Originally posted by @Henry Murray:
> Hi Sam, thanks for your insights and suggestions!! Long Beach is very block by block too so what you're saying makes sense.. although I don't know Long Beach nearly as well as it seems like you know Indy. I saw that someone had put together a map of neighborhoods and their ratings but I hadn't had a chance to go through it yet. I had only been looking at the crime map on Trulia and yeah like you said, most of the high "cash flow" areas looked like they also had much higher levels of crime.
> When you say suburbs, do you mean areas like Carmel and Fishers? Or do you mean areas like Broad Ripple, North Central, or Glendale?
I'm thinking more like Perry Township, Greenwood, Beech Grove, actual suburbs or outlying areas of Indy with newer housing stock. ARVs of 80-150, rents of 900-1200. These are B/B+ areas. Carmel and Fishers are closer to A.
> And how do you think that people who bought on the fringes are going to be in a bad spot when the market cools off? I understand that if they bought a property in a bad area it wouldn't appreciate but if they're positive on cash flow after expenses and vacancy and don't want to sell, how do they lose?
Because D properties don't cash flow for OOS investors in the first place. These people take near total losses on a very regular basis, and I know it because I'm the one buying them back. These are basically worthless assets. They do not work unless you are a slumlord. You are buying a job. A job that you can't even do if you're OOS.
The C properties are a little better, but let's be honest, most of these people would be better off sticking with their 401Ks. When the allure of owning real estate wears off, they start to realize that, but their exit strategy will most likely involve losing money unless we're still in this passive cash flow investing mania we are in. And even then, it's 50/50 at best.
> I was also curious about why you think so many of the C neighborhoods are declining? Is the city not trying to grow them or are there other economic forces that Indy is struggling with right now? Or do you mean that a lot of the areas that look really good on paper (and would be marketed to out of state investors) are just simply in bad areas that people don't want to live in?
Because the poverty that's being pushed out of downtown is moving out to the outlying areas. Many areas that look like suburbs, 50s built ranch homes, are most definitely declining. I keep hearing about how Eagledale is such a great place to invest. I lived in Eagledale for about a month when I first moved here (I didn't know any better). It was a dump. The bedbugs were so brazen they would just hang out on the couch in broad daylight and some guy pulled a gun on my landlord at the time. There are better parts of the neighborhood, but that was my experience, and OOS landlords are rarely discerning enough to be tell the difference anyway. I would never buy anything there. And all things considered, Eagledale is probably one of the better of the neighborhoods that investors are crowding into. Don't get me started on the others.
The worst part is that for not much more money you can find something decent on the MLS if you do some digging, from a homeowner that probably took care of it, and using a broker who doesn't have a conflict of interest. Buy a quality asset that might be worth something to someone who actually lives here. They know best.
