Purchasing apartment complex

[Frederick William]

I am looking to purchase an apartment complex in Los Angeles. Target price being around 1 million. Most properties I’ve seen are in bad neighborhoods. Mostly east Los Angeles or Crenshaw area. Wondering if this is a safe place to park an all cash investment. Can’t help but think of detroit and all of the real estate investors that lost big there. Any advice is welcomed.

[Scott Mac]

Just some of my thoughts,

How many units will you get for $1 million?

How close are current rents to market rent, how much work is needed to bring the units up to market rent. Is Market rent most likely to be Section-8, if so how many bedrooms do these units have?

How close is current vacancy to average vacancy for that area?

Is the area machine gun alley with drive-bys thinning out the population on a regular basis? Call LAPD and ask about the complex and the area.

Has LAPD pulled out of the area and it's now patrolled by the Sheriffs department or State Police due to massive overwhelming crime.

Also are most of the other apartment buildings on the street matchy-matchy, or are the buildings very dissimilar?

Does the street and a few blocks around seem like a residential area or an industrial area (with land use being manufacturing or warehousing, or trash dumps)?

Are you afraid of the people in the general area, or will being there yourself not be a problem?

Can you line up a reliable hard working property manager for the place, or will you have to self manage?

Will workmen go down into the area during daylight hours to do fixups or will you have to do them yourself? (you call Adee Do and find out Adee Don't).

How close is it to the main commercial corridor (in Crenshaw, the Crenshaw business corridor" AKA the heart of African American commerce in Los Angeles").

How familiar are you with the culture of that area (know your customers, and know what they want for their rent money/voucher).

Is the graffiti load mainly tagging or is it gang related? Ask the Police or study up on it yourself online.

Have you ever been down there after dark and heard the level of gunfire in the general area--if any (and does this dissuade you from owning there).

Good Luck!