Sin City: How Apartment Managers Can Avoid Crime, Disrepair

by Luke Jones  on Monday, Nov. 12, 2012 12:00 am  

We’ve all heard it: “You wouldn’t want to live there. It’s dangerous.” Sometimes, it’s so dangerous that the government steps in. Management is fired. Residents are evicted. Buildings are razed.

How does a property get to this point, and what can landlords do to prevent such a downward spiral?

Jason Bolden, a real estate attorney and a former president of the Little Rock Landlord Association, said it’s a snowball’s path down a steep hill and the good decisions need to happen at the top.

“There’s only one factor: bad management. Period,” Bolden said. “If you had great management in place, those kinds of mistakes don’t happen.”

Longtime Little Rock residents may remember “Sin City,” a group of apartments near Chicot Road that were a hive of violent crime in the 1980s and 1990s. In 1995, the apartments were closed, and this year the city board of directors voted to spend $70,000 bulldozing the abandoned buildings.

Now, a similar story is unfolding at Valley Heights, a 198-unit complex at 6900 Cantrell Road where rent ranges from $480 to $725 a month for one- to three-bedroom apartments. After a string of burglaries allegedly by apartment residents, the city of Little Rock sued in June to declare the apartments a nuisance. Nearby residents cite the apartments as a source of constant crime. The complex’s owner, Henry Management Inc. of Little Rock, has faced a hail of mismanagement accusations during the past year.

(Click here for more on Henry Management.)

But 10 years ago, or 20, or 30, the average Valley Heights resident might have said, “This is a great place to live.”

“When they first built it, Valley Heights was more like a young couple’s property,” said Howard Warren, legislative director for the Little Rock Landlord Association.

Success for a place like Valley Heights needs to start at the investment level, Bolden said.

“If you’re an investor, you’ve got to make sure you’re buying right,” he said. “You’ve got to make sure you’re not overpaying and you’re not paying too high of an interest rate. If you have good financing in place, at a good purchasing price, the likelihood of problems is greatly reduced.”

If an investor overpays for a building, Bolden said, it makes it harder to recover once tenants start leaving and cash flow becomes an issue. Lack of cash flow turns into lack of apartment upkeep, which leads to issues like power outages, sewage problems and environmental damage. Then a landlord can’t be as strict about tenant quality.

 

 

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