Is it my imagination or are certain inner city areas where there are alot of boarded up houses starting to gentrify or turn around?? In other words is it a good investment to buy these $5,000 or $10,000 houses now?
Is it my imagination or are certain inner city areas where there are alot of boarded up houses starting to gentrify or turn around?? In other words is it a good investment to buy these $5,000 or $10,000 houses now?
It depends on where you're looking.
If you're looking at houses for 5K, you're probably looking in neighborhoods where they shot The Wire and Homicide, Life on the Street. Those neighborhoods are not turning around. Personally and from the crime statistics, I would say they are getting worse. If you're looking at North Ave and Harford Ave., I doubt that's turning around either. 5K. 10K. Stay away. Move on up to the 50 and 60K houses that will eventually go for 200. That's where you want to be. Look where you see decent corner neighborhood bars that are busy on Fridays and Saturdays. Find the places where the brick has been freshly pointed up and the marble steps are scrubbed. That's where you want to buy. If the windows are broken and there are a ton of board ups, it's going to be too long to turn around. Not just my opinion, but I join many others and say go to the county.
Rental Property Investor · Baltimore, MD · Member since 2018 · 41 posts · 23 votes
7y
It seems that the areas around Canton and Fells are. Near Fed, Pigtown is on the up it looks like and I know investors that are doing a lot of development in that area.
Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes
7y
As an investor in B-more for over 40 years I've done well - but now with the guns and dope and murders - I am very selective where I go and what I buy -
Is it my imagination or are certain inner city areas where there are alot of boarded up houses starting to gentrify or turn around?? In other words is it a good investment to buy these $5,000 or $10,000 houses now?
It depends on where you're looking.
If you're looking at houses for 5K, you're probably looking in neighborhoods where they shot The Wire and Homicide, Life on the Street. Those neighborhoods are not turning around. Personally and from the crime statistics, I would say they are getting worse. If you're looking at North Ave and Harford Ave., I doubt that's turning around either. 5K. 10K. Stay away. Move on up to the 50 and 60K houses that will eventually go for 200. That's where you want to be. Look where you see decent corner neighborhood bars that are busy on Fridays and Saturdays. Find the places where the brick has been freshly pointed up and the marble steps are scrubbed. That's where you want to buy. If the windows are broken and there are a ton of board ups, it's going to be too long to turn around. Not just my opinion, but I join many others and say go to the county.
Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes
7y
If you are buying $10k homes then you are not buying in an area that is "turning around", or probably ever will or that matter. To determine if an area is gentrifying (i.e., "up and coming") then check the retail sales data - that will tell you more than driving the area at night or counting vacant homes ever will.
Wholesaler · Durham, NC · Member since 2018 · 157 posts · 50 votes
7y
Thanks for posing the question. I am appreciating all the responses. @Joe Norman@Stephanie P. what about investors who are willing to deal with the tougher areas specifically for cash flow to replace income and is not looking at those properties necessarily for wealth building or appreciation? If one gets a good property manager and is disciplined with reserves, can going after those properties in those areas be profitable?
Thanks for posing the question. I am appreciating all the responses. @Joe Norman@Stephanie P. what about investors who are willing to deal with the tougher areas specifically for cash flow to replace income and is not looking at those properties necessarily for wealth building or appreciation? If one gets a good property manager and is disciplined with reserves, can going after those properties in those areas be profitable?
Here's my opinion.
If you buy a house for 5 or 10K, more than likely you're going to have to put 40K into it to make it habitable. You probably have to either pay cash (depleting your personal reserves) or get loans at exorbitant rates so the lender can get a decent return on the dollar (if you can find a lender that will go that low). Those loans are hard to get because
they're too small
don't generate significant revenue
the properties get vandalized because all of the sudden they're the best house on the street
they're a magnet for crime because that must be where the money is
your cash flow is eaten up in tenants that don't pay and fixing things that get broken
they're just really risky in general
I say go a little bigger and get loans that lenders want to give, go with tenants that will have some pride in where they live (keeping your property clean and in good repair) and bring a sub par property up to speed with the rest of the neighborhood.
Remember, you want to buy the worst house in the best neighborhood and fix it up forcing equity, not the best house in the worst neighborhood and drag the rest of the community with you. That's a heavy load.
Thanks for posing the question. I am appreciating all the responses. @Joe Norman@Stephanie P. what about investors who are willing to deal with the tougher areas specifically for cash flow to replace income and is not looking at those properties necessarily for wealth building or appreciation? If one gets a good property manager and is disciplined with reserves, can going after those properties in those areas be profitable?
Here's my opinion.
If you buy a house for 5 or 10K, more than likely you're going to have to put 40K into it to make it habitable. You probably have to either pay cash (depleting your personal reserves) or get loans at exorbitant rates so the lender can get a decent return on the dollar (if you can find a lender that will go that low). Those loans are hard to get because
they're too small
don't generate significant revenue
the properties get vandalized because all of the sudden they're the best house on the street
they're a magnet for crime because that must be where the money is
your cash flow is eaten up in tenants that don't pay and fixing things that get broken
they're just really risky in general
I say go a little bigger and get loans that lenders want to give, go with tenants that will have some pride in where they live (keeping your property clean and in good repair) and bring a sub par property up to speed with the rest of the neighborhood.
Remember, you want to buy the worst house in the best neighborhood and fix it up forcing equity, not the best house in the worst neighborhood and drag the rest of the community with you. That's a heavy load.