Help! Neighborhood Turned Ghetto - Posted by Kevin

import · November 14, 2005, 10:58am

Posted by Mike on November 14, 2005 at 14:36:12:

Looks like you need to start a community watch program. Im sure there are some homeowners who are not to happy what has happened to your area. There is nothing wrong with section 8 IF they are screened section 8, (credit, criminal, and eviction checks) Both of my section 8 tenants have good credit. Here in PA section 8 will live almost anywhere if it is a 3 bedroom. 1 Bedrooms are a joke and I wont be buying anymore of them in the future. I think you will do fine with section 8 if you screen.

import · November 14, 2005, 10:58am

Posted by Kevin on November 14, 2005 at 11:58:09:

I bought a duplex in Texas in December 04 in a lower middle class neighborhood. It was cashflowing nicely, around $350/month for the first 8 months I owned it. Meanwhile the neighborhood has quickly deteriorated into a ghetto, as other landlords in the area have turned their complexes into Section 8 rentals. 3 months ago I had a tenant move out on one side, and I just found a replacement (had to go section 8 since no one else wants to live in the hood). Now I just had the other side move out so I have yet another empty apartment.

My cashflow through all this of course has turned negative and the best I can hope for is to break even at this point after finding another tentant.

I’m not sure what to do. If I sell the duplex now, I take a loss. If I wait, my fear is that the neighborhood just gets worse and worse, leading to further depreciation.

Any advice would be appreciated!

Kevin

import · November 15, 2005, 7:57pm

Re: Be sure to keep - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on November 15, 2005 at 20:57:43:

the fire insurance paid up.

import · November 15, 2005, 3:02pm

Re: Help! Neighborhood Turned Ghetto - Posted by Mary in CA

Posted by Mary in CA on November 15, 2005 at 16:02:03:

Have you talked to the city’s redevelopment office? In our town they set up redevelopment zones to fix this type of problem - maybe they could help you stop the problem before they have to redevelop the area (and probably condemn yours and all the other owners’ properties in the neighborhood to sell to some big name re-developer).

Just a thought.

Mary Nichols
Stockton, CA

import · November 15, 2005, 1:12pm

Re: Help! Neighborhood Turned Ghetto - Posted by Crassus

Posted by Crassus on November 15, 2005 at 14:12:35:

What useless criticism.
Kevin, what I would do is analyze why the neighborhood went downhill. If the major cause is landlords accepting section 8, perhaps you can persuade them that it is in their best interest to change their policy. However, if there are other reasons for the decline and section 8 is now the norm because no one else will live there, a solution is more difficult.
Maybe you and other landlords can get the police to patrol the neighborhood and drive the druggies and other scum away. Perhaps this is wishful thinking.
Maybe the neighborhood decline is isolated and your specific block or blocks is surrounded by a larger, overall more acceptable environment. If so, see if some clean up strategy works. If it doesn’t, sell and take your loss.
If your neighborhood is in the middle of a much larger declining area, definitely get out.
I see little upside( the vague hope that the area will improve in the future and appreciate) and you’re losing cash every month. Acknowledge your mistake or misfortune & act to minimize it and not make it worse. As we know, there’s plenty of money to be made elsewhere.
This is what I hate about investing 1500 miles away.

import · November 14, 2005, 2:23pm

Re: Help! Neighborhood Turned Ghetto - Posted by Daphne Lowe

Posted by Daphne Lowe on November 14, 2005 at 15:23:29:

Sell and move on. Clearly you’re uncomfortable and don’t know what you’re doing. I’m a happy Sec 8 landlord, my properties are in good condition so I get to cherry pick the best tenants. I’ve obtained most of my properties from landlords like you. I’ll take this nuisance off your hands, my max price = mo rent / 1.25%

Daphne

import · November 14, 2005, 1:34pm

Re: Help! Neighborhood Turned Ghetto - Posted by Sailor

Posted by Sailor on November 14, 2005 at 14:34:45:

My 1st thought would be to buy up the neighborhood cheap & turn it around. Barring that, I’d make sure thata my bldg was the very nicest on the block. Another thought would be to organize the owners & have a group plan. Good luck!

Tye

import · November 14, 2005, 1:31pm

Re: Help! Neighborhood Turned Ghetto - Posted by Natalie-VA

Posted by Natalie-VA on November 14, 2005 at 14:31:01:

Kevin,

I don’t know your market so I can’t advise you on whether to sell or not, but I wanted to offer some info on calculating cashflow. It seems that you thought you had $350 cashflow, and that may not be true.

You should take your rents and multiply them by .75. (You are taking out 25% for vacancies and repairs.)

Then, you subtract your payment with taxes and insurance to come up with your cashflow.

In other words, if your rents are $1000 and your payment is $750, you have zero cashflow. The other $250 gets allocated to repairs and vacancies.

I hope this helps next time around.

