Morris Invest Deal Analysis

[Milos N.]

So here is a deal they offer. I would like you to comment on it.

Bare in mind that this was sent to a person I know that didn't even have an original conversation with them.

I guess they were put on a mailing list regardless (while still waiting for a conversation).

Here it goes:

1045 Almeda St Jacksonville, FL 32209

Bedrooms: 2 

Bathrooms: 1

Monthly Rent: $800.00

Per Year Taxes: $293.00

Acquisition Cost: $49,500.00

Now quick internet research shows that the house was purchased on the 15th of November for 33.000.

Rentometer says the rent is 600-650 (not 800 as advertised).

They are putting 16.500 in it, i guess to rehab it. Maybe that would increase the rent, but by that much??

Still how much can a 2 bedroom 1 bathroom rent in a shady part of Jacksonville .

The crime seems pretty bad to me:

31 COUNTS OF ASSAULT

27 COUNTS OF SHOOTING

21 ARRESTS 

https://www.trulia.com/real_estate/Robinson_s_Addi...

If somebody familiar with Jackson would comment is this a war zone?

I live in Oakland,CA and even though the areas are red in trulia rarely we have so many shots fired, and arrests, but it seems large parts of Jacksonville are war zones, or am I wrong?

I would say this deal sucks because it is a war zone, but would love to hear other opinions.

Thanks in advance

[Marc Love]

The area you mention is indeed a rough area, but so it Compton CA and houses there are $100k.  For Florida, Jacksonville is the cheapest rental house market given its economy/population to price point ratio. What that equates to is very high rental demand. The challenge is just managing that sort of property with high-risk tenants. Your only other option for rental housing in Jax will be at the 80k+ price point and even then, you are just moving from a 650 rent to an 800 / 900 rent, so that said, MI is correct that you will just bet on "equity" rather than cash flow. Bottom line is if you don't have a manager that "manages" property, then you won't succeed. Most so called Jax "managers" do nothing because their properties are at high price points with no-trouble renters, so of course it behooves that lot to only take clients with easy to rent properties. But that sort of property you should just manage yourself. Rent investment is just like anything else. A good analogy: Buy a used car, spend more time maintaining it, but have more cash flow because you bought it cash, vs. paying $600 / debt service. High risk, high yield in real estate is indeed the "rough areas." Any one that tells you different is likely not experienced or someone hoping one day their "equity" and "appreciation value" or financed properties will payoff...likely it won't because depreciation-based repairs will cut those margins drastically when trying to sell for a retail high value on the market. Hope this info helps.