Thinking about investing (Decatur, Forsyth: rental car, real estate, rentals)

[sjd]

I am thinking about buying some investment properties in Decatur. The CAP rate seems to be pretty high. My question is to the people who live there or know the area, do you see Decatur staying strong in the rental market? Do you see people still living there or will it become a ghost town? I know it smells and there is high crime, but I am trying to get an idea of what the future holds for this town. Any educated thoughts would be great.

[Out of Alaska]

Crystal ball...

I don't think I can tell you anything you don't already know!

My OPINION is yes. Based on the following: ADM plants will always be there, whether the HQ ever moves or not. CAT will be there. Staleys will be there. MU will be there. These factors will bring in a certain person who may want to rent a home for a period of time without the $$/commitment/desire to buy.

The last time I went to rent a place there (ok it was several years back, but I do not have reason to believe it will be different now) it was pretty dire. I ended up going around with a gal from Swartz properties, and was NOT impressed. Swartz owns/manages many of rentals in the area. The places were not working or middle class type places. They were low-class holes that needed so much work I would be embarassed to be showing them.

Where to do this - I don't know if it would be worth buying a rental in a decent school district or not, I don't know if the perspective rental cares. You might know more being in teh business. I think the west end will continue to be a good rental market. Young professionals love the area, and it's close to MU for both recent grads and students. I assume you've been there, driven around, etc. East side, while you would get the factory workers, is crime ridden and probably already flush with rentals. Forsyth and MTZ are great but that's a whole different market which I am not sure matches up with your goals.

Have you tried posing as a perspective buyer and going out with an agent or is that too shady for a real estate agent to do?

[chet everett]

I have not been to Decatur except on the way to other places, but from what OO AK says it reminds of many very intensive factory oriented towns. I partnered with a guy that owned places near the AMC plant in Kenosha, when it shut down it took a LOOONG time to come back, but if cash flow is good enough maybe long term appreciation is not a factor.

I know that the working single guys don't make great tenants. They do alright on wages but blow it on booze and other "entertainment" and sometimes are late on rent even if they make solid money. You need to have a "bouncer" mindset collecting rent from those types...

There are lots more pleasant ways to make money in real estate, but if you're doing that already and recognize the downside then there are probably worse ways to make money.