The year was 1988 and I owned a small pizza place at Temple University's main campus in The City of Brotherly Love. Although the action was nonstop at 'Leo's Pizza', I was more interested in what was going on just a couple of short blocks NW of the epicenter.
My brother and I started making forays into the blighted, neglected, abandoned neighborhoods (aka "no man's land") and liked what we saw. The homes were large, brick and stone construction, and just 2 blocks walk from classes. Plus, the prices were low. All instincts led us to believe that no matter how bad the neighborhood was at the time, things had to get better someday.
We zeroed in on a rowhouse (townhome?) located at the far end of the block that was for sale. We didn't know the first thing about buying, investing, rehabbing or being landlords. But once again, we were ready to take the leap of faith and get our education along the way.
We bought this home for just $15000. There were tenants inside that weren't interested in leaving. They might have had a lease, but we never saw it. We told them that we were coming in to rehabilitate the place and that they would have to leave. There would be noise, smells, painting, sanding, tearing, banging, etc. Looking back, it was easier to get them out than we thought it would be. We killed them with kindness. I wouldn't suggest the same MO today.
We scrubbed the home top to bottom, skinned the walls, sanded floors, ran new electric and wound up doing about $15K in work, not including 'sweat equity'. The unlicensed plumber I used forgot to put in a drain line for a new sink he installed! When all was said and done, the place looked AMAZING. The only problem was, we were still in a location that at the time was considered 'off the beaten track', maybe a little dangerous, not really a 'part' of Temple U.'s campus. We flooded the school with very cool looking ads, registered with the off-campus housing office and got the word out. Within a week we had the place rented out for $1875/month to 5 students. We didn't know this at the time, but we had just set a record for the highest rental in the neighborhood, completely and utterly unheard of at the time.
Now we were addicted. I went on to buy many more homes in this neighborhood, one for only $300 (more about that on a future blog), and even a lot for $1.00. The real estate bug had bitten me. I loved buying these disgusting old homes with GREAT energy & history, turning them around to shine again, and renting for the most amazing returns ever heard of....
Can this be done today, in the year 2009? My answer is an emphatic yes. Maybe not the same exact prices/ratios, BUT, keep in mind that what was $30K (total to purchase&rehab) then, is considerably more in today's money, 20 years later. Add to this the fact that you can buy something that's almost new, in Florida (no snow!!), close to the beach, next to a university, with an amazing return. In my opinion, that beats walking into a home in shell condition and having to start rebuilding from scratch.
If you'd like to know more about how to invest like a PRO, contact me today for more information and secure your future!
Scott Miller, Realtor®Estate SpecialistCommercial REBusiness BrokerRealty Associates561-716-4060 direct561-451-9377 fax