Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...
From Dennis Fassett, Cash Flow Mercenary...
I read a funny piece recently about some folks who bought murder houses. Well, it was funny to me at least. I’ll get to that in a sec...
The first one was a cute condo in south Kansas City. It was on a pleasant little cul-de-sac that was quiet and peaceful; tree-lined, far from the madding crowd, the perfect place for the community of mostly retired folk.
Then, in September 2014, a crazed criminal slaughtered a family with beatings and shotgun blasts, leaving all to die in his bloody wake.
The second one? A condo right next door to the first one where one of the family members was gunned down – right in the driveway.
Nice neighborhood!
And the third was a house in a marginal neighborhood where 3 people were gunned down.
In each of the cases, the properties were put on the market after the bloodshed and other damage was “cleaned up.”
The article talked to the people who bought each of the properties. The condo buyers each got discounts of about 25% vs. comparable units in the area. The house buyer? 40%.
Not bad.
Getting Over the Stigma
The article (of course) sensationalized the fact that deaths occurred on the property. It even suggested that such violent crimes should be disclosed because of “ghosts.”
Yeah right.
I mentioned that I thought it was funny, because my very first deal was a murder house.
I wasn’t looking for a murder house, specifically. But I had been direct mailing like a madman for 11 months and hadn’t done a single deal yet.
I finally got a call - from the murder house seller.
I wrote about this in another piece several months ago, so I’ll spare you most of the details. But it turned out that the seller’s brother had beaten their mother to death right there in the living room – with a guitar.
The guy was a huge drug abuser and just wanted to cash out fast to feed his habit. So I made him a ridiculously low offer, and he accepted.
That was in November of 2004.
Fast forward to today, and that house is a great rental house. It’s been rented to great tenants and made me a lot of money over the years. And now, nobody even remembers the murder.
Why I Buy Murder Houses
My point is, these “stigmatized” properties can be great deals.
I know people get squeamish about someone having died in a property, but Americans typically think with their wallets.
Meaning, if you do a rehab on one of these properties, or offer one for rent at a big enough discount, you’ll likely find a willing buyer.
The cool thing is, Michigan, where I live and do deals, doesn’t have any sort of disclosure law regarding violent crime committed in properties. So that makes it easier to “transition” a murder house into an income producing asset.
So check the guidelines in your area.
The thing is, the news is full of murder houses that have sold for big discounts.
Some of the high profile ones were where these folks were murdered:
-
Nicole Brown Simpson
-
JonBenét Ramsey
-
The Heaven's Gate cult mass suicide
-
Lizzie Borden (turned into a B&B!)
Just be careful. It seems there’s a limit to how stigmatized a house can be.
Case in point - Jeffrey Dahmer’s former house has been vacant for years with absolutely no interest.
So while it’s hard to build a business focusing on stigmatized houses, I’ve kept my eye out for others over the years. I’ve made offers on several, but I’ve not been able to bag another one. Yet.
But I keep looking – because my murder house is still the best deal I’ve ever done.
Do You Do Murder House Deals?
I’d love to hear about them below.
Dennis Fassett
earned a BS in Economics and followed that up with an MBA in finance. After working and corporate finance and banking for several years, he started buying single family houses, and quickly built a very nice portfolio of cash flowing rentals. When the credit markets started to dry up and he couldn’t get any additional single family mortgages he shifted his focus to apartment buildings. He now has over $3 million in rental real estate. He manages most of it his self and still has a day job. Dennis has even created his own Private Equity fund to buy apartment buildings.