What are your thoughts investing in cities with drug problem?

Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes

Doing some research regarding the cities I'm planning to dive in for out of state investment property and came across these articles. Any tips when investing in cities with drug problem?

https://www.monarchshores.com/drug-addiction/10-cities-with-worst-drug-problems

https://www.cnbc.com/2019/07/10/how-ohio-is-coping-with-high-opioid-overdose-rate-slamming-its-economy.html

Thanks!

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Sheldon ZimmermanBusiness Member

Real Estate Agent · Lancaster, PA · Member since 2018 · 63 posts · 59 votes

I'd recommend knowing your market as well. But there is a drug problem in every city. The best thing is to have a team that screens your tenants well. But even that might not catch it if someone becomes addicted over time. I would just know the market and area you want to invest and that will help in this matter. I would not invest in an area with high drug problems personally.

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Troy Albers
Rental Property Investor · Fleming Island, FL · Member since 2019 · 85 posts · 104 votes
6y
@Armel Bayot common sense tells me to stay away from those areas. Plenty of other places in America to invest in.
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George W.
Investor · NJ · Member since 2018 · 869 posts · 921 votes
6y
Every city in the us has some sort of drug abuse. Best advice know the area you plan on investing in.
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Sheldon ZimmermanBusiness Member
Real Estate Agent · Lancaster, PA · Member since 2018 · 63 posts · 59 votes
6y
I'd recommend knowing your market as well. But there is a drug problem in every city. The best thing is to have a team that screens your tenants well. But even that might not catch it if someone becomes addicted over time. I would just know the market and area you want to invest and that will help in this matter. I would not invest in an area with high drug problems personally.
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Troy Albers:
@Armel Bayot common sense tells me to stay away from those areas. Plenty of other places in America to invest in.

Ironically, from what I've read so far with the posts here, some of those cities (like Chicago , Ohio) with drug problem has a good cash flowing properties.
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @George W.:
Every city in the us has some sort of drug abuse. Best advice know the area you plan on investing in.

I concur. Ohio is under my radar and those articles just caught my attention. Wonder what are other investor's experience investing in areas with drug problem.
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Sheldon Zimmerman:
I'd recommend knowing your market as well. But there is a drug problem in every city. The best thing is to have a team that screens your tenants well. But even that might not catch it if someone becomes addicted over time. I would just know the market and area you want to invest and that will help in this matter. I would not invest in an area with high drug problems personally.

True, every city has a drug problem. Not sure if that's mostly prevalent in C neighborhoods or lower. I guess a really good experienced property manager plays a big role here to make or break a good return of your investment. Wonder if these cities with drug problem has an impact to their neighboring cities, like Dayton to Columbus or other neighboring city or state.
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Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
@Armel Bayot I believe if you screen your tenants well you can avoid a lot of the drug issues. The problem is when landlords and property managers place the first person to apply for the rental. I have about 20 tenants and have never had a drug issue.
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Christina CareyPro Member
Real Estate Broker · Dayton, OH · Member since 2010 · 245 posts · 186 votes
6y
Originally posted by @Armel Bayot:

Yes, there are drugs in every city, and yes, it's definitely more prevalent in lower rent / lower income areas. The few drug-related issues we've encountered have all been in C & lesser areas, and all but one were inherited tenants (the other was a section 8 tenant that eventually found other ways to occupy her time since she didn't need to work).
It's often a matter of which came first - could they afford better before drugs became a factor? Or is the drug problem a byproduct of living in an area where drugs are more prevalent? It's not a black & white issue, and I'm not going to dive into the psychology & sociology of the matter here. As others have said, tenant screening is everything. Well, almost ... another comment mentioned the possibility of someone becoming an addict over time - presumably after the person has been living in your property. The solution to that is strict rent payment requirements, and at the first sign of trouble, inspecting the unit, which should be happening on a regular basis anyway.

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Marcello Di Gerlando
Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
6y
The city inst the problem. Its the particular property you chose to purchase. If you have to mitigate for meth you may just go broke.
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Christina Carey:
Originally posted by @Armel Bayot:

Yes, there are drugs in every city, and yes, it's definitely more prevalent in lower rent / lower income areas. The few drug-related issues we've encountered have all been in C & lesser areas, and all but one were inherited tenants (the other was a section 8 tenant that eventually found other ways to occupy her time since she didn't need to work).
It's often a matter of which came first - could they afford better before drugs became a factor? Or is the drug problem a byproduct of living in an area where drugs are more prevalent? It's not a black & white issue, and I'm not going to dive into the psychology & sociology of the matter here. As others have said, tenant screening is everything. Well, almost ... another comment mentioned the possibility of someone becoming an addict over time - presumably after the person has been living in your property. The solution to that is strict rent payment requirements, and at the first sign of trouble, inspecting the unit, which should be happening on a regular basis anyway.

