Brrrr in bad neighborhoods a bad idea

Brrrr in bad neighborhoods a bad idea

Member since 2019 · 17 posts · 1 vote

Hey guys I’m absolutely brand new to all of this. Brand new to this website, investing and real estate alike. I’m a police officer in nyc and looking to get into BRRRRing to start a real estate portfolio for passive income. From doing my preliminary searching it seems I can get started for very limited funds ($30,000) in some neighborhoods in the mid west. Some of the homes I’m finding are in that price range and it’s very appealing to pull the trigger just on the principle of thinking cheap is a good deal, aside from all other variables(rehab cost etc). Correctly if I’m wrong but it seems that usually houses and real estate prices drop in the neighborhoods that are less desireable, the kind that have increased crime rates and whatnot. So in this lies my question, is it a bad idea to buy a house in a neighborhood like this even though the prices of the home make it seem to be a good investment. What kind of inherent risk do you run as the owner of the property in areas like this. I’m well aware from all the time I’ve spent at work of the issues that arise in areas like this and the character of the individuals that live in those areas(generally speaking). I’ve answer millions of jobs(911 calls) in regards to landlord tenant disputes in which after investigating I’ve found the tenant may not have paid rent in months or even years as well as much less than desireable activities going on within the home unbeknown to the property owner. Furthermore I’ve felt bad for a lot of the property owners because some times there’s nothing I can do for them considering the housing laws set in place in nyc. I don’t want to make myself into a helpless landlord. Thanks in advance for all info.

0Reply
31 views

Most Popular Reply

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
7y

@Steve Barounis

Hi, Steve. What you're describing is essentially what we do here in the Burgh. The difference is, it's taken me years to turn into a good renovation specialist so I can personally be on top of our renovations, and the properties we work on are in a very local area. Moreover, we are putting money into a depressed area that is on the mend, and the only reason we were able to ascertain that was that we are local and I was able to investigate the factors that made that inevitable carefully.

I'm not sure this is the wisest strategy for you to carry out long-term from a distance.

See this reply in the discussion

13 Replies

Jump to latestLatest
  • Rental Property Investor · Member since 2019 · 187 posts · 230 votes
    7y

    @Steve Barounis

    I can only speak in generalizations regarding nearby neighborhoods similar to what you describe, but buying in a bad area because it falls in your price range is a bad idea. I see attempted flips around here that never recoup their money and a BRRRR would suffer the same fate. I think you already know the answer to this question but are hoping for a silver lining as it feels like this is all you can afford at the moment. Be patient, explore other neighborhoods and be ready to act when one comes along that meets your criteria. Don't compromise because it will likely end with you being the helpless landlord in the scenarios you describe.

  • Erie, PA · Member since 2018 · 413 posts · 348 votes
    7y

    Bad idea

  • Member since 2019 · 17 posts · 1 vote
    7y

    @Brandon Roof

    Thank you so much. Yes you hit the nail on the head I was hoping i was wrong for the benefit of cost but I sort of already knew the answer. This definitely helps make the decision making process easier, also gives me a lot of guidance as to how much capital I should save to start. The plan is to hopefully buy a property around this time next year as that’s the soonest I think I could have the money together to pull the trigger. Thank you guys. Follow up question is what specifically do you look for in a neighborhood, leaving the house itself out of the equation.

  • Rental Property Investor · Member since 2019 · 187 posts · 230 votes
    7y

    @Steve Barounis

    Low crime is certainly up there along with minimal noise and traffic. You will find lots threads in the forum stressing the importance of good schools in the vicinity. Other things I really like to see is a nearby hospital, close access to major highways, and lots of options when it comes to shopping and dining. Other forms of entertainment are always good in my book as well. Parks, beaches, a zoo, museums. The more boxes you can check, the better.

  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    7y
    There is a lot of risk in that strategy. The Lower income homes with extensive rehabs are some of the highest risk investing you can do. You said you are new, I would not pursue that strategy if I were new to investing. Lots of solid strategies for new investors, I don’t think that is one of them though.
    Irish Jones Realty4.947 Reviews
    View Page
  • Member since 2019 · 17 posts · 1 vote
    7y

    @Matthew Irish-Jones

    Do you mean brrrr? Or do you mean buying in lower income areas?

  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    7y
    Originally posted by @Steve Barounis:

    @Matthew Irish-Jones

    Do you mean brrrr? Or do you mean buying in lower income areas?

    Hey Steve,

    I mean both.  Your managing a large construction project with a ton of variables.  Your also going into high risk areas that take a lot of hands on management.

    It can be done but, it is a complicated process to jump in on. 

    Irish Jones Realty4.947 Reviews
    View Page
  • Member since 2019 · 17 posts · 1 vote
    7y

    @Matthew Irish-Jones

    Definitely appreciate your advice. What do you think is the best way for a rookie investor to get involved in real estate?

  • Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    @Steve Barounis

    Hi, Steve. What you're describing is essentially what we do here in the Burgh. The difference is, it's taken me years to turn into a good renovation specialist so I can personally be on top of our renovations, and the properties we work on are in a very local area. Moreover, we are putting money into a depressed area that is on the mend, and the only reason we were able to ascertain that was that we are local and I was able to investigate the factors that made that inevitable carefully.

    I'm not sure this is the wisest strategy for you to carry out long-term from a distance.

  • Member since 2019 · 17 posts · 1 vote
    7y

    @Jim K.

    Definitely hear ya, I live in New York, Long Island to be specific. I think for especially since I’m super green as far as investing and real estate go, this market, here on Long Island as well as most of lower New York State are out of my price range realistically. I’m not opposed to starting in a place that is slightly outside that market but not too far away. Something in perhaps, New Jersey, Delaware, Connecticut, Massachusetts, Rhodes island and Pennsylvania. That way I’m close enough that if I needed to make a visit I could be there within a few hours with limited inconvenience. I think that way I may be able to get myself started in for less money than it may cost here. The only thing would be trying to assemble a team that could run my property in my absence.

  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    7y

    The only time we do it (& very successfully) is to hold it high % CFD for an investor that knows the area, lives in the area & can do the rehab at their expense. I will often throw out a property we get at foreclosure/tax lien auction to several of them, some jump at it others back off because of the 'area' but so far those who bought in have done very well. In fact my wife reminded me yesterday that one of our 'investors' has never had his work/tools/supply van broken into because he has a 100 lb python in it.

  • Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    7y

    @Steve Barounis It is common for newer investors to associate a less expensive market or area of town as being less risky when in fact, because of some of the reasons you mentioned, it can be more risky most of the time than spending a little more and buying in a better neighborhood where the tenant class is better.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    High risk.. for what  to end up with a low end rental   ..   there is nothing riskier than rehabbing in those areas.. 

    its tough enough when your right on top of it..   

Join the conversationCreate a free account to reply, vote on answers and follow this thread.