Bad Neighborhood?

Hi Monica. There is two ways to look at this. One is I do not buy a property that I and my family would not live in.

Now on the other hand for an example if I am of different faith than all of the people living in that area I may not feel comfortable putting my family in that area. But the people of that same faith maybe comfortable living there then yes buy the propery and rent it out. But if the people living there already are afraid to live there then you need to stay away from that area.

I hope that helps.

Steve

That's exactly my thought, is that the people who live in these areas, they are all used to the neighborhood. They have nice homes (mostly on the inside), large yards, decent cars... to be honest I think the fact that their cost of living is so much lower than ours on the "other side of the tracks" is a benefit to them. Most investors wont touch the neighborhoods because they worry about vandals and thieves, but I really think it could be a goldmine if the places dont stay vacant for too long. I wish I could find someone who's actually done something like this.

with any experience on the subject have any feedback on this?

The part of town that is my target zone is not an area that I would go at night.

The first thing I did when I decided to invest in this area is to go to the police station and ask if there were any areas that would be considered "war zones". They circled a couple of spots for me. Look for an area that is about half owner occupied/half rentals, where people have jobs that are living there. Those are usually a little more stable and even though they may be low income there are families, etc.

Drive around and see if there are any houses that are being rehabbed already. That means that if you find a good prop it won't be difficult to wholesale it quickly because investors are interested. If you see any being worked on, stop and talk to the crews to find out who owns it. There is a potential buyer for you already.

You want it to be an area that has distressed properties in it. That is where you will find good deals (as you already stated). You don't necessarily want the really pretty neighborhoods. They usually think their prop is worth more than it actually is.

I put up my signs in the daylight and drive for dollars in the daylight (of course). I NEVER go there at night. I have my magnetic door signs saying that I Buy Houses and then people aren't suspicious of the "crazy white lady" scoping out their neighborhood. In fact, they have been very friendly when I go door knocking when I can't find addresses for absentee owners. Yes, I do that. I am not afraid. Why do you think they call me the "crazy white lady"? They are more than happy that I am wanting to help fix up their neighborhood.

Go for it! Just keep your car doors locked and always be alert. But I NEVER have any problems.

Karen

This is what I do. I am sure that there will be many opinions on this. Some that want only pretty neighborhoods, etc. It is all good. Everyone just has to choose their own path. My path leads me to the more "seedy" area.

Thank you so much for your response! I know there are a ton of experienced, helpful investors on this site but I really wanted to hear from someone who has actually taken the risk and had success in these areas. You made me burst out laughing with the crazy white lady comment... at least I have the benefit of blending in I guess! Anyway, you helped me make my mind up... Im going to go for it. Thanks again!

Yea your a crazy white lady collecting dead presidents in your pocket. I'll take that kind of crazy any day Karen. lol

Louie, I LOVE you!

You made this crazy white lady laugh out loud!

Karen

I myself tend to stay away, however, mostly these neighborhoods are ones that people don't go into the daytime either.

I took that approach once and learned from that mistake. I bought a property that my local eyes thought was in a not so good neighborhood but not in a war zone. I rehabbed it to hold and rent thinking people who live there would like to rent a newly renovated house and maybe I can help rebuild the community. I was wrong, after i rehabbed it it was broken into and stripped to the bone. Very expensive lesson. I now work with a great realtor who has experience and we are actually closing on another home in Oct.
Be careful.
Richie

typically you look for distressed properties in low crime areas. for me i'm in this to make life easier. why bother with a high crime area? you don't have to. the fact is distressed properties and motivated sellers aren't just in high crime areas. hope this helps.
keep moving forward, rob

Stay in the B- to D+ neighborhoods. Meaning this:

A = The Hollywood of your area
B =
C = The middle - INVEST HERE!!!
D =
F = You need a gun to go anywhere

The C neighborhoods are perfect for investing, no crime and good prices. But if you have a buyer on your list that wants a property in an F neighborhood, by all means go for it if they're serious. It's all about what your buyers want, when you're wholesaling.

If you're gonna buy it yourself, I don't suggest it though.

Most of my buyers say: "NO war zones, please." Too much crime, drugs, trouble. Hard to find long-term tenants, etc.

However, one of them has an exit strategy for every level of his real estate land-lording.
He owns a ton of properties.
SFR, multi-units, commercial.
He buys in all types of neighborhoods throughout Texas. He changes his strategy to suit each property individually.
He's been investing for 20 years plus. He buys dirt cheap. He adjusts his model accordingly.
His extreme lower end model is:
He may paint. No appliances, no cabinets, no extras. Bring-your-own A/C, etc. Low end. Low risk.
He says: Real estate is real estate. People need housing.

if you don't have a buyer on your list who would purchase properties in that area, I would stay away from it.
You don't want to spend your money rehabbing a property and then not be able to sell it, or have a renter from whom you wouldn't be able to collect the rent...

You can also find yourself a property manager who can advise you; I have a property manager whom I ask about the areas before I purchase any properties; either I get a green light or I get a red light... following her advise, my properties get rented as soon as the rehabs are done...

Wishing you success,

Monica, I own properties in areas that others would not even think about buying. The end result is that I am buying them so cheap and making more money with less headache. It really comes down to being street smart and treating others that are not as fortunate with respect. I treat them with respect and don't talk or act as if I am better then them.
Joseph

I know a cash buyer in DFW that LOVES bad areas. He wholesales houses in the better areas of town and uses the profits to buy cheap 'hood houses and rents them out for cash flow or sells them on Lease/Option. What areas you look in and what types of properties you are looking for should be based on one thing: What your buyers want. Not whether or not you like the area.
It can be "good in the 'hood"

is not a war zone and is very quickly (due to all the investors there) becoming pretty nice.