Thanks for your feedback Christina.
Do you do any routine inspection to your properties even if you're not suspecting drug activity?
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Christina CareyPro Member
Real Estate Broker · Dayton, OH · Member since 2010 · 245 posts · 186 votes
6y
Yes - typically once a year at a minimum just to look for maintenance issues, service HVAC systems, etc. Outside vendors will often alert us to issues, as will neighbors, either of which would warrant a visit outside of that. Pets, 1st time renters, students, are other scenarios which might call for more frequent visits.
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Luke Saglimbeni
Rental Property Investor · East Longmeadow, MA · Member since 2019 · 154 posts · 64 votes
6y
@Armel Bayot
If numbers work and you can get properties for pennies on the dollar I’d say why not. And also ensure you have a good property manager. Good luck
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Luke Saglimbeni:
@Armel Bayot
If numbers work and you can get properties for pennies on the dollar I’d say why not. And also ensure you have a good property manager. Good luck

Thanks brother!

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
Well DC is on that list, and is the richest region of the country. I wouldnt invest in the areas of high drug violence, but I do invest in the areas that are nice as they are amongst the lowest risk real estate investments available due to the high incomes.
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Sherif Lyons
Property Manager · seattle · Member since 2018 · 27 posts · 42 votes
6y
Originally posted by @Christina Carey:
Yes - typically once a year at a minimum just to look for maintenance issues, service HVAC systems, etc. Outside vendors will often alert us to issues, as will neighbors, either of which would warrant a visit outside of that. Pets, 1st time renters, students, are other scenarios which might call for more frequent visits.

If I were you id crank that up to every 2 - 3 months a year. at least quarterly inspections. I've worked for a slumlord and now I work for a company managing Class A and B+ buildings. As I've said in another thread, I have never seen a building bounce back from meth being manufactured inside it. Meth will poison the entire unit and surrounding units as well. Heroin needles are a great annoyance and crackheads just steal everything from the building that they can scrap or pawn but id rather deal with that than meth. With the latter 2, you can just evict, light rehab and you are relatively fine. With meth, the financial damage can ruin you if you don't catch on right away.

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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Russell Brazil:
Well DC is on that list, and is the richest region of the country. I wouldnt invest in the areas of high drug violence, but I do invest in the areas that are nice as they are amongst the lowest risk real estate investments available due to the high incomes.

Kinda ironic, the city where the most powerful man reside and work has a drug problem.
When you say " areas that are nice " does that mean B neighborhoods?
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
@Armel Bayot
A Classish, B+ish. My average rent is $3,000 and my typical tenant has a household income in the $150-$225k range probably.
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Sherif Lyons:
Originally posted by @Christina Carey:
Yes - typically once a year at a minimum just to look for maintenance issues, service HVAC systems, etc. Outside vendors will often alert us to issues, as will neighbors, either of which would warrant a visit outside of that. Pets, 1st time renters, students, are other scenarios which might call for more frequent visits.

If I were you id crank that up to every 2 - 3 months a year. at least quarterly inspections. I've worked for a slumlord and now I work for a company managing Class A and B+ buildings. As I've said in another thread, I have never seen a building bounce back from meth being manufactured inside it. Meth will poison the entire unit and surrounding units as well. Heroin needles are a great annoyance and crackheads just steal everything from the building that they can scrap or pawn but id rather deal with that than meth. With the latter 2, you can just evict, light rehab and you are relatively fine. With meth, the financial damage can ruin you if you don't catch on right away.

Does a unit/building with a history of meth lab has huge impact on appreciation and getting new tenants?

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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Russell Brazil:
@Armel Bayot
A Classish, B+ish. My average rent is $3,000 and my typical tenant has a household income in the $150-$225k range probably.

Sounds like thats from a SFH?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
@Armel Bayot
Typically. Though I do have a condo w $3,000 rent as well. Ive got a few cheaper condos too in outlying areas.
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Armel BayotPro Member
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Rental Property Investor · Walnut Creek, CA · Member since 2019 · 116 posts · 38 votes
6y
Originally posted by @Russell Brazil:
@Armel Bayot
Typically. Though I do have a condo w $3,000 rent as well. Ive got a few cheaper condos too in outlying areas.

I've never looked at the DC area for OOS investing , wonder if that's a good ground for a newbie.
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Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
What do drug dealers all have in common ? They all have a big wad of cash in their pocket . That could be my rent money next month ! Stop being afraid of stupid crap like drugs in the city , geez every city had drugs and crack addicts . It is my opinion you have to be on drugs to even want to live in a big city !
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Cheree Hill
Elkridge, MD · Member since 2019 · 10 posts · 5 votes
6y
@Armel Bayot
Not in DC.... That rent is normal
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