WAR ZONES
I had a question about War Zones. has anyone here made any money in them? I have about 27 houses staked out to try to flip. some of them are not in War Zones but the neighborhoods arn't the best in the world. they have a mix of good and bad houses. How do you flip these suckers and not get stuck with them. or how should I market them? And help would be Appreciated. Thanks in Advance.
Six words "BUY THEM CHEAP - SELL THEM CHEAP!"
The people that want houses in the war zones are mainly landlords that don't provide the best housing to their tenants. Why fix them up only to have your tenants tear them up?
Make sure you know your property values, and make sure that the houses that were sold weren't listed for an eternity before they moved.
There's a reason why there are so many fixer's available in the war zones.
People that can qualify for a loan don't want to live there. Rehabbers want to be sure that they can sell when the rehabs are done.
Good Luck,
Jeff <IMG SRC="images/forum/smilies/icon_wink.gif"> [ Edited by jeff12002 on Date 01/18/2004 ]
It is ok to flip houses in war zones,be sure you are buying cheap,cheap,cheap. If you are buying rehabs or keepers buy in blue-collar middle class neighborhoods,this is where you will find the greatest need.
If you are relatively new to the RE Investing business, I suggest you stay away from the so-called warzones.
I would stick to areas where you could see yourself walking the streets at 21.00 PM on a friday or saturday night.
Lesser areas can be good prospects for investing, more so if you see signs of other investors or rehabbers working the same streets.
Do your due diligence using census data, talk to the guys at the local police station, drive around the area's schools, and talk to some of the shopkeepers.
You'll know soon enough...
[addsig]
Do a test market! Put an ad in the paper for a "handyman special". Your phone will blow up. Make a list of all of the investors in your area and screen them and see which ones buy in war zones.
I think if you can buy them cheap enough
their is money to be made. A friend of mine wholesales 1-2 warzone houses
a month for 3-5k. He also only pays
50-60% of market value. So give it a
shot.
Jeffrey Adam
[addsig]
Some time in the past I bought a mass of multiple units deep in the heart of the war zone. Well timed, right before the Watts riots and that is where we bought.
The problem "War Zones" caused by a segment of the population feeling and with due cause that they were being left out of the good life and that a barrier was preventing them for climbing up and out into the great American Dream. We ended up with about 1,800 units. Why because the investors and the larger management firms had played a part in the one thing that creates these conditions. Absentee Landlords And Management.
We corrected it by intense ongoing (three years) constant in person being there in the area and we corrected all the violations and started a bunch of programs to help.
We then formed masses of Corporations that took over ownership building by building and sold shares that entitled the tenants to own their units. Now they were the owners and they lived in the area and they fixed up their buildings and took a pride in them.
The Acid Test. The Watts Riots, we did not lose (damn it) a single building. At the end of the three years all buildings were either sold to tenants in residency by Coop Ownership or the Ownership was now in the hands of local business men who were of the same ethnic and racial grouping. It was tough, it was rough. But I look back on it as one of the best times in my life. I learned a great deal more then I taught.
Lucius
My experience with 'war zones' has been in the Detroit area. The only criteria I have is- Is the neighborhood/area experiencing revitalizaition? (Rehabs going on, new construction, etc). If so, I will usually look at it. If it's in the downward cycle, I'll pass.
Hope this helps!
I have bought my last 6 houses in War Zones. Before a put in an offer I look at All the work that is needed, I am waiting on a closing where 2 families where murdered on the next block last week by the same person, then set off a bomb to kill himself. But I'm still buying the house, I am paying $9,500.00 for the house, I am putting $5495.00 into the property. The subject to appraisal is $55,900.00. I also have 3 people qualified to buy the propertywhen it is fixed up, Probably aroundJuly 2004, It is very cold here now and I don't want my husband to spend to much time there on a daily basis. In the last 3 years I have purchased 5 of these properties and have netted over $110,000.00. They are a GOLD MINE. The key is to have a Creative Broker on your side, any smart broker will advertise your house, that means 70 to 80 leads, which means about 15 qualified buyers. That is where I got the people that are qualified to buy the house. I'll do a seller credit of 10% of the appraised value $5,590.00, and pay for closing costs, $4100.00. They will have apayment around $369.00 and own their own home with about $750.00 coming out of their pocket. I'll receive a check for $43,710.00 at closing which will mean I'll net about $28,715.00 not bad for being in a WAR ZONE. See my profile for more information. GOOD LUCK!!!!!!!!!!!
Warzones can be very profitable as mentioned above by the "tinman". The key is the price you pay. I usually pay no more than 50% of market value if I buy in a warzone. I then
wholesale it to one of my wholesale clients who specializes in warzones.
I had a house in a warzone get vandalized 3
times one time! They stripped the carpet, fixtures, etc... It turned out to be the neighbors right next door! I would rather make a quick buck and wholesale the property in a warzone than wait for the big
payday and go thru all the trouble of baby
sitting the property. A friend of mine has
a guy who stays in all of his houses while they are for sale. Prevents the vandalism.
Try both. Retail one and wholesale one and
see what works best for you.
Good Luck
Jeffrey Adam
_________________
"The only place success comes before work is
in the dictionary".
[ Edited by JeffreyAdam on Date 01/20/2004 ]