One of the things I want to do this year is grow my business. So I began looking for opportunities to invest and to put together another group investment or syndication. I found a small apartment complex in one of the communities close to my home base and decided to go and look at it b/c it was a screaming great deal!
I had to drive a little while to get to it but not too far. This neighboring community is very different from my home base but If I invest again in this area I will have a little experience in the area and may be able to get better results then I did when I first went into the area. This particular property is a foreclosure that appears was just over leveraged and once the debt service became too much for the previous owners they gave it back to the bank. The bank has hired a out of town broker who co-brokered the deal with a local guy. The local broker is a good guy and understands this market very well. He met me at the property and showed me around. Luckily for the bank and for me if I buy it the property has a guy looking over it and keeping the copper from growing legs. “growing legs” means things just get up and walk off i.e. get stolen borrowed or otherwise disappear. There are very few worse things that can happen then your HVAC’s, copper pipes, and wires growing legs. To replace those things cost an arm and a leg. I wanted to talk a bunch of pictures of the property but after I got there my battery died in the blackberry! Luckily the broker also has a blackberry and had his car charger so he let me charge my phone! After walking thru the place I decided that it as in ok shape and needs some work but nothing I think I cant handle so I made an offer to buy it all cash with no contingencies!
I did not offer the asking price b/c the agent and I talked a little about what I think about the property and about where the market it for this type of property. I think that the bank will need to take a bath on it and if I am able to help them I will try to do my part. This property would not be a good deal for me but a great deal if I am able to fix the problems. If I am not then it could turn into just a good deal. If all I can do is just buy a good deal then I should stay at home b/c good deals are a dime a dozen. What makes this business great is finding the great deal! The hardest thing in the world is to NOT BUY A GOOD DEAL. Good deals come along all the time but a great deal! Those are rare and when you have the potential to bring one of those down you have to be ready! If you have used all of your gun powder (investment capital) on good deals then when a great deal comes along you can not kill it and bring it home to feed your family b/c you have been taking all of these good deals.
If I get a good response from the bank I am going to talk to the current lone resident manager who is looking after the place to make sure nothing grows legs. I need to know what he knows and what happened to the past ownership.
If I end up buying it I will create an entire case study of it and post it on my case study page. Otherwise I will just write about my experience and see what happens.
This property is what I call a dirty ugly, ultra low-income property! I don’t call things a slum b/c in my opinion you can own low-income property and run it like a decent place to live or you can become a slum landlord! The property becomes a slum b/c of ownership 1st and foremost. If ownership cares then management cares and if management cares then resident’s care if everyone cares the place can be for lower income people but still be a great community and a great investment.