Buying for Appreciation due to City Renovations

4 Replies

Hello everyone! Today I am doing my Biggerpockets due diligence and setting up my profile // leaving iTunes podcast review (5 Stars!)

My first forum question:

I purchased my first rental property last year at the age of 20! So far it has been a great success. I am house-hacking and cash flowing about $200.00 a month, this has allowed me to put about $1200 into the bank each month. Now I am looking to invest again. My first home is a single family 3 bedroom 2 bath house in the Grand Rapids area. I am looking to invest in Grand Rapids again. There is an area of Grand Rapids (East Side) that has boomed within the past few years after the city came in and did some renovating. Now they are looking to do the same within the next 2 years on a popular (but run down/low income) area on the West Side. Right now there is a home for sale that sits on the exact street they "plan" to renovate.

My question would be, how should I factor this into my investment analysis? Do I start looking in that area for rental/appreciation play even though it is lower income with a higher crime rate? Or do I take the city's plans with a grain of salt? And who should I contact about planned city renovations?

Assuming I will be purchasing a duplex and personally living in one of the units, I want it to be safe. I also am just starting my investment career and do not want to put myself in a bad position at the start.

Thanks!

Jake Lowing

Hi, Jake.  Welcome to BP. I would consider it "speculative" .  If you have money to speculate,  or you lockopportunity to invest for cash flow , then maybe buy.  If you can't afford to wait for the city to get the project going, then walk away.  There will be property on the West side to buy in a few years from 'investors'  that couldn't hold on to the good deals they picked up on speculation.   I would have more fun losing the money at Gun Lake.  :-)

Good luck.  There will alsways be deals that.  You're in the right plus to learn how to find them and make them work.

Hi @Jake Lowing , I agree with @Chad Hovermale .  These types of things come up pretty regularly - there is a plan to revitalize X or Y area, so it feels like there is great opportunity/pressure to pick up something in that area.  But as you know, lots of things can happen.  The program can get scrapped, delayed, or moved three streets over.  A different person gets elected, and they decide they want to put the money elsewhere.

Speculating is fine, just understand that there is a higher risk involved with it.  At an early stage, if you can keep getting 'base hits' over and over, you will be able to cash in on plenty of great opportunities for more speculative deals later.

So to answer your question directly, I wouldn't change your numbers at all, just keep it in the back of your mind as a 'tiebreaker' in case you're looking at multiple properties.

My thoughts are does this area have historical appreciation? I have seen well intentioned hood fix ups happen before only to be boarded right back up a couple dozen months later. 

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