The only calls I ever get from my bandits, is from the signs that I nail onto the boarded up houses--Locals calling with cash and want to buy it from me to live in or people wanting to rent it.

People in those areas have cash! They are not all on welfare and packin'!

Karen

Just remember, people live where they live for one of two reasons.
1 - Because they want to
2 - Because they have to.

Some investors love war zones.

Karen love the post and wow I would not go in area's as such I am too scared to even look in a areas as such.. But you made my morning with this one. I live in a subdivided Community surburban area But I guess you are right distressed areas are good in some parts but my question would be this Is it really safe to place a family in a area where there is high crime?

We all want to make money I know I do but I am new and learning so I am willing to listen and receive.

(Please fill out your bio so we can call you a REAL name) All distressed areas are not high crime.Many are just lower income.

Also, many distressed areas are being bettered, and actually very quickly, by investors. It's the "taking back our neighborhoods" adage.

So, instead of thinking of it as a disservice to those families, think of how you are giving them an opportunity for a better life.

Karen

I was making offers in Detroit about 2 years ago and I live in New Mexico. I chose Detroit because Zillow and the other big RE websites provide enough info to actually be USEABLE (they are completely worthless here for sold info- Non Disclosure State, NM is)and the area was very active. Obviously, I wasn't doorknocking or driving for dollars in Detroit, but even just by using website info I could see that Detroit is DEEPLY segregated. I hate to say that, but thats how it is. A few years ago, it seemed like EVERYBODY was leaving Detroit, but if that was true, why is Detroit STILL THERE??

I chose a neighborhood that was close to public transportation and freeways, little neighborhood parks, green lawns etc. Looked like a nice place to live. All "cookie-cutter" 1950's crackerbox style houses so they were easy to comp too. But I noticed that on one side of 8 Mile the property values were twice as high as right across the street, and selling like the proverbial Hotcakes!

But across the street??? Same houses, same parks....but DEAD lawns and DEAD parks. Why? I think...because no matter where you live, no matter who you are, there are people in your neighborhood that DON'T want more or better. For themselves or anyone else. Maybe there are people that would like to have a green lawn, a blooming garden and a white picket fence, but they know it would be pointless to try where they live because they are outnumbered by people who choose to lose. Some people just aren't into Keeping Up With The Jones'. Some people are more into Keeping The Jones' Down Because They Are Making Us Look Bad. So what do the Jones' do? Work hard, save money, and MOVE.

There are areas in Detroit where you can buy a house for $100...in areas where ZOMBIES are afraid for their lives. Even dead people avoid certain neighborhoods. So maybe a "bad" area to some is like "moving up in life" to others. Maybe moving out of a Rental into a Lease/Option right across the street is your American Dream. Maybe your new dreamhome is somebody elses left behind problem. Good. For. You.

ps- The neighborhood I'm talking about is Eastpointe,MI. Dean and Matt bought over 100 houses there not too long ago.(maybe you remember the Weekly Wisdom video about it? They got on the local news too and even donated some of those houses to charity)

Is this a "bad" neighborhood ?

I have a property that, at first look, was in a war zone. But after talking with some of the neighbors, I realized that although they do have chain link fences or "private property" postings, they are down to earth nice blue collar people who look out for each other. This property I have had under contract (renewed several times) for quite a while, but the owner does not want me to stop marketing the property and he is willing to renew the contract for as long as it takes. He mows the lawn about once a month and all the neighbors keep an eye on the property. It has been empty for 4 months and there has been no vandalism. The neighbor across the street told me she wanted a good neighbor in the house. The last potential buyer said he wanted to trash it and build another one. That's how much work it needs. But yesterday, I had a property manager looking at it and he is very interested. So you never know!

The reason I'm telling you this is so you know that even though it appears to be a scary neighborhood, nice people do live in those areas and they are working class people. To be honest, I would not walk down that street at night, but so far I have seen no evidence of loud noises or disturbances. Just put the property under contract and if you can't move it during the inspection period, you have lost nothing.

Shirley

Diversification in America! ~Gotta Love it!

All people need housing at every level.
All types of housing, all types of buyers, all types of investor business models.
Rule of Thumb: Buy what your buyers are wanting, needing, craving. Fit their criteria. They all want something different.

The housing industry has turned. It has switched gears. The crush has created a new mega-necessity for renters.
83 million Americans are currently "un-loanable," conventionally speaking.
Invest in what they'll need in the near future. It's Americans rebuilding America.
God Bless America!

I think the same as some of you. people have to live somewhere. If they grew up there... they call it home.... And somebody is the landlord... find buyers for that area

THEY CALL WAR ZONE, STAY AWAY!!!

Basically the reason why homes across 8mile are selling for 2x as much is because Detroit ends after 8mile. Detroit is considered "the ghetto" of michigan- Trust me; I'm 24 and been living in Detroit for all 24 of my years . Surrounding/Neighboring areas of Detroit are where the real money is. Warren (near eastpointe), taylor, romulus (located near the airport), southfield and other cities are your best bet.

I think this is an interesting thread. I'm glad you brought it back up.

Karen

If the area has a low average DOM with a lot of sales activity I don't care if I can hear the AK-47s going off at night. Some one is buying and living there.
I don't think I would buy and hold there but I might fix/flip the right property.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

I do notthink I have come across this abbreviation before. What is "DOM"?

DOM=Days on market

Note- check top left hand column. There is a glossary of terms.

Karen

I am finding many Low price houses in my target area.

Materials and Labor still cost the same no mateer what area you are rehabbing in.

You have to find homes that have good Bones and only need coemetics to make them profitable.

They are out there, you have to spend time down there looking.