Demographic concern in multi family property

General Real Estate Investing
1

OK, it’s been a while not to post or respond to this forum… busy looking for a deal.

Anyway, I am about to purchase a MF property, based on available data, sales comp & market rents, this property seems to be a good deal. Price much lower than market, rent is also much lower, for potential upswing.

What I am afraid of is the demographic or quality of the tenants in that area, which I don’t have available data to verify. After talking with the agent, I noticed that the current owner is having problem keeping good tenants. These tenants skipped payments and many times being evicted. Therefore, I haven’t seen the property reaches its potential. What do you suggest in this matter, can this problem be fixed? Or tenants in certain area always like that therefore the problem will continue to exist?

I know if I can establish this property, I can get good ROI, however, if this problem continue to exist, I will have a minimal ROI that is better off to be invested elsewhere. Any input?

Thanks in advance,
R’

2

R,

Yes, the demographic area is a major concern. Warzones often have ridiculously low prices (and rents) and there is no real opportunity to raise the rents. The quality of the tenants in warzones is the worst, with a very high percentage of drug addicts, drunks, criminals, and deadbeats. To make matters worse, many low income tenants will not talk to the police when there is a crime (even a murder). It can be next to impossible to make money in a true warzone.

Normal low-income areas also have marginal tenants, but with some hard work, you can make very good money in low-income (non-warzone) areas, thanks in large part to Section 8. If you are afraid to go to an area at night, don’t buy there!

Good Luck,

Mike