So I found this block on the edge of a lower-middle class area. On the block there are 12 houses. One has recently been renovated and is about to be completed. 3 more are currently lived in and kept in pretty good shape. The actual road is really dirty and overgrown. That leaves 8 houses that are not being lived in. 2 of them are very dilapidated (roofs need work, havn’t seen inside). 1 had a small fire in the kitchen.
I’ve seen 2 of the remaining 5 and they are on the market “as is” for 30,000 and 35,000. Both are single family units about 2000 sq. ft. BOth have solid foundations and good non-leaking roofs. The remaining three are not on the market, but have not been occupied in 3-5 years (according to the mailman).
Has anyone had any success buying property on one block, doing minor asthetic repairs and then renting it out and doing other houses in the neighborhood? Maybe I am missing something, but it seems that if you owned 5-6 houses on a block and had them filled up with good people you would drive up property values in that neighborhood.
If anyone has done anything liek this please repsond and let me know how it all worked out.
As always i really appreciate the comments and advice from everyone in this forum. I am closer than ever before to actually putting an offer on a property and joining you in calling myself a real estate investor.
It sounds like something that can be done. My question is that if this block of 12 houses is in a bad neighborhood, can you raise property values in JUST that block?
In Fort Wayne and I’m sure in most cities there are pockets of decent houses that are surrounded by less than desirable areas, but most of these are numerous blocks together, not just 1.
I did recently visit a home in a historic district that is almost on the demo list. It is just one street of about 20 houses that is surrounded by ghetto, but there are numerous houses being worked on and restored. This house could probably be purchased for $10,000 or less, but needs almost completely gutted. Plus even if you were all in for around $40,000, not sure what the comps would be on a historic house on a historic street in the middle of the ghetto. Too much risk for me, there’s easier ways to it!
If you can sell a couple at a higher value because you rehabbed them, then you could use those for comps on an appraisal which would help show a higher value.
But, a buyer might look around and wonder if they should pay $70k for a house on a nice block, when around the corner the houses are only worth $30k.
Yes, I have done this, but with a slightly different twist. When I buy multiple buildings on the same street, they are usually not vacant, but rather infested with druggies. Where I live, it is common for the drug problem to vary greatly from block to block.
On one block, there were 4 apartment buildings that were full of drug dealers. The police were at the properties every day and the neighbors were terrorized. I bought the 4 problem buildings and kicked out all the druggies (after the appropriate month long battle). The block has completely turned around and I have filled the buildings with good tenants. I can’t honestly say that the property values have increased, but the rental market and reputation of that block certainly have.
Where I live it is very common for there to be millionaires living a block away from 100k dollar homes. This house is only 7 blocks from mine and I live in an upper middle class neighborhood
Today I did the comps for renting and similar (and more outdated) places very close to my potential property are going for about 350-400 a bedroom. I am going to make an offer for 24k tomorrow. At the very least I’ll get some experience in flipping on my first one so it will be easier when I do some real ones down the road.
Can anyone direct me toward a puchase agreement that includes lots of escape clauses?
I sort of want to have an offer ready for the agent so he pushes the deal a little harder to the bank.
A few developers are doing this on a grander scale near me and buying up everything they can in a larger neighborhood in Hartford. The residents are up in arms though as the developers are fixing up the properties, upping rents and due to the higher rents the middle and low income people have to leave. The properties are being filled with young professionals now. If anyone is in CT its the Asylum Hill neighborhood in Hartford, west of Hartford in the Asylum St and Farmington Ave areas.
I know a lot of gurus advocate filling an offer with escape clauses. the trouble with this is that when you make your offer it will seem like you are just looking for a way to weasel out. This puts you in a poor bargaining position.
I’ve found you only need three clauses in your contract:
“Subject to buyer’s approval of appraisal.”
“Subject to Buyer’s approval of detailed inspection to be made within XXXXXXX days of agreement.”
“Should buyer fail to perform on this agreement, seller’s sole relief will be buyer’s earnest money deposit.”
Anything else is useless and weakens your position.
So I made my first offer today with a normal 15 day inspection period. After a great seminar by Vena Cox (or something similar) at my REIA meeting, I decided to not only jump in, but lower my offer considerably.
I went from 24k to 16.5 and the agent seemed to think it was reasonable that the bank (it’s a bank owned property) would accept. He deals n lots of bank owned properties (according to him) so I feel confidant about the future.