Comparing ZipCodes to Invest In

2 Replies

Hey BP,

I just got pre-approved for a HML, just have to cover closing costs and the rest of the purchase price; looking to do a flip, not under contract. I am currently comparing 2 different zipcodes to invest in. Zipcode A has a much higher crime rate, but ZipCode B has lower rents, lower population growth, higher annual residential turnover, and lower crime rate- slightly above the national average. In a recent post I made about "RedFlags and Tell Tale signs", I posted 3 pictures of the immediate area of a property in foreclosure (Zipcode A).. If I only intend to hold the property for less than 120 days, is it worth the trouble buying in a higher crime rate area?..My exit strategy if I can not sell, is to put the property up for a 1-2 year lease option at around $1060/ month with the first & last month's rent, and security deposit to go toward the principle. Any help or constructive criticism would be appreciated =]

ZipCode A: 

Median Income: $37,874

--Fair Market Rents--

Studio$657
One Bedroom$750
Two Bedroom$933
Three Bedroom$1,234
Four Bedroom$1,480

Crime Index:

ZipCode A = 2.9

Zipcode B = 1.23

Market Action Index:

Zipcode A = Slight seller's advantage

Zipcode B = Strong seller's market

Since you are flipping, the statistics in a zip code doesn't matter too much (unless of course you have to hold it because you can't sell). I'd focus on the ROI after all expenses including expected holding costs. I'd assume it will take longer to sell in zip code A due to your rating of the market. Honestly, I'd prolly go with zip B just because it'll prolly less work on the back end.

Thanks man, I appreciate your advice! Definitely makes more sense to me now. Strange, I didn’t receive a notification for your reply until now...I also received advice from a masterclass I attended recently, to zone in on a 

.5 x .5 mile radius and focus on one small area IOT really zone in my efforts with alternative deal finding strategies. It made a lot of sense to me instead of getting overwhelmed with an entire zip code and MLS portals..

-Frankie