How to rehab an entire area

[Fitzgerald Hall]

Hello everyone,

I am a beginner level investor in Atlanta, Ga. I have an idea to purchase quite a bit of SFH in an area within walking distance from a college and turning them into college housing. The property values aren't very high and the area has quite a bit of abandoned and boarded up homes.

I believe that if I can purchase the majority of the boarded up houses on 2 or 3 of the closest streets to the school and fill them with college students, it will be abetter look for the school and raise the value of the area and ultimately be great income investment.

The problem I am facing is that I am beginner and I do not have access to enough of funds to do this on my own. Even if I am being creative and offer to partner with the owner of the property in exchange for completing the rehab, funding would still be a problem. The area has a long history of college housing that does well during the school year so Im confident that it would be a good investment. On top of that the Georgia Dome is in the process of being build which will make the surrounding areas more desirable. Does anyone have any suggestions on how i should go about finding funding for something of this nature? Any help or advice would be greatly appreciated. Thanks in advance.

[Curt Davis]

Your best bet would be to find a private lender who will finance this project for you.  Your biggest hurdle is you have no track record and would be considered too large a risk and project for someone who is new.  

You might try to find another investor who will partner with you on the deal and split profits.

Good luck

[Robert Leonard]

@Ve'Ron Hall I wish somebody would do what you're talking about just North of LSU, but that's another subject and I'll have to start another thread to have that discussion.  :-)

Lots of people who want to become rental owners mention the demand for housing around colleges as great a great way to make a lot of money, but as a landlord, I'm always thinking 'I want long term tenants, who move in and stay for a long time.' Well that's never going to happen with college kids.  I'm sure those who actually use the strategy will chime in with their case for what's good about it.  I just want to make a case for low turnover, low maintenance tenants and steady cash flow away from the college campuses.

If you want to pursue those properties, I would follow Curt's advice and find an investor or several of them to partner with.  If the potential is there, they will see it and you may just be the catalyst to get it started.  The first ones in take the biggest risk, but if it turns around, you will have the greatest rewards!  I hope you find a way to make it work!

[Mike H.]

I think the other thing is that you might have a chicken and an egg scenario here.

You probably won't find anybody wanting to buy an entire block or two and fix it all up. Most would want to do one house and see the results.

And if you do one at a time, you might have a hard time getting students to look at the place and rent it given all the boarded up houses around it. And then your proof of concept won't work.

Its definitely a good idea though. If you can pull it off, you're going to better the entire area and possibly make some really good money.  Its the perfect storm for an investor. 

Just keep pitching and, even if you have to take a shot and do one house at a time, maybe thats what you have to do. Then it will be up to you to lease the place to a student and sell them on your vision of what that block/area is going to become.....

G/L

[Kevin Polite]

@ve'ron hall Might be a tough sale if you're talking about near the AU Center. It would be a great project though, especially with Morris Brown having money and selling there property. I think some of the Universities have purchased the properties and are holding on. I know Clark bought some and tore down some projects, but nothing has been built there.

[Fitzgerald Hall]

@Curt Davis Thanks for responding! I dont think a lender would be my best bet at this point. I will go with the partner with other investors strategy.

@Robert Leonard Thanks. Yes the potential is definitely there. Other college homes in the area that rent to college students are doing very well. The money that is made during the time school is in will be enough to cover expenses while school is out. I have a good relationship with the school so filling the houses with students wont be a problem at all.

@Mike H. Yes I agree, which is why the entire area must be converted to college housing. The properties are literally 5 min walking distance from 3 different campuses. Im surprised no one has done it yet. 

@Kevin Polite Im confident that it will work. This confidence comes from my knowledge of the area and a having went to college in the area I know for a fact that there is a high demand for this, especially for those students moving in from other states. Other colleges have done this and so have this college to a certain extent, but there is much more room for growth here. Im not sure what the universities are doing with their money but this would be a great investment for anyone who took the time and committed to it.

[Mike H.]

If you're that confident, then I'd say to go for it. But I think you're going to have to do it one house at a time in order to prove to someone that its doable. And, then, the real hard part is that you're going to have to sell the first few student occupants that you're going to be bringing the entire area back.

Thats the sale I think you're going to have to make. Nobody is going to fork over the money that would be needed to convert an entire block or several blocks.

And if they were, they would not be the type of entity that would want to cut you in on the deal. They'd likely be a large corporation or hedge fund that would want no part of a partnership on the deal.

So that might be another thing to consider. If you offer the idea up to too many people, you eventually run the risk of being cut out entirely. If you go for it one at a time, then maybe a bank or some other investor might be willing to stake the investment once you've done 2 or 3 and can show that its working and making money.

[Fitzgerald Hall]

@Mike H. Thanks! Thats a great suggestion and I think that would be the best way to go about it. Much easier to convince someone to help with 1 or 2 properties vs 20 properties.

[Rick Baggenstoss]

Definitely one at a time in the beginning.  You could work the are for years.  Turn arounds don't happen that quickly in real estate so you just need to build up your momentum.  The vision is doable, but it's a long road.

[Fitzgerald Hall]

@Rick Baggenstoss My fear is that the big investors will catch on quickly and and beat me to it. Another is that since the dome is coming soon, prices will rise dramatically.

[Steven Burrows]

I'm from NY, and somewhat interested. What's the price range of the houses you're looking at?

[Rick Baggenstoss]

When the big investors jump in, they'll more likely build apartment buildings/condos.  If you're early, you've done good work, made lots of friends in the area, know all the homeowners and the situation with every house, then you'll be in great shape to further your vision more.  

You really want competition there.  It will help you accomplish your goals without being the one to put all the money in.  

[Fitzgerald Hall]

@Rick Baggenstoss This is very true. Thanks for the advice. I see that you are from Decatur. Are you active in the area?

[Rick Baggenstoss]

I am.  I also invest in Historic West End.  

[Fitzgerald Hall]

@Rick Baggenstoss I would love to connect and send you over any deals that would fit your criteria. 

[Theresa White]

I found this when I searched "own an entire street." Did anything ever come of this effort?