Would you hit this one?

[Joshua Feit]

What's up BP!

I have a deal that's mine for the taking. It has some distinct positives, and some major negatives. I'm looking for your quick input -- would you go for this one? Yes? No? Bonus points if you give your 1-2 sentence 'why'. Thanks for the input!

The deal:

Actual purchase price: 80K (cash purchase / may refinance later)
Units: 8 (2br/1ba each)
Rent/unit: $350/mo
Management: 10% to manage / nothing to place tenants
Taxes: 1600/yr
Insurance: 1200/yr
Flood insurance: 2400/yr (yes, it's in a flood plain near a river)

The positives:

Solid management in place (for years) that is eager to continue. (Yes, I know how to vet PMs.)
Lots of CapEx in the past two years, mostly updated units.
New roofs / new plumbing in most / new HVAC / etc.)
Block bombproof construction
Property has been cranking out greatly increased cash flow each year.
2016 - the true net after ALL expenses, management, and repairswas about $800/month
2017 - the true net after ALL expenses, management, and repairswas about $1,200/month
2018 - so far this year, the true net after ALL expenses, management, and repairs is about $1,600/month
I have actual bank statements / tax returns / P&Ls to verify all of this
Many tenants have been there for 5+ years
Very low vacancy rate
All tenants current on rent

The negatives:

Neighborhood is terrible. Definitely a 'D' area. Someone got shot down the street two weeks ago.
Stagnent local economy. I highly doubt this place will appreciate anytime soon.
No rent increases in sight. Rent is definitely market.
Flood plain (see above)
The reason for the net increases is that there have been a lot less repairs so far this year, due to all the Capex and repairs made over the past two years. That's a good thing, but it's not like the neighborhood is improving and the rent is increasing.

It's a lot of cashflow, and a lot of headache. So -- would you go for this?

[Dennis M.]

This would be a hard yes for a slum lord like me ! Your typical investor will run for the hills on this deal but there’s a lot of upside and fear drives a lot of those decisions . Low income areas can have great cashflow if managed right . An 8 unit for 80k even in the hood is a great deal . Those people need to live somewhere and nobody is a homeowner in these areas . Somebody is going to get that rent money it might as well be you ! I’d  bet it has a low vacancy too . Look you don’t have to live there or hang out in the area . There’s perhaps a chance You might be able to bump up the rents to 375-400 ...Plus pepper spray and bullet proof vests are tax write offs !