Tips On Investing In Real Estate in The Inner City
When Googling tips for investing in the inner city, you get more horror stories from investors who were unsuccessful, rather than solid tips on how to profit without losing it all.
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Today, Al Williamson and I will share practical tips on navigating this investment strategy successfully, and when taking into account no nonsense tenant screening advice found on here BiggerPockets, this process can be recreated again and again. Here, I’d like to share how to succeed rather easily with a clear head and long vision.
There are different first steps to take when investing in a higher end neighborhood versus an inner city neighborhood. Being able to scale your methods based on each strategy can be a key difference in getting through this with your investment safe and sound.
*Lisa: Lock Yourself In*
I say this tongue in cheek, but my very first purchase going into this neighborhood was to contract out the installation of security doors on the front and back. I mean, The.Very.First.Thing. I did this because it was my first time in an inner city investment vehicle, and I knew I was dedicated to making this work and I had to show up everyone who said “you’re making a big mistake!” Also, because I knew I was a single female, I wanted that protection so if I was working inside late at night, there would be no surprises. This also served as a huge deterrent, as I suddenly became the home where you would have to cause too much trouble than its worth to try to get copper pipes (which remained safely in my basement throughout the entire renovation). It costs about $1300 for the installation of 2 doors both front and back, but considering the house cost $13,599, this is a relatively minor cost for the exponential amount of peace of mind it delivered.
*Al: Light It Up!*
No need to hang an “under new management” banner when you buy an inner city rental. Put those words into action by improving the night lighting. Lighting changes the atmosphere around your rental faster than anything else. It make rental safer and push those with questionable intension outside your cone of light.
*Lisa: Check Online Crime Reports!*
This was a huge part of my success in finding my little cash cow. When vetting a property, I can put the address within CrimeReports.com or SpotCrime.com. These two websites are immeasurably important when investing in these areas, because these are the indicators that describe what kind of community exists within the neighborhoods. Finding out if the property is in a low crime area makes the possibility of investing in your real estate without theft or vandalism huge. These neighborhoods throw you off at first, but within minutes of them finding out I am fixing the place up, the neighbors in these areas were MORE than happy to tell you if they see anyone messing with the house they’ll call the cops. That’s the neighborhood you want to invest in.
Al: Make Small Community Donations
What's smart for large corporation is also smart for small landlords; donate to the community surrounding your business. You're never too small of a landlord to seek the favor of your neighbors. Start with $5 donations to the closest neighborhood organizations. Also consider Boys and Girls clubs and sports teams as well. Don't underestimate the power of a small monthly donation's impact on a struggling community.
In higher end neighborhoods, you may immediately invest in landscaping and curb appeal, and in inner-city neighborhoods, you may have to scale your methods and first invest in good lighting and bars. You can invest profitably in both, but understanding the different first steps can make a huge difference in how smooth your ride will be. Tenant screening still is a must (I turn down applicants all the time, only putting in tenants who make 3x my monthly rent) to ensure success. If you let a deadbeat in from not doing your due diligence, its not because of the inner-city, its because you may need to improve your tenant vetting advertising reach and processes. Investing in these neighborhoods safely can be profitable, and help spark more change than any government program. Line your pockets with cash, and create a more welcoming neighborhood. It can be the ultimate two for one.