How does being near railroad tracks affect property value?

Question

Being someone who works in investment real estate, I tend to come across quite a few discounted properties that are located near railroad tracks. I've heard a few opinions on this, and I've seen varying evidence in my market research.

As an example, just this evening I'm pulling sold comps for a house and one of the highest sold price per sq ft comps is located literally right next to a railroad track, and has a massive commercial building right in front of it. These are supposed to majorly drag down a properties value, but this is my 2nd highest priced comp on price per sq ft. How is this? It sold FHA so it is an owner occupant as well, not an investor, in 17 days on market.

While were on the subject, does being near railroad tracks affect rent rates? Curious to hear feedback on both of these.

Michael Noto · Answer

I am just thinking of that scene from "My Cousin Vinny"

Scott Mac · Answer

Hi Stone,

I take it you've never seen this old "I  Love Lucy" clip https://www.youtube.com/watch?v=iRwHr81DVxg

Pat L. · Answer

NOPE !!!

Mindy Jensen · Answer

I wouldn't buy a property near a train if someone paid me to take it. I lived 2 blocks away from one, once. Never again.

John D. · Answer

It's one of the "nevers" many of us keep a list of.

Alvin Sylvain · Answer

Everything is "it depends".Like, my first question is, OK, there's a train track -- is there a train? No train, who cares.Second: you say there's a commercial building in front of it -- is this a commercial area? Manufacturing plants and such don't particularly care about train noise.Third: given that a railroad track has an adverse effect on the price -- how is the price of this property relative to that? I mean, if you're getting a $10K property for $9K, great! never-mind that 5 miles down the road a similar property is $15K. In the $15K area, you'd expect pay around $15K. The railroad tracks mean the price is around $10K (or whatever, made up numbers). What's important is, for whatever the price is, do the numbers work?Finally, and also important: are you moving in? or what? If you're renting the place, work the numbers considering that you won't get the same rent as the $15K place down the road. If you're flipping the place, consider you need to pay $7K or less so you can flip it, fix it, and still make a profit. If you're moving in, what, are you crazy?

How does being near railroad tracks affect property value?

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