Two Houses for the Price of one in Class D Neighborhood

[Mark Millich]

I’m discussing a potential deal with an individual who’s in the process of fixing up two houses and selling them both for $40,000 in total (for sale by owner). They’re both on the same lot, so it’s one property tax. One of the houses is already occupied by a tenant as well with a rent of $600 a month.

The issue – the houses are in a Class D area with a relatively high crime rate. The houses are also over 100 years old. My coworker, who’s also into property investments, has five properties in this area that he bought in cash and is doing very well on in terms of cash flow. He does have some issues, but nothing detrimental. As a matter of fact, the individual selling the properties is someone that my coworker purchased one of his properties from (that's how I got in touch with him). I would obviously get a home inspector in, along with completing a title search and getting an appraisal before purchasing the property. If bought, I would also contract out a property manager. It would be my first property investment, but I’m obviously a little hesitant considering the area.

Thoughts? Thanks in advance for any feedback.

[Dennis M.]

most people on here ( especially west coast) are going to be very reluctant to advise you to do this . I would say the opposite . Because I invest in such areas I have found it to be profitable and the entry price to be very easy . That being said it is not for everybody and it’s surely a bit more hands on . There is a learning curve but You have the advantage of being local and having a local mentor that can successfully guide you through this . I’d Have your investor friend guide you and listen to him . Practice your due diligence and know what your getting into . The low income areas offer a lot of income potential but many investors want an easy check in the mail without the work . Getting loans will be difficult . Owner financing is what you want either that or get a unsecured line of credit to buy them