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Real Estate News & Commentary

What A “Working Class Neighborhood” Is … and Isn’t

Lisa Phillips
Expertise: Landlording & Rental Properties, Personal Development
20 Articles Written
Working Class

When discussing different real estate investing strategies, there is a lot of negativity surrounding the strategy I invest in – low income investing.

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The numbers may look great, but the negativity causes a lot of new investors to shy away.

So what should a new investor believe?

I feel one of the greatest opportunities for real estate investors lie in these “depressed” properties and the over-generalizations do not understand the true nature of these investments.

This video blog will share my thoughts on the nuances between a “working class neighborhood” and a “slum.”

Conclusion

Generalizations won’t get you the big returns in real estate investing, but nuances and niches can make you stand out from the pack.

If you can see through the “broad brushstrokes” that are applied to cheap properties and see the true colors underneath, you may find a highly profitable niche that’s very affordable to obtain. If you have any insights to add, please feel free! These are my very own opinions of what I see when I am looking at under-30k properties for real estate investing in many different cities, and its been consistent through many different neighborhoods.

By Lisa Phillips
Lisa Phillips is an REI coach that exclusively advises everyday investors on how to cash in on working class neighborhoods for higher profits wi...
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    lamac66
    Replied about 6 years ago
    Good insight. Especially checking out the neighborhood at 2pm. I like to go weekend nights too.
    Lisa Phillips
    Replied about 6 years ago
    Thank you for the comment. I find this tends to be an area where perceptions are dead wrong, which is probably why its such a profitable market.
    Cory Binsfield
    Replied about 6 years ago
    Nice post. Very useful when it comes to looking beyond the obvious. I’ve noticed that neighborhoods that some people seem “unsafe” actually turn out to be safer than the areas that all the college kids turn to. Why? Criminals like all the shiny objects that college kids haul around. Moreover, the working class neighbors tend to maintain their properties better and keep on eye out on things. Some of my best renters have been the two income working class couples raising children or starting careers out of trade schools.
    Lisa Phillips
    Replied about 6 years ago
    So true! I stayed for a year in a half in a working class community. 95% of the residents were from Guatemala, but everyone worked and was employed, and there was never any theft/robberies, etc and everyone naturally interacted with everyone for the most part. However, my friends living in Georgetown had constant thefts and robberies, but its because, I think, its where there are honestly nicer things to take (there weren’t any $700 bicycles in my neighborhood like there are in those places) and B) People don’t know each other as much, so no eyes watching out for your items. Interesting, right? But yeah, low priced housing, and safe neighborhood – working class to the core.
    Sergio
    Replied about 6 years ago
    Another great article Thanks again Lisa
    Sergio
    Replied about 6 years ago
    Good point Lisa Thanks a lot
    Lisa Phillips
    Replied about 6 years ago
    Thank you Sergio! I always appreciate your comments on the board.
    Tifani
    Replied about 6 years ago
    Excellent points! Thank You Lisa for your post.
    Tifani
    Replied about 6 years ago
    Excellent points! Thank You Lisa for your post.
    Lisa Phillips
    Replied about 6 years ago
    Thank you Tifani!
    Sharon Tzib
    Replied about 6 years ago
    I love your addition to the blogs in this under-discussed topic. So do you also pay attention to the type of crime in the neighborhood? The more violent it is (murder, rape) the more of a red flag it is to me. Thanks, Lisa!
    Lisa Phillips
    Replied about 6 years ago
    You hit the nail on the head! Too many broad brush strokes are made in regard to this, and I think its time for some firm and realistic delineation. Yes, type of crime will deter me – narcotics, prostitution, and physical assaults are big no nos. Of course, many times there is a block by block disposition, so if another block .5 miles away has issues, that has not had an effect on my own properties. Thank you for the comment, Sharon!
    Martin Cortez
    Replied about 6 years ago
    I have always been told that if you see joggers, then you are NOT in a working-class neighborhood. Stick to the bread and butter areas.
    Lisa Phillips
    Replied about 6 years ago
    hmmm. I live in very expensive northern virginia (its where the jobs are at, and the rents and high), and people are jogging everywhere. I mean everywhere. That average SFH list price is 624k, too. I live here, but invest elsewhere, but it is an extremely nice neighborhood that should hold its value. Different investment strategy.
    Quamir Brown
    Replied about 6 years ago
    I am currently a college student looking into the field of Real Estate, any advice such as (Books, Successful Individuals in the Industry, or Advice)?
    Lisa Phillips
    Replied about 6 years ago
    Hi Quamir. I say first you should read the biggerpockets article on 100 ways to make money in real estate investing. From there, you can figure out your strategy (buy and hold, flipping, etc), and that will determine what the best books will be, both here on biggerpockets and out on Amazon. Others, if you have any advice, please chime in!
    Martin Cortez
    Replied about 6 years ago
    I have always been told that if you see joggers, then you are NOT in a working-class neighborhood. Stick to the bread and butter areas. Reply Report comment
    Kevin Perk
    Replied about 6 years ago