–Natalie

import · November 14, 2005, 12:48pm

You better than us? - Posted by Shakita Jones

Posted by Shakita Jones on November 14, 2005 at 13:48:53:

I’m section 8 and I live in one of those neighborhodds that you call “the ghetto”. Why do you prejudge us people? If it wasn’t for us, you wouldn’t be getting no Section 8 checks for your shack!

import · November 14, 2005, 11:28am

Re: Help! Neighborhood Turned Ghetto - Posted by mark

Posted by mark on November 14, 2005 at 12:28:54:

Sounds like the the neigborhood has been on a decline for sometime now. I would not sell! If you are making 350.00 per month spread lower the rent. When you have a ad in paper make sure you work every person and follow-up. You have to work harder then the landlord down the road…

import · November 15, 2005, 2:56pm

Re: Help! Neighborhood Turned Ghetto - Posted by Kevin

Posted by Kevin on November 15, 2005 at 15:56:21:

Crassus,

Thanks for your advice. A neighborhood cleanup is definitely in order. I think there are too many sec 8 already to stop anyone from using that program. In fact, I have decided to join them instead of trying to beat them. I now will have section 8 tenants on both sides of my duplex and I will be positive cashflow starting Dec 1.
Not sure I could have done much about this even if it were 5 miles away. My realtor/PM has done all he can to help me keep it filled, and being there in person wouldn’t really have changed anything.

cheers,
Kevin

import · November 14, 2005, 2:27pm

Re: Help! Neighborhood Turned Ghetto - Posted by Kevin

Posted by Kevin on November 14, 2005 at 15:27:57:

“Clearly you’re uncomfortable and don’t know what you’re doing.”

Did you read my post?
Starting with an insult not a very good way to make an offer! No thanks.

import · November 15, 2005, 5:20pm

THERE IS NO SHAKITA JONES! - Posted by Cappy-VA

Posted by Cappy-VA on November 15, 2005 at 18:20:07:

Its called “baiting” you post something ridiculous and see how many people will respond. Trust me on this one.

import · November 15, 2005, 6:48am

Re: You better than us? - Posted by Frank Chin

Posted by Frank Chin on November 15, 2005 at 07:48:01:

Shakita:

Calm down. No one said anyone is better.

My sister’s first husband passed away when her kids were 8 & 10 years of age. She was only able to get a low paying job, so she got assistance and section 8. No fault of hers.

She lived out of state and I visit her once a year and stay for several days. She lives in a beautiful complex of several buildings as seen from a distance. The only thing thing different I noticed is her building had lots of kids hanging around outside, and adults standing around too. And its the only building in the complex with a security guard checking for ID’s. I had to show ID even before ringing the doorbell. The other buildings got no guards, dead and quiet outside, no grafitti inside like hers.

On about my third visit I asked why things are so different at her building. She said the complex received “assistance” for its construction, and the complex had to set aside so many units for low income and section 8’s. All of “these” people were assigned to one building in the complex, hers. The others pay market rent.

Since many of residents are single moms with kids as she is, they got kids hanging around outside. And most of the adults standing outside are “not working” for reason or another.

I had no reason to prejudge anyone, but only noticed the activity of the building different than other, and only then told its mainly section 8. My sister had since got herself a high paying job, bought a condo half a mile away, but still socialized with friends she made at her former home. But she tells me many of the residents want to move somewhere else. Are they prejudging??

Shaktia, this is a free country, and when given a chance, people like to live in a quiet, clean neighborhood. People just don’t want to live in a graffitti filled, noisy atmosphere. And you just can’t tell someone not working on section 8 to stay indoors all day.

There’s no prejudging. Things just turn out that way, that is, many people don’t like noisy neighborhoods with people hanging around outside all day. Real Estate investors also have the same choice as to the type of neighborhood they invest in.

Frank Chin

import · November 14, 2005, 1:37pm

Re: You better than us? - Posted by Goldfinger

Posted by Goldfinger on November 14, 2005 at 14:37:43:

Yes, and without us you would have no section 8 check and no shack!

And I don’t need to prejudge, only need to remember the trash that caused me to sell and move my rental investments to a better area.

It was also sad, there were some very good people who were there because life had given them an undeserved blow, and because of their circumstances they had to live with the trash too! I know what I’m talking about, for several years I was one of “you” people.

Been there, done that.

import · November 14, 2005, 1:32pm

Re: You better than us? - Posted by Kevin

Posted by Kevin on November 14, 2005 at 14:32:16:

It IS the ghetto.
1 year ago, less than 50% of the area was section 8. Now it is more like 75% section 8. This coinsided with suspicious looking characters and crackheads suddenly showing up in the neighborhood, scaring away DROVES of potential tenants I had looking at the place. I have been forced to turn my duplex Section 8 because no other tenants will live there.

Now how exactly did I prejudge?

import · November 15, 2005, 9:54pm

Re: Help! Neighborhood Turned Ghetto - Posted by Joe

Posted by Joe on November 15, 2005 at 22:54:55:

Kevin:
Daphne may be short on tact, but she is long on truth. I agree with her, and I’m not even going to make you an offer. She is tellling you what you need to hear, not what you want to hear.
I’ve taken some a$$ whuppin’s in business and it’s no fun. It’s like that feeling you get when you’re about to vomit but you haven’t yet and you wish you would so it would be over with. Be a man. Take your butt-kickin’ and move on.
I’m sure Daphne meant no harm and you should be grateful for her brutal honesty.

import · November 15, 2005, 7:36am

Re: You better than us? - Posted by Mark

Posted by Mark on November 15, 2005 at 08:36:18:

Frank is so wright…(Why can’t we all just get along)