1919 Rehab
Greetings Folks, I received a call today from a retired couple who wants to sell a rental property. It's in a part of town that has declined in value over the years due to drugs and the darkness that follows in it's wake. The house was built in 1919 and appears to be structally sound. The seller is also including the lot next door for the grand sumum bonum of $7000. I believe he will negotiate, and I may be able to talk him down to 5k. The house needs about $1500 in rehab tomake it habitable.
Does this sound like a good deal? Has anyone had any experience with properties in the less desirable parts of town? All comments will be graciously received.
I will share my rehab rental story. A partner and I purchased a 2700 sq. ft. home that was divided into a duplex for 12k, we spent less than 8k to fix it up and took out a loan for 38k. We split the difference, have had it rented out for over a year to good tenants and have a positive cash flow. If you can own a piece of property that is rentable for less than 10k and you can get 300 to 400 a month or more, I don't see where you could go wrong. The main thing will be finding and keeping good tenants. Just make sure that you get a good inspection on the property to make sure that you do not have any major problems that you will have to address in the near future.
Thanks for the story, I plan to do the same. Do I need to wait until the title seasons to get a loan? I have heard there are lenders who will give loans immediately.
As I was leaving the neighborhood this evening a young black kid waved at me. I waved back! I didn't realize it until he had chased me to the end of the street that he was trying to sell me some crack. There are some historical districts here in Memphis, but the house I'm interested in is not located there.
Thanks,
Arb
arbolis,
Just a word of warning about investing in neighborhoods with crack users and sellers. It hasn't happened to me as an investor yet (because I stay away from those areas) but several years when I was an active General contractor I was working a complete rehab for an investor in just such a neighborhood. The local drug users literally sent him to foreclosure because everything I installed was gone the next day, they actually stole the copper plumbing out of the walls, backed up a pickup and carted of the AC unit, roofing, siding etc... I drove up one morning and watched a crackhead walking down the street with the brand new front door that I installed the previous day on his back. They would take these stolen items down the street to the building materials salvage dealer to sell and get money for drugs. Just thought I would pass that on.
JayDub
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It is all about cash flow! If it pencils out you can make the property secure and take care of the rehab. I once rehabbed a place on the west side with my .45 in my tool belt
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