Looking at a 16 unit complex that is 3/4 vacant

[Howie Baker]

Greetings BP community,

I had a realtor contact me about a 16 unit complex in a more rural small community that is about 3/4 vacant. One of my mentors would salivate over this property and offer up a master lease to the current owner to get the units updated, cleaned and rented. My concern is the small community, what is the best way to check the viability of this property to support getting these units rented? The rents all seem to be below market rents for the area. I have not seen the property yet so I have no concept of deferred maintenance needs.

This is also a community that I am unfamiliar with but is close to one of the cities that I am working in.

This would be my first attempt at a virtual investment, though I could schlep out there, I want to have a really good reason before doing so.

Howie

[Roy N.]

@Howie Baker

We had a similar opportunity brought to us last month: 2 x 12 unit, 1x 14 unit, and a 4-unit commercial property in a small, rural town. The vacancy rate was 20(ish)% and the current owner has held all four properties for 30-years and was looking to retire.

When we started pulling economic data for the area it became evident the local economy is in a long-term decline - reliant on an over-exploited natural resource. We concluded tenants would continue to be come more scarce and of poorer quality and took a pass.