Rental Property Investor · Manchester, NH · Member since 2017 · 59 posts · 23 votes
Hi guys/gals,
I am new in terms of posting to the website, but I have been listening to the podcast for a while and I've been doing my education and research. My wife and I are both medical professionals and we make a decent income but we would really like to get into real estate investing within the next couple years, primarily buy and hold multi family properties. We live in eastern Massachusetts and the pricing for multifamily homes or single-family homes are pretty high in comparison to the rental income except in some of the more urban and higher crime areas.
My question is I'd like to get some opinions on whether it's a good idea or not to invest in rental properties that on Trulia for example are in the yellow for crime. I'm also not quite sure if the property values in the higher crime areas will rise at the same level as the surrounding towns.
In these areas the numbers do you work and some are around the 2% rule, just estimating...
Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
8y
Erik, there are certain pros and cons of investing in higher crime neighborhoods. For buy and hold I personally have never considered it. Mainly because of the higher turnover, higher vacancy, more hands-on property managing experience you typically hear about. For that kind of investment I just wouldn't risk it. Unless of course there's a big redevelopment initiative in place and you can get ahead of the redevelopment.
Now those neighborhoods can be good for flipping because there tend to be more value add opportunities. I'm working on a few such examples. But we're very focused on the specific neighborhood and solid comps.
Hope there are a few nuggets in there. Good luck!
Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
8y
Erik, there are certain pros and cons of investing in higher crime neighborhoods. For buy and hold I personally have never considered it. Mainly because of the higher turnover, higher vacancy, more hands-on property managing experience you typically hear about. For that kind of investment I just wouldn't risk it. Unless of course there's a big redevelopment initiative in place and you can get ahead of the redevelopment.
Now those neighborhoods can be good for flipping because there tend to be more value add opportunities. I'm working on a few such examples. But we're very focused on the specific neighborhood and solid comps.
Hope there are a few nuggets in there. Good luck!
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
8y
@Erik Pfundstein Well, hello neighbor! The crime maps are one of the more useful things on Trulia. The home values not so much.
There are some places where you can still get deals on the south shore - Plymouth is one of them.
Not 2% deals, but 1%+. As you probably know, north Plymouth - near Forest Ave is a tough area. In fact I hear that if you're looking for almost any kind of drugs, that's the place to go!
Downtown Plymouth has some good areas as does West Plymouth. Further south is good for seasonal rentals (and I have on at White Horse Beach on the market now!)
Other towns to look at include Marshfield (but watch those crime maps - there are hot spots), Pembroke, Kingston, Halifax, Middleboro, WEST Brockton (roughly defined as zip code 02301). Further south and west, Taunton, Fall River and New Bedford - again, watch the crime maps.
Let me know what your parameters are and I'll see what I can do to help.
Rental Property Investor · Buffalo, MN · Member since 2010 · 511 posts · 92 votes
8y
I'm not fimilar with Trulia's site. Everybody's defention of a bad neighborhood is different. Drive around these areas at different times to see what's going on. If your managing yourself it, is this a place you feel safe, not to mention bringing family and friends. Some areas it's spotty and a block away things are better. Do your research of the neighbourhood for crime stats, rentals versus owner-occupants, sometimes cities provide this information or other data sites.
My first rental was in a questionable area, and it was quite a learning experience. It was a combo of area, bad PM, and me being a rookie. I kept it when most others would probably of run. First situation wasn't good for the tenant and a friend of his. PM threw up there hands after putting a questionable tenant in, city started coming down on us. After that we had a few evictions with drama, spent more money fixing damaged things that shouldn't of had to, belongings left behind, break ins, loss of rent etc etc.
It definitely stopped me from buying other properties, because this one was a suck of time and money, that I believe was a mistake. On the other hand I still have it today, stable tenants now, and area is seeing some redevelopment. Thanks to great handyman and new PM that have helped me along the way through these troubled spots.
Not only screen your tenants but also your contractors, don't get sucked in by their drama. Have money set aside for when things go awry. Good tenants do go bad and it doesn't always matter to the neighborhood, be a active landlord.
Network on BP!
Investor · Oklahoma City, OK · Member since 2015 · 48 posts · 86 votes
8y
When we were starting out a few years ago, I bought two houses next door to one another from a landlord looking to get out of the business. They're in a C+ part of OKC, and were leased to decent Section 8 tenants. Then the one across the street became available and I bought it. Now we own 6 houses on that street, plus a vacant lot next to one of them that could be used for new construction or to move a house onto. They all rent @ 2%+ what I paid for them and we've got them all in great shape.
Now looking to offer for sale as a package deal and move on to the next challenge. But just speaking for myself, it's been a great learning experience, and a crash course in effective property management!
Real Estate Agent · Watertown, MA · Member since 2015 · 366 posts · 77 votes
8y
I agree with driving the neighborhood at different times. I'd ask a local property manager if I hired your company to manage my properties which neighborhood should I purchase my investment properties in.