In real estate, you are often flexible, and sometimes that means buying a home you would normally never consider. This is especially true in the Dallas Fort Worth market right now, as inventory months supply is less than 3 months.
I once had a coworker who was a former Marine who served in Iraq and Afghanistan tell me there have been house placements where he felt more unsafe than in a red zone with snipers. Now, I wasn’t sure how serious he was about this comment at the time and dismissed it, but after this appointment, I think there may be some truth to that statement.
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setting the stage
Let me try and describe in my mind a picture of what a difficult area it was.
As soon as I started arriving within 15 minutes of the property, I knew right away that I was in a rough area. Many commercial buildings were boarded up, some of which looked abandoned and vandalized. Meanwhile, dilapidated homes line the streets with swaying roofs, peeling exterior paint, boarded up windows and pitbulls in backyards.
This is not the type of area you want to get out of your car if you have a choice in the matter.
how did i get this property
This particular lead was a referral from my website. She described the situation, quite typical of a probate scenario, where there were several siblings, and they weren’t getting along with each other on how to settle the estate.
One more thing – the house was at one point a high traffic drug house. You know, typical stuff,
This type of property was certainly far and away what I considered to be in my “wheelhouse”; Right from the beginning, I was thinking of wholesale for the exit strategy. For this probate property, one of the brothers had been living in the property but had actually let himself in as well as the property. One day, while he was high, his “friends” stole practically everything from the house, from the refrigerator to the AC system. Besides this, they also set ablaze some items like copper wire and even ceiling fans.
Despite the seller trying to warn me about how much work the house would need and how rough the area was, I still wasn’t prepared for what I’d see at the actual appointment.
Over the phone she described the house as “a black hole that absorbs light even during the day.” He recommended bringing a flashlight or two. I did a little more research on the area and found that it was much more of a war zone than I had first guessed, located in a very rough area of Dallas.
The seller was so apprehensive about visiting this property that we contacted the Dallas Police to set up an escort for the day in addition to her brother accompanying her to the appointment.
Appointment
When I arrived at the property, as I usually do, I ran the comps and tried to get an idea of what the ARV was before setting foot on the property.
As I was calculating the cost of the repair in my head, all kinds of red flags started going off. And I soon realized the numbers wouldn’t mean anything to most buyers. To give you an idea, the tax assessed value of the property was only about 37k.
Inside the property solidified the decision for me. It wasn’t something that fell into my buying criteria. Take a look for yourself:
finding a buyer
Lucky for me, I have a handful of colleagues who buy very unique homes like this one. Remember, not every investor operates on the same margin or has the same exit strategy. You can sell anything, anywhere, if the price is right.
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This particular property was sold to an investor who frequently shopped in the area. He would buy these properties, clean them up just a bit, do a very basic rehab (just barely livable) and then sell the homes through the owners’ finances. The seller will then complete the repairs on the homes themselves.
the moral of the story
stay safe. Make sure you always at least text or call a loved one to let them know where you’re going.
Plus, I share my Google Docs calendar with my wife so she knows where I’ll be throughout the day in case of an emergency.
What is the toughest asset you can invest in? What do you do to ensure your safety when visiting homes?
I’d love to hear your stories – please comment below!
Note by BigPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
