Effect of Crime and Maintenance Issues on Multifamily Properties

[Thomas Fawole]

In deciding whether to buy a big multifamily property or not, does the fact that there has been a couple of shootings over a couple of years in the complex play a big role? What about reports of sewage flooding apartments some of the units? Do these issues gathered from the grapevine merely affect the price during the negotiation stage? Thank you.

[Joseph Gozlan]

@Thomas Fawole I would re-evaluate your classification of the building/area. Class C is usually blue collar, hard working people. People that work don't have time to shoot each other. Sounds more like. Class D to me. 

Class D means higher risk and thus commands lower prices in the market. 

As for the plumbing issues, EVREY class C/D building has plumbing issues. What we do is budget a big sum of money for capex when we purchase the property to cone in and fo the work to "reset" the plumbing day one. 

Make sure to higher licensed plumbers to come in with cameras and inspect ALL the lines under the buildings during your due dilligence period.