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Updated almost 3 years ago on . Most recent reply

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Michael Hunt
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What do experienced investors see in this listing?

Michael Hunt
Posted

Curious as to how an experienced real estate investor would interpret the following listing:

"Charming Triplex located in the heart of [AREA]. Very low maintenance Triplex with excellent long term tenant which have each been at the property for over 15 years. Tenants are paying well below market rent. Potential to increase rent by 45% from current rent. Super Hot Area for new development opportunity in one of [AREA's] Hottest Neighborhood. Close proximity to shopping, restaurants, schools, parks, public transportation, and freeway."

As a novice, I read the underlined parts as 

low maintenance = hasn't been maintained or tenants are easy-going

long term tenant which have each been at the property for over 15 years = property hasn't been updated/renovated in 15 years, so expect to pay a lot of renovations

Tenants are paying well below market rent = rent hasn't been updated; these "low maintenance" tenants will most likely leave if I raise the rent by 45%.

Would you agree?  Am I missing anything? Would love any additional insights.

Thanks in advance!

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John Warren
  • Real Estate Broker
  • 3412 S. Harlem Avenue Riverside, IL 60546
5,073
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John Warren
  • Real Estate Broker
  • 3412 S. Harlem Avenue Riverside, IL 60546
Replied

@Michael Hunt these are all standard things to say in a listing. Most owners end up with tenants who are well below market rent because it is much easier to self-manage a property (and potentially more lucrative) if you don't have a bunch of turn over. The danger point comes when the Capex items loom, and that is when a lot of long term owners decide to sell. That doesn't mean this is a bad deal though. Every building I have ever purchased has had rents significantly below market, and that is the opportunity I am chasing in my deals.

  • John Warren
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