    Lisa, Interesting points. I like your idle hands description. Working class neighborhoods are decent neighborhoods to invest in. People work there and are generally trying to improve themselves. These are the folks who clean up after others, prepare our fast food, serve us at various retail outlets, often wearing some type of uniform as you say. They are often working so hard that have little time for anything else like crime or property destruction. Plus they are often trying to pull themselves up and do not want to mess up. So yes, I agree these can be good neighborhoods to invest in. They key is seeing them and you provided some good things to look for. Kevin
    Lisa Phillips
    Replied about 6 years ago
    Kevin – Thank you, I think your words are very eloquent in explaining how this strategy fits into society on the economic and housing levels. Thanks!
    Lisa Phillips
    Replied about 6 years ago
    Kevin – Thank you, I think your words are very eloquent in explaining how this strategy fits into society on the economic and housing levels. Thanks! Reply Report comment
    Lisa Phillips
    Replied about 6 years ago
    Kevin – Thank you, I think your words are very eloquent in explaining how this strategy fits into society on the economic and housing levels. Thanks! Reply Report comment
    Sara Cunningham
    Replied about 6 years ago
    This kind of property is always in high demand in our area. There are so many working class families that need housing but have no way to afford to purchase a home. Nearly all of our properties fall into the category you write about. All of our tenants are working. We chose to invest in these types of homes because we have consistently had long term tenants and great cash flow. Like you we always check the areas out for crime etc drive around and observe what is going on at different times of the day or night. So far our strategy has worked.
    Lisa Phillips
    Replied about 6 years ago
    I too have long term tenants. I also fix up the place really nice, so that contributes as well, but its amazing what’s out there? I really started talking about this because SOO many people told me this was the wrong track to get it on, but when I did it, I realized everyone else was projecting their own fears, were overreacting, or haven’t realized that you can leverage the internet to find out everything you need to know about an investment. Thanks Sara!
    Lisa Phillips
    Replied about 6 years ago
    I too have long term tenants. I also fix up the place really nice, so that contributes as well, but its amazing what’s out there? I really started talking about this because SOO many people told me this was the wrong track to get it on, but when I did it, I realized everyone else was projecting their own fears, were overreacting, or haven’t realized that you can leverage the internet to find out everything you need to know about an investment. Thanks Sara!
    Gunnar Teltow
    Replied about 6 years ago
    Another great post Lisa! I recently toured two neighborhoods, and your observations are right on. One was Mission Hill in Austin. As I was driving down the street, I saw a group of guys grilling in front of an apartment building, in the middle of the work day. That immediately put a bad taste in my mouth. Idle hands! Great way to put it. The other one was in North St. Louis. Again during the day. Nobody around, just the mail carrier making rounds. Little touches I liked was seeing (almost) every property occupied, and several with little flower pots etc on the front. One or two even had bicycles in the drive way, unprotected. SFRs in these neighborhoods go for $30-50k, and I’ll take that over a Duplex on Mission Hill for $150k in Austin anytime. Yet many investors seem to shudder when they hear “North St. Louis County” but their eyes light up when you mention “Austin”. Gunnar
    Lisa Phillips
    Replied about 6 years ago
    Exactly! I couldn’t have put it better. And there are so many, and I am such a big fan, I want experienced investors to diversify their portfolios as well with more of these. All you have to do is go visit, your gut will tell you most, internet research will tell you the rest. Good job, im glad you found your sweet spot!
    Gunnar Teltow
    Replied about 6 years ago
    Another great post Lisa! I recently toured two neighborhoods, and your observations are right on. One was Mission Hill in Austin. As I was driving down the street, I saw a group of guys grilling in front of an apartment building, in the middle of the work day. That immediately put a bad taste in my mouth. Idle hands! Great way to put it. The other one was in North St. Louis. Again during the day. Nobody around, just the mail carrier making rounds. Little touches I liked was seeing (almost) every property occupied, and several with little flower pots etc on the front. One or two even had bicycles in the drive way, unprotected. SFRs in these neighborhoods go for $30-50k, and I’ll take that over a Duplex on Mission Hill for $150k in Austin anytime. Yet many investors seem to shudder when they hear “North St. Louis County” but their eyes light up when you mention “Austin”. Gunnar
    Amit M.
    Replied about 6 years ago
    +1, plus you have a great humanitarian attitude 🙂
    Lisa Phillips
    Replied about 6 years ago
    Thank you, we try everyday 🙂
    Sundeep
    Replied about 6 years ago
    I’m a little late to this article, but was just going through the email newsletters and also just listened to Lisa’s podcast. Great info on the “low-end’ market. I have to admit, I thought the price point was going to be slums only, but am now converted to at least do some research. Thanks!
    Lisa Phillips
    Replied about 6 years ago
    Thanks Sundeep! An open mind can bring you possibilities you may not have seen before. Happy searching, and make sure you use my Leveraged Analysis Technique to vet the properties fully!
    Susan Dellea Investor from Sandwich, Massachusetts
    Replied almost 5 years ago
    Nice post, as usual!
    Lisa Phillips Real Estate Investor from Arlington, VA
    Replied almost 5 years ago
    Thank you, Susan!

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