent value.
I also agree with all the other comments and especially the ones to do GOOD inspections - and make sure they are thorough.
New to Real Estate · Bristow Va · Member since 2018 · 20 posts · 8 votes
5y
There is some good advice in this thread. If i was you, i would get a walkthru with a qualified GC and go with my gut. There is plenty of money to be made on properties like this and, as someone else said, you are only getting one side of the story. Let us know if you decide to go through with it, best of luck!
Rental Property Investor · Tampa, FL · Member since 2020 · 77 posts · 42 votes
5y
@Jeromy Jordan it should never matter who owns it always do your own inspections. Find yourself a good local inspector you can build a relationship with and trust. That’s all we care about. Tenants will cover for their landlord and some will make a mountain out of a molehill. We have had tenants try to kill deals and encourage deals. So while we listen to what some tenants have to say we take it with a grain of salt.
Also look at the location of the building. If it's in a low income area then you will have bad reviews. People like to complain about everything and pay nothing. We have a lot of HUD properties and have purchased from some characters. Always came down to having great team of inspectors, a great Realitor etc.
Inspections are key, get those done. I don't know how handy you are but also when you do a first walk thru look at the ceiling for water damage, inside closets for water damage. Check the caulking around bath tubs and counter tops, if there is mold there he doesnt do quarterly inspections to make sure the tentants are destroying anything around those things. Check under the sinks for water damage there, if its bad chances are your floor under is gonna be bad. I check furnace and water heater also, if the water heater has a ton of scale around it that can be a sign of lazyness and lack of care. Key notes to, take a look at the roof if its wavy thats bad. Check foundation for cracks and in the basement if there is one for water staining. Another thing I tend to look at is windows and windows with AC's in them. Most of the time the tentant puts these in and if done incorrectly you can get tons of water damage running down your window/wall.