Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Cost of bullet proofing a house?
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.
Nothing like reading a thread like this in the morning to wake you up. GET A NEW PARTNER. DON'T BOTHER. I'm not sure how many posts it takes to wake you up and find a new person to work with.
Originally posted by @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.
I'm now on my phone and the BP app and mobile browser can't tag people for some odd reason, so I am hoping quoting does the tags instead. As I am now attending a 3 day REI workshop at a hotel conferance room and didn't bring my iPad or laptop, just my smart phone.
Anyways, getting back on topic ...
OK, when I get back home tonight I will re-run the numbers less conservatively (this workshop does not end until like 7pm on these 3 days lol). I was told by fellow REIs previously as a newbie if I think something costs x, then I should double it so I have room for newbie errors. That is essentially what I did. In that case I would propose to only buy this house for no more than $120,000 still not at $174,000. Mainly also due to our max budget even with a loan is $200,000 for a property like this with such risk that will force us to have it as a rental instead of living there. I factored in our budget cut off too btw.
Bulletproofing the house won't help you if you ever plan on going in or out of the house.
Originally posted by @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.
Again, can't tag while on my phone.
Exactly how I feel.
Some friends of mine are currently doing the exact same thing in a gentrifying neighborhood in New Orleans. What they're finding is that (1) gentrification takes a long time, especially when you're living there; and (2) it's much harder and more expensive to do their needed repairs. This is primarily because decent contractors won't go to their house without a higher quote. We were there once and couldn't even get a taxi to show up. Make sure that danger premium is part of your analysis.
bad neighborhoods don't get better by not having good.people move into them. If.youbare committed to being a part of the positive change the community needs you shouldn't consider living there. Likewise, crazy **** happens in good neighborhoods too. There was a double murder last year 2 miles from my house in a very nice section of Tampa. Girl went nuts and killed both of her parents. There are no guarantees.
Run away my man...run just as fast as you can in the opposite direction.
Properties - investment or otherwise - in high crime areas are bad news.
@Amiris Brown obviously I wouldn't live there if I was you but you want a number, I grew up in Mexico City being a the son of a Developer, we were a target so we have armed vehicles as well armed widows and doors in our house so I called up dad see if he remember the cost and he said for our 2,300sq high raise condo, cost was around $180,000 back in 1992.
Got back home from the REI workshop, that's happening this entire weekend about an hour away from me.
Anyways, so I crunched the numbers on this house again less conservatively this time and without the bullet proofing cost.
These results still show that $174,900 currently being asked for is not a deal.
Observe here: https://www.biggerpockets.com/buy_and_hold_results/199093
Sounds about right @Account Closed, thanks! Let me be clear, I'd only bullet proof it if I lived in it in case there were stray bullets that hit from a shooting behind the businesses that keep getting held-up and shot at on Rhoad Island Ave. For the most part, the houses on that same street are safer so to speak as they are not in bullet flying trajectory of the Rhoad Island Ave. businesses lol. In a car driving by during daylight my fiancé and I felt fine, even cruising in a Prius passing by houses with very old used junker vehicles lol. I would never step out near dawn or dusk though, not without body armor. If we were to live there, the Prius would paint a big red target on us as it would not fit-in among anyone else's ride, that's for sure. I'd rather this be a rental if it ever was sold at a better price that it is listed at now.
Originally posted by @Amiris Brown:
Sounds about right @Account Closed, thanks! Let me be clear, I'd only bullet proof it if I lived in it in case there were stray bullets that hit from a shooting behind the businesses that keep getting held-up and shot at on Rhoad Island Ave. For the most part, the houses on that same street are safer so to speak as they are not in bullet flying trajectory of the Rhoad Island Ave. businesses lol. In a car driving by during daylight my fiancé and I felt fine, even cruising in a Prius passing by houses with very old used junker vehicles lol. I would never step out near dawn or dusk though, not without body armor. If we were to live there, the Prius would paint a big red target on us as it would not fit-in among anyone else's ride, that's for sure. I'd rather this be a rental if it ever was sold at a better price than it is listed at now.
ugh this iPad messed up my edit and turned it into another post when I corrected "that" to "than" darn this autocomplete ... I need to get my laptop fixed ASAP lol ...
@David DuCille that sounds too much like gambling still. I want a sound investment that doesn't rely on guessing the area of growth and/or gentrification wave — especially since all of it will be funded with OPM. I must secure a solidly sound ROI and my own cashflow.
@Sean Morrison thank you for your wise insight, means a lot to me. :-)
Hmmmm actually, I just thought of a great way to make this cashflow beyond dreams even given its location plight ... Hmmmm ... brb
Yes, it can be a rental property that cash flows at $160,000 or even $170,000 (I would still not pay $174,900 price) if it can sustain no more than a 10% vacancy rate (which I am skeptical about, as I originally set a 25% vacancy rate in previous calculations), so it will almost meet the 2% rule. As a newbie, I could have a 50% margin of error though, so it may only barely qualify as a 1% rule if I'm mistaken or at best may meet above and beyond 2%.
As for living there, after we literally drove through there during daylight hours ... my fiancé finally realized he didn't want to live there lol. I tried to tell him it didn't meet his standards, from what I could make out online via Google Maps. Guess he had to see it for real himself to have it dawn on him, instead of Google Street View lol. It is slapped right up against a Church, with nearly no backyard ha the listing obviously lies lol but I knew that from Street Veiw already lol.
Armor plating is extremely expensive. A typical $30k car that is armored costs $300k. I can't even imagine what it cost to plate a house.
Also, keep in mind there are different levels of armor. Rifle rounds can penetrate most levels.
It isn't worth the price, my fiance withdrew his speculation after he drove by it in-person with me lol. Guess I should have dragged him out there first, instead of showing him the bad deal numbers, so he could better face reality lol.
We've moved on from this stray bullet death house lol.
Bullet proof a house! Best post I've seen on BP!! LOL
You know how you bullet proof a house? Dump your partner and get someone with some common sense!
I'm curious about what your thoughts are for when you actually have to leave the house? Bullet proof vest? Helmet? Might be able to pick up some body armor on ebay...
You can get all your groceries delivered from Amazon Fresh. Self imposed house arrest for 3 to 5 years? You might be a good candidate for a mission to Mars!