Cost of bullet proofing a house?

[Amiris Brown]

So, there's this house that has been deeply discounted about $100,000 off its original listing price. Just last month there were 3 armed robberies next door to that house on a street with businesses. There have been muggings and rapes at knife point on that block in the past four months. I consider this too much of a war zone, but my partner insists to play the speculative game of appreciation as that area is slated for redevelopment very soon (it's in the process of gentrifying right now actually). I don't want to take the chance but he does, since a block over houses are still selling at $300K+. This would be a potential rental once it's fixed up a bit (it also needs work, but mostly cosmetic like refinishing the hardwood floors). However, we wouldn't be renting it out immediately instead we would live in it for 3 to 5 years. Which is why I'd want to bullet proof the property so to not worry about stray bullets fired at the businesses being held up next door. I'd like to put this in my cost analysis since my partner is claiming it's a good price, my argument has been just because the numbers seem good doesn't mean the socio-economic reality is good. If I can't convince him, I figured to rerun the numbers with all the repairs needed. Heck, maybe he is right and I'm wrong after all. I just want to make extra sure before we regret passing up this deal, which I'm tempted to move on from.

[Laura A.]

Amiris - I live in the DMV (Virginia). I understand your plight. Properties are expensive. Investor competition is fierce. And margins are thin on rentals. Then there is a lure of riding the gentrification wave. 

There are rough neighborhoods and then there are war zones. There are other fish in the sea. This isn't worth it. 

If you are looking for a better price point, there are other neighborhoods and strategies that are less dangerous. 

But I love any post that starts with, "so, there's this house..." You know it's going to be a good story.

[Amiris Brown]

@Laura A. if only I could get my partner to understand that, which is why I came here. Since I'm a newbie he doesn't always think I'm correct even though I did do research already in what risks are good and what risks are bad to take. In the tax history this house showed it wasn't even able to be rented, now I can't tell if the owner tried to rent it as-is which would be a turn off that explains its past vacancy issues, but even if it was fixed up well the area is nice two blocks down but right next door to this house are businesses that got held up 3 times this past month alone. Even fixed up, with this one block being so rough it will have a 25% vacancy rate. I just don't think having to ride the gentrification wave is worth the wait on this house, which is what I'm essentially having to set out to prove to my partner. Since I have no money of my own, his money and credit plus a loan is what we will be using. Since it's his money and/or credit he's trying to find these deeply discounted deals, but what he needs to understand is numbers aren't everything especially at face value.

[Ariel Goldenberg]

Amiris - if not your physical safety, let's talk about energy and time spending. It seems like this project will take tons of both with endless risk for who knows what return and when. Seems like the perfect storm of a bad deal. 

I would say - take your time and energy somewhere else.

Good luck!

[Amiris Brown]

Thank you for your understanding btw, @Laura A.. :-)

[Frank Jiang]

You are making a mindset mistake.

If you and your partner are both going to contribute to a project and you feel it is not a good investment, the burden is on him to convince you that it is a good project.  You are free to tell them at any point, for no particular reason to pound sand and withdraw your funds/time/commitment.

Working this hard to "prove them wrong" when you don't have to actually empowers his position, belittles your position, and is a waste of time and energy in my opinion.

[Amiris Brown]

I never thought of it that way, @Frank Jiang. Thanks! Very good perspective for me to keep in mind if this arises again within our business ventures between him and I.

[Account Closed]

You also forgot to budget in a ballistics proof vehicle to drive to and from your house in. That's about another $150k the last time I was shopping for one for a nice Excursion or Tahoe.

[Rick Wang]

didn't your partner want a super quiet place too? Or is this someone else? Because if you have those issues... it won't be quiet!

[Amiris Brown]

True, yes same partner @Rick Wang! It's only bass noises that hurt him, he doesn't care about anything other than low frequency, but still I'm sure he'll hear something as just like being next to businesses that keep getting robbed it is also literally next door to a Baptist church. Sunday's and Wednesday's will surely not be quiet, and cars will most likely blast music with bass. I should point that out to him, as it may stop his wishful irrational thinking regarding this property.

[Amiris Brown]

Well, that settles it well enough for me. If any of y'all are willing to take such a crazy risk, even if the price came down below its land value, so to sell at no more than $50K by all means pick up this property and let me know how it goes for you. It will be the final say in wether this was a newbie mistake to pass on up or not. I'm passing it, as a newbie and him never flipped a house before this is outside of our expertise at this point of our REI careers.

IMHO, it would do well only if it was rezoned as a commercial property so to rent it out to businesses. Currently, it is zoned as residential only which is a problem.

This property is located at:

3201 OTIS St MOUNT RAINIER, MD 20712

[Matthew Stellas]

Would it be cheaper to just wear body armor? 

