Investing in up and coming neighborhoods built by Habitat For Humanity

21 Replies

So this weekend i volunteered with habitat for humanity in baltimore maryland. They are renovating at least 10 homes on this block which makes me think that this is a gold mine. Is it a good idea to purchase a property on this street based on the fact that the properties are going to going up in value? The inside of the homes that are being renovated are very nice. What would you do?

Ride the wave while you can catch it. I've seen those neighborhoods spike in value for a couple years during the habitat for humanity rehab period then the home values fall or level out.

depends on the area. You need to be careful in Baltimore because one block over can be a war zone. If it's east or near water you may be ok

Originally posted by @Shaniqua Dupree :

So this weekend i volunteered with habitat for humanity in baltimore maryland. They are renovating at least 10 homes on this block which makes me think that this is a gold mine. Is it a good idea to purchase a property on this street based on the fact that the properties are going to going up in value? The inside of the homes that are being renovated are very nice. What would you do?

I love their program because the owners of each house have to put in a few hundred hours of sweat equity working on other people's houses in order to qualify for their house.  This instills a significant sense of investment in these homes.

If habitat is rehabbing 10 houses on one block in a flurry of activity, I would definitely consider buying one of the distressed houses on the same block and rehabbing it.  You know your market better than I do but yeah, that's a valid strategy.

*investment = pride of ownership.

Could you compete? Or would you be faced with trying to compare prices of heavily subsidized houses. Keep in mind Habitat is receiving the prop for next to nothing and then rehabbing with donated labor and subsidized materials.

Also what would your comps be? Habitat homes are usually from what I have seen in depressed areas with little sales activity. 

You then need to consider the resale and price restrictions in place on the habitat owners.

im still new at this but P. Martin what does "Comps" mean? Also will the value of the material that habitat use or the fact that its all volunteer rather than professional affect the value of the homes on the community? What are price restrictions. 

I hope my questions dont run you away from my post. : )

Originally posted by @P. Martin:

Could you compete? Or would you be faced with trying to compare prices of heavily subsidized houses. Keep in mind Habitat is receiving the prop for next to nothing and then rehabbing with donated labor and subsidized materials.

Also what would your comps be? Habitat homes are usually from what I have seen in depressed areas with little sales activity. 

You then need to consider the resale and price restrictions in place on the habitat owners.

Originally posted by @Shaniqua Dupree :

im still new at this but P. Martin what does "Comps" mean? Also will the value of the material that habitat use or the fact that its all volunteer rather than professional affect the value of the homes on the community? What are price restrictions. 

I hope my questions dont run you away from my post. : )

 Comps = comparable sales.  Comparable sales should be actual sales for similar homes in the area.

A lot of the time and labor that go into a habitat home are donated.  You would have to compete with this if you are rehabbing nearby properties..

When someone buys a habitat home, there are some restrictions as far as how soon they can sell the house and/or restrictions on how much money they can make off of the sale.  These restrictions are written into the contract when they buy the home.  I don't know the details.

oh ok. Well i think ill do fine in the area then. They have to live in the home for 5 years before they are able to sell it. But what does that have to do with me buying in that area? 

Look and see what is available and what has been sold nearby. I know of an area in Dallas where habitat has built something like 20 homes on 1 street but market values are still next to nothing if you look at sales activity nearby. If you buy and hold even if the area comes up and appreciates you still need to compete with the sales price of any nearby habitat home being resold.

When you say invest what would you plan? 

It could be a good investment area. Some questions to ask yourself.

What is the price of the house plus remodeling cost? What do comparable houses sell for?

What is the rent in the area?

What will your monthly cash flow be without expenses?

What statistics can you find on the neighborhood? School ratings, crime rate, % renters vs owners, %increase of value in homes in area.

There are more questions to ask but these can get you started. Come back with answers and we can help you more. You definitely don't any to be in a war zone. A C neighborhood with potential to improve is an OK idea as long as you are making a good return on your investment.

It could be a good investment area. Some questions to ask yourself.

What is the price of the house plus remodeling cost? What do comparable houses sell for?

What is the rent in the area?

What will your monthly cash flow be with expenses?

What statistics can you find on the neighborhood? School ratings, crime rate, % renters vs owners, %increase of value in homes in area.

There are more questions to ask but these can get you started. Come back with answers and we can help you more. You definitely don't any to be in a war zone. A C neighborhood with potential to improve is an OK idea as long as you are making a good return on your investment.

So sorry to burst the bubble of encouragement people from other parts of the country are floating, @Shaniqua Dupree, but Baltimore doesn't work the way most other places do. Baltimore was severely depopulated over several decades in the last half of the 20th century. It used to have about a million people when I was growing up there, but that is down to like, 600,000. 

https://www.google.com/webhp?sourceid=chrome-insta...

