Entire Street Pkg for Sale- Deal or Disaster?

Question

A Broker brought a package deal to me to see if I had any interest since I had been hunting properties near a military base. Pricing is good but then there are these facts:

Lot size for the entire street is 4.3 acres and in the past the street resembled a mobile home park except with small homes. 40 rental units consisting of 24 houses, 6 duplexes and one four-plex. Each unit is a 2bd-1ba except for one 3bd unit. Currently 5 units are occupied with the balance of the units having been condemned by the City.

What I had initially considered was to go in and rehab each property and rent out each home but then after evaluating, I figured there may be more money made by Owner Financing the homes or outright flip a certain number and keep a few for myself as rentals. Currently the homes were tiny so invisioned a tiny home community which would be the first in the area or tear down and rebuild as many nice affordable 3/2s and 2/2s as will nicely fit on the street along with a 6 plex. I have never done anything of this magnitude and wondering if my thought process that the street has great potential of what can be done and find a mentor or partner to do this deal with or do I get the entire street with all lots and wholesale as a pkg deal or wholesale per lot and keep one lot and build a home to show potential to other investors. I enjoy wholesaling but enjoy rehabs as well and hard work indeed but almost excited about the potential of this deal. I just want to be sure I am not thinking too big.

City has street zoned for Residential or Manufactured use. I welcome any and all feedback. Asking price is currently $600K (15K per door) which I intend to negotiate down. Seller is willing to 100% Seller Finance the deal which is one of 2 offers I made her with no pre-payment penalty.

Keep this deal, run from it, wholesale?

Sam Shueh · Answer

It may prevent people from leasing or buying. The bad image will remain to be a sore subject in the future or a potential lawsuit(S).

Kevin Hunter · Answer

@Sarah S., it sounds to me like there can be potential there. I am curious what the city said about the condemnation. Please fill us in. I love the idea of buying low, selling off a piece, and retaining the rest free and clear or at a small cost. Keep us in the loop.

Marcus Auerbach · Answer

@Sarah S. that's a tough question to asnwer with the information on hand. Whenever you can buy in bulk and then sell or rent the individual pieces you have the theortical makings of a great deal. A combination of sell/hold might work well from a financial standpoint.But then there is the desirebility question. $15k a door is dirt cheap. Condemned does not sound good. Whenever someone is so motivated that they are offering seller financing and a super low price you know that they don't have a great time beeing the owner. The question is, why would that be any different for you? What can you do that will turn things around?

Gus Kazek · Answer

@Sarah S. That's a great deal if I've ever seen one. The zoning of manufacturing puts you in a unique position. You could make out great if you know of a manufacturer looking to expand. Also the residential side has tons of potential since you are very close to a military base. I'd say negotiate down and develop that sucker!

Sarah S. · Answer

@ Marcus Aerbach The Seller who is selling it inherited it all from his father last September. His father obtained the deal from auction w intent to develop entire street but took sick before he could do anything w it. I have met Seller and he admittedly says real estate is just out of his scope of knowledge or interest. He shared he has a troubled past dealing w addiction and was a drop out in 10th grade. I am one who encourages people so attempted to tell him to find someone to help him learn what he can do with the streets potential but in honesty I personally see his concerns. Title check has been done and it is clear. Seller gave me Probate Attorney info and he confirmed son is only legal heir and nothing can uphold the sell if I choose to buy. Only unknown is why the city condemned some buildings but I will know that later today. I am on alert when I see the word condemned but have randomly picked brains of some local investors and all 4 do not run from condemned homes esp when their plan is ro rebuild but these guys have experience vs mine of no condemned properties.My go getter attitude says grab the opportunity and ensure I have resources such as experienced developers, investors, etc. I can draw knowledge from as I go and make this a learning opportunity once I feel confident about the potential and my ability to handle such a task. My "I am too new to do this" attitude says wholesale it and walk away with pockets padded a bit but dang instict says believe in myself and put in the work and make it happen. Ugh...decisions..lol. I appreciate your unput, more for me to evaluate. Thank you.