There are about 5 or 6 houses in the west end of my city that are selling for 5k-7k. A few houses down the street are for sale by realty companies (occupied) for 40k. The problem is it is considered one of the “bad” areas in the city. The crime rate is high and it is practically the ghetto. It would seem extremely hard to lose money on a 7k house but I may be naive. I am tempted to buy a property and rent it out.
Does anyone here ever get worried when landlording a house in the ghetto?
The house is 5k, need 8-10k in repairs and I can rent it out for about 350-375/month.
You would probably have no problem renting it out, but say after 2 months of renting it out, and no payments have been made you have to evict them. Chances are your going to have another 3 or 4k into it again. It sounds like it might be ok to rehab it and sell again, but then again, i dont know if a person willing to move to the ghetto would be able to buy a house. probably talk to a realtor to find out the area your talking about. There are also landlords that will buy the house to rent them out
Leave slumlording to the pros, don’t do this as your first project. There are more risks involved, will you be brave enough to collect the rent? If not, stay away. Were the homes used as Meth Labs? If so you will need to rip the entire structure down and rebuild or you might be held liable for any illnesses that occur. Remember you get what you pay for!
if you are worried about how to collect the rent you are already asking the wrong questions. while the cash to get in is tempting (and cheap) you are taking on a bigger liability (and risk). You need to know what you are doing and have solid, proven team in place to rehab and manage the property.