Why would properties sit for over a year?

[Donald S.]

Hey guys, so I'm looking at a property, 4 family, that's been on the market for over a year. raw numbers look good, and its fully rented out. My question is what should I be looking for as to why its been on the market so long? it is in a fairly bad neighborhood, c- type area almost d area. There's no photos except for the front of the place, So maybe structural or foundation issues? anything else I should look out for when doing my due diligence?

[Justin R.]

1. Overvalued 

2. Difficult sellers

If the property is overvalued its either one of two things. Seller asking an amount too high, or the property has a perceived "flaw." The flaw could be something you cannot change such as a railroad in the backyard or next to a cemetery. Or, the flaw can be a value add opportunity for you to fix and reflect in the rents/value.

My guess is that "IF" this was a fixable flaw with value add it would have been picked up by another investor within the last year. This can also be a large repair item that generates no perceived value such as foundation, extensive mold, etc.

I would offer low and where it works for you. Ask if it has fallen out of contract in the past. If you ask, the listing agent will more than likely be honest with you (somewhat.) If you go under contract make sure your due diligence reveals anything past investors could have found. 

Look not just at rent rolls, but past taxes as well.

Best of luck!