[Amiris Brown]

Ha, yes but you can't shower or fall asleep with it on @Matthew Stellas. I don't think I could even drive with it on as I'd insist on having a helmet too, if it was just a rental.

[Lisa S.]

Is this property in Baltimore city? Yikes! I'd definitely not invest or live in that neighborhood. No way it's worth it. 

Edit: i see the address. 

[John Quiles]

@Amiris Brown I would say if it cashflow well go for it and rent it. Maybe rent it section 8 so you dont have to go there to collect rent. Or get a property management company to do that. Forget about the bullet proofing or living there. Why would you do that? Let the tenant pay for the mortgage while it appreciate and you go and pay rent somewhere else. But make sure you do it under an LLC and that you have great insurance. Last thing you want is to be liable if something so happen there.

[Ben Meisel]

Run, don't walk, from this "deal." I would question why your partner is willing to risk your life. It's hard to calculate ROI on a life. It also sounds more like gambling than it does investing.

[Jason M.]

The moment you walk outside, you can't bring your bulletproofing with you. What about your car? Find a new partner.

[David DuCille]

buy it, fix it up, rent it out.  People live in "war zones " everyday.  I have one house in a bad neighborhood with a lot of violencee.  I bought it for 25k spent 35k to fully renovate it.  Now it rents for $1395 a month and my mortgage is only $500.  Decently renovated properties in bad neighborhoods still rent to section 8 tenants pretty easily

[Amiris Brown]

@John Quiles, as I mentioned before it wouldn't cashflow as a rental until it was brought down to $50K and bought in cash at that price point lol. Not a deal either way it's sliced.

[Amiris Brown]

@David DuCille, true but they'd have to come down all the way to $50K or lower for me to ever even consider it. It needs work, even if the bullet proofing was left out lol. Currently it is listed at $174K not enough of a discount after everything is factored in regarding repair and renovation costs plus the vacancy rate it will still have.

[Amiris Brown]

Read the thread and run the numbers folks, at $174K heck even at $150K or $100K it will not cash flow after pouring money into it to get it rent-ready. It's not even worth the land it sits on lol (such a sad fate for a house), if we're still talking buy-and-hold by making it a rental.

Anyone is welcome to try to prove me wrong. Show me the numbers for your assertion though.

[David DuCille]

your numbers are not accurate at all in my opinion.  It's a 900 sq ft house, why is it going to cost you 100k to renovate?  I just renovated a 1500 sq ft 1920s bungalow for 90k and that was using lots of high end materials not basic "rental grade" materials.  I completely resided it, put in new windows, 3 brand new bathrooms, new kitchen, appliances granite etc.   When you renovate an entire house your cap ex budget becomes next to nothing.  Also, is your homeowners insurance really $6000 a year?????

I think your numbers look like a rookie that is being super cautious.  

Go on Zillow and look at 1102 e osborne ave Tampa FL.  You should be able to see the old pics from. The investor we bought it from.  So we have some similarities.

[Amiris Brown]

The cost of living in this area, the DMV, is inflated which makes labor and material costs sky rocket too compared to most parts of the country @David DuCille. For example, even food lol in central NC I use to pay $180 to $250 for the same amount of monthly organic groceries whereas here near DC it is about $1,200 a month. The same logic is true when pricing local contractors here. So who's numbers are wrong, hmmm?

[Amiris Brown]

Like I said, especially since I'm a rookie, anyone is more than welcome to buy this property themselves and prove me wrong, and contact me about their cashflow of $100/m or more. I'd like to see it happen, I could learn something. Also, I'm factoring in rookie mistakes in my numbers too, especially with all the shady contractors here in my area who do **** jobs at full price costs, as I've never rehabbed a house before after all.

[David DuCille]

i will guarantee you the cost of materials at home depot is not triple the coat at my home depot.  Yes contractors will probably cost more but I'm sorry, ive lived in NYC, a far more expensive place to live than where you are.  It does not cost anywhere near 100k to renovate that house.  It's under 1000 sq ft.  I do not want to disrespect your knowledge of your local market but it's impossible to spend that much to fix that house as a decent rental unless there is something major going on that I cant see in the pictures.

[Angelo Wong]

@Amiris Brown kind of agree with the advice to not live there.  Even if you knew (and it wasn't speculation) for a fact that you would get the appreciation, the risk of losing your life is there.  I guess a question to ask is how likely will you actually be dead within 3-5 years in that neighborhood and if that risk is worth it to you.

From a philosophical perspective there are things more important than money, but from a practical perspective, even if you knew the house would appreciate a billion dollars, there's no way you could use that money if you're dead.

But again, I'd weigh actual murder statistics to what your risk tolerance is before making a decision since your view of how dangerous the neighborhood is could be skewed.