Think what that means for the housing market. Lots and lots of surplus units. Drive east on Biddle Street sometime and count the board-ups if you want to get depressed.

So except for in a few neighborhoods near the water, like Canton, Federal Hill and Fells Point (and you can be sure that Habitat for Humanity isn't rehabbing anywhere near there!) you just aren't going to get appreciation in Baltimore. Too much inventory holding down the prices. Save your money and time until you get a better feel for the values. Go to Baltimore REIA and BWI Meetup and Real Deal and talk and listen, and listen and talk with people who are out there doing deals.

Best of luck,

Nancy Roth

Washington, DC

Originally posted by @Nancy Brook :

It could be a good investment area. Some questions to ask yourself.

What is the price of the house plus remodeling cost? What do comparable houses sell for?

What is the rent in the area?

What will your monthly cash flow be with expenses?

What statistics can you find on the neighborhood? School ratings, crime rate, % renters vs owners, %increase of value in homes in area.

There are more questions to ask but these can get you started. Come back with answers and we can help you more. You definitely don't any to be in a war zone. A C neighborhood with potential to improve is an OK idea as long as you are making a good return on your investment.

 Alright it took me doing some due diligence but i got the answers. A prospective home that i would invest in is selling for 50k. It needs little work but ill do a few upgrades to up the rent. That would be approximately 15k. Speaking of rent, in the area, most homes are rented for $1100-$1400. I would hope my cash flow would be $1400 or more because of the upgrades.imnot sure what expeces to include besides ground rent and i am not sure where to find that info. Crime is low but two blocked over its moderate to high crime. The schools are poor ALL over baltimore city on Trulias scale anyway. Well on my scale also. I wish i didnt have to live here but i must take care of my baby sisters. Anyway, i digress. The neighborhood is majority renters and not much has sold in the area. Maybe two homes. So after looking at the numbers i know its best not to invest in the areaat this time because the value of the homes on the block are low. Many of them are being auctioned off but sold dirt cheap. The shells on the block and the vacancies are really wearing on the neighborhoodi believe. Plus the fact that it is in Baltimore City. 

I'm definitely no expert, but if your purchase, rehab and rent numbers are close then you may not want to write it off just yet. It sounds like a good possibility for buy and hold.

I have donated many homes over the years to Habitat for humans... I would not personally consider buying on a street that they are working on as a superior investment.. maybe a neutral or cash flow buy and hold.. but just on the face, because they are there does not imply improved values.. for a few reasons.

 heavily subsidized the folks living in those homes could not buy at fair market value and those that can afford to buy at fair market value generally will not choose those areas or streets.. they look very nice in the beginning but they wear down and soon progress to the mean.

As others have said, just because Habitat is there doesn't really mean much of anything. Habitat is able to get properties for dirt cheap, and then offer crazy incentives to buy there. You and I can buy the property for cheap, and then offer no incentives. I have 4 lots for sale for someone on a block where habitat built ~50 homes. They've been for sale for 3 years with one lowball offer. 

That all being said, if you're looking to learn some skills or more about building, do more work with habitat. I'm not an expert in Baltimore real estate but perhaps there are some city incentives to renovate run down homes and you could improve your neighborhood somehow. See if Habitat deals with a local Realtor who you could talk to. 

Message to

Shaniqua Dupree, and others.  You're ignoring the ethics of capitalizing on a program that did not used to capitalize on the misfortune of others.  Surely you are aware of what gentrification has done in Baltimore, and elsewhere.  Habitat should not be making big bucks from their dealings, and I would hope that you have more integrity than to take advantage of situations like this.  Furthermore, I would file complaints about Habitat turning the organization into development marketers.

"So this weekend i volunteered with habitat for humanity in baltimore maryland. They are renovating at least 10 homes on this block which makes me think that this is a gold mine. Is it a good idea to purchase a property on this street based on the fact that the properties are going to going up in value? The inside of the homes that are being renovated are very nice. What would you do?"

@Jacko Racko @Mark Gallagher   Jacko you can dream about a Habitat neighborhoods being gold mines.. but not reality.. low end buyers never change their spots.. just degrades over time I have seen it for 30 years.. we hope it would be better but it just is not.. they will use and abuse the homes then move on

@Jacko Racko Please tell me "what gentrification has done in Baltimore" if you don't mind. Have you ever been to Baltimore? 

Hinricks - You replied to the wrong comment, or confused my intention with that of Dupree.

Roth - Yes.  I have been to Baltimore.

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