Okay. From the 50% rule to the .02 rule, this deal is great. It’s 7 SFH that has combined rent for $2850/month asking for $125K. That’s NOT a typo! HOWEVER, the “problem” is that the houses are in the hood. Now, it’s a relatively small town where I grew up, not South Dallas (Oak Cliff) hood. So this “hood” is more like the poorest area of town. I wouldn’t go there at night, and my other rentals are in decent neighborhoods. I’ve been avoiding the “hood” on purpose, but this seems like such a great deal.
Question: What other factors should I consider? Why wouldn’t this be a great deal?
Thanks in advance - EXO
You should consider who your renters will be. If they will be drug dealers, drunks, and hookers, I would not buy the property at ANY price. They won’t pay; you’ll have countless evictions; and you’ll be broke in no time.
I would strongly suggest talking with other SUCCESSFUL investors who have properties in this area. When I say SUCCESSFUL, I mean landlords who have a bunch of properties in this neighborhood and have had them long enough to know what happens there. I would also determine if there are Section 8 tenants in the area. Keep in mind that renting to Section 8 tenants means that the properties will have to pass the Section 8 inspection.
You might also go to the local police department and ask them about the area. Try to get a picture of the neighborhood from their perspective. Ask them about the specific properties you are interested in purchasing. Pull the police reports for the properties for the last year. Also, research at your local building department to be sure they don’t have any negative orders against them (like being condemned for drug activity, etc).
Finally, you need to understand the repairs needed. A good purchase price is meaningless if the repairs are prohibitive.
Just do your due diligence. If everything looks good, this could be a good deal.
Good Luck,
Mike
what would be your objective and exit strategy for such a purchase? How would it build your business? It looks to me like it could take away resources from your already established operation with little prospect of large return.