Diamond on the roughest side of town

3 Replies

Hi everyone, I'm a newborn in real estate but I have been doing a lot of reading in the forums, listening to webinars and reading books on real estate. I had plans of purchasing my first house closer to end of this year. I live in Detroit, MI and there a lot of great homes to buy but you have to be careful about the neighborhoods. I recently found a house that I am very interested in buying. It is a very decent home and it is already occupied so there is nothing to do but collect rent. However, it is in a notoriously bad neighborhood. If the present tenants were to move out, I think it'd be hard to find someone else to move in that neighborhood. I'm not sure if I should just live in the now and purchase my first home regardless of this flaw or if I should run like the wind. Would you purchase a diamond on the roughest side of town?

Don't do it! In just about every case, you want to choose a rougher house in a nicer neighborhood over a better house in a rough neighborhood. You can improve your house- but not your hood. This becomes even more important in areas with a lot of excess housing stock, like Detroit. There's a lot of very affordable properties there in good neighborhoods where tenants will actually want to live. So don't make a bad choice on your first property- you could end up out of the game before you even really begin. 

Originally posted by @Malissa Davis :

Hi everyone, I'm a newborn in real estate but I have been doing a lot of reading in the forums, listening to webinars and reading books on real estate. I had plans of purchasing my first house closer to end of this year. I live in Detroit, MI and there a lot of great homes to buy but you have to be careful about the neighborhoods. I recently found a house that I am very interested in buying. It is a very decent home and it is already occupied so there is nothing to do but collect rent. However, it is in a notoriously bad neighborhood. If the present tenants were to move out, I think it'd be hard to find someone else to move in that neighborhood. I'm not sure if I should just live in the now and purchase my first home regardless of this flaw or if I should run like the wind. Would you purchase a diamond on the roughest side of town?

You already answered your question... When you're first starting out, the last thing you want to do is buy a property that is going to give you nightmares about.  Buying something that you're going to have a hard time managing is going to get your burnt out on real estate before you even get started.