How to create better neighborhoods
Hey everyone! I was searching the forums and from initial impression have not found much on the topic. I would like to know how you all as investors seek to improve the communities that you invest in if that is a strategy you follow. Obviously, I know there are plenty of factors that go into creating safe neighborhoods but how do you guys participate with the opportunities you have? Turning a once troubled neighborhood into a strong community does tons for the area and the people so I am curious to hear your responses. Thank you!
#1 All Forums Contributor
- Investor
- Virginia
@Jenna Barnes
We buy distressed debt, we try to keep borrowers in the homes which reduces vacant properties and blight. Studies also show it can drop home values in the area as well.
Thanks
@Chris Seveney do you care to elaborate a little more on this? Do you buy in B or C class neighborhoods?
#1 All Forums Contributor
- Investor
- Virginia
Quote from @Jenna Barnes:
@Chris Seveney do you care to elaborate a little more on this? Do you buy in B or C class neighborhoods?
First, we are not buying the property but we buy the distressed loan. Yes many of our loans are in Class B and C neighborhoods. Once we acquire the loan we try loss mitigation with the borrowers in order to get them on new payment plans through forbearance then loan modifications. We try and give them a 2nd chance and hopefully they can succeed, unfortunately that is not always the case.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,507
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
A beautiful house will attract good quality clean people. We as investors are cleaning up neighborhoods just by putting a better product on the market and discontinuing this cycle of crack homes and squatter homes
Quote from @Eliott Elias:
discontinuing this cycle of crack homes
It's not a crack house. It's a crack home.
I focus on a small area and create the best product on the market. Doing this brings the best tenants for the class of property. It just keeps building on itself. Better tenants, better rents, better neighborhood, better tenants, better rents,.... My long term goal is to buy the majority of houses on one street so I can rename it after my company.
@Chris Seveney I see! That is actually super interesting and I have not been exposed to that yet so I'll have to do some more digging into that! Thank you for the knowledge!
@Greg Henderson @Eliott Elias Thank you! This makes perfect sense. And yes, I think that buying into the whole street and community is sometimes the best way to reap the benefits of making those communities attractive. Thank you for your advice!
I think I heard this on a BP podcast episode at some point, and it always stuck with me. The guest said that you want the best house on your block, not the best house in your city. It seems reasonable to me that a block or a neighborhood is only as attractive as its worst / ugliest house.
So an investor who focuses on buying those "weak link in the chain" houses, and makes them *slightly* better than the current best house on the block, creates a win-win for themselves and the community. In addition to the obvious value-add play for the investor, this increases appraisal values for adjacent homes, helping the members of that community build their wealth without having to lift a finger. Not to mention, those neighbors get to look at a newly-remodeled home instead of an eyesore when they open their curtains or drive down their street.