All Forum Posts by: John Warren

Thanks for the great responses @Jay Boyle @Perry Ivy @Al Williamson @bill florence @Ndy Onyido and @Joel Owens

I realize that one has to have a certain set of skills, and D areas aren't for everyone. I am just trying to figure out what kinds of skills I would need that I don't have I guess!

I agree with Jay about using local service providers to mitigate a lot of the risk, but I also appreciate the perspective several of you gave about it being too much headache. I guess I was just wondering if you can get good tenants in those rougher areas.  A good friend just had a unit trashed in a B+ type building which had been rehabbed and managed fairly well. At least in the rougher areas, you can plan for this and rehab accordingly (harden units, use inexpensive materials  you expect to replace more often, etc.) 

So I guess from my original question I have some new ones to ask! What skills would I need to land lord in these types of areas? Can you get decent people to rent these types of units? (decent, not necessarily rich/affluent, etc). Do you need to be heavily capitalized to invest in these types of areas? Are the investors here investing in a high risk/high reward type situation?

Thanks all!

John

Thanks for the replies @Andrew Syrios @Jassem A. and @Brian Holt

I currently manage my own four flat and do all my own maintenance (for the most part). Do any of you use section 8 or any other government programs? The ones I have been talking to sound really interesting. They have monthly meetings with the tenants, and the landlord signs the lease with the company not the tenant. This means I wouldn't have to evict, I just inform the company and they do it...

Of course this all sounds a little too good to be true... which is why I am curious if others are doing this successfully.

Hi BP community,

I have a confession... I am considering investing in a 'D" area! The other day I was helping someone from my church who's mission group purchased an 8 plex in a "D" area of the Chicago suburbs. They are doing a gut rehab of the building, and while I was busy installing exterior doors I started wondering if it would be worth investing in this type of area!

I have always been passionate about investing in multi-family apartment buildings, and this year my wife and I bought our first 4 plex. It has been incredibly easy to manage (almost boring), I feel like we are ready for a bigger challenge, but in many Chicago suburbs it is hard to find anything larger that we have enough capital to afford! I have no idea why people will pay 500k for 5 unit that "might" cash flow, but I am not interested!

So, here are the positives I see in this "D" area.

1. The buildings are very inexpensive, but the rents are still high ($850-900 for a 2 bedroom).

2. The town seems interested in revitalizing the area, and the housing stock and apartment complexes are pretty great... just run down.

3. There is metra access to this town and easy access to major highways.

4. I have met the coordinator for the housing forward program (government agency) and I like the way it sounds like they are doing business. Several investors in my landlord association use them, and love the regular checks they get!

The cons...

1. It is a rough area...there is definitely gang activity and the clientele could be pretty seedy. There are worse neighborhoods in the city, and the population is more spread out in the burbs, but still.

2. Taxes are pretty high in all of the Chicago suburbs. This could be mitigated by buying buildings right and contesting, but still.

3. The school system stinks.

So, am I crazy to consider this? I don't want to be a slumlord, but it seems like investors can make some serious cash flow in these areas if they are smart/prepared/etc.

I think he does. He is with loan depot, and they are national company

where in Illinois is the apartment complex?

@Tim Porsche I have a good investor friendly mortgage guy if you need one for this strategy. In fact i was just discussing this strategy with him last week over breakfast. Let me know if you need his info.

John

I just went through the same thing with my new four flat. I opted to do a small increase as turnover would kill us at this point!

@JD Martin @Mark Gallagher

Thanks again! My wife and I may have made the wrong choice not to stage... Only time will tell I guess. We also Mia have made the wrong call on the trim upstairs. I almost painted it white, but then a friend was saying how nice the wood looked. I personally Have hated it forms day one!

The kitchen was done long before we considered making this change. We would definitely have done generic colors/granite/stainless if we had thought we would sell... Live and learn I guess!

I also forgot to mention that there is just over six months inventory in my town, so it is definitely a "buyers" market 

@Michael Woodward

@Mark Gallagher

@JD Martin

Thanks for the advice. I  am definitely considering dropping the price again. 

I just realized that I can easily post a link to the zillow add. At least then you guys can see the pics! Here it is.

http://m.realtor.com/#details?property_id=74459953...