investing in ghettos

[REI NOOBSTER]

I am thinking about making my first investment in Camden NJ. This is about 22 miles from my house. I want to do this because the ARV on a duplex in good shape can be as low as 65K. Gross rents are $550-$650 per side.  The gross rents compared to ARM is better than in my area. That and If I pay 70% of 65k I am paying under 50k for a duplex that grosses $1000-$1100. I would get a property manager that would be recommended and used by someone in my REI club.

Can some one give me advice form their experience in investing in non-desirable neighborhoods?

[rlack72]

My only advice is - undesirable neighborhoods = undesirable tenants.

[AJ290]

Do not invest in war zones.  I speak from experience.  Ugly houses attract ugly tenants.

[REI NOOBSTER]

I won't buy in a "war zone". Just a neighbor hood that I personaly  
would not live in.

[propertymanager]

Future guru,

It depends on what you call "non-desirable neighborhoods".  My wife would not live in ANY of my rentals, so to her they would all be undesirable.  There is very little market demand for higher prices rental houses in MOST areas (I'm not talking NYC or Hilton Head here).  Therefore, depending on your standard of living, nearly all rental properties may be undesirable.  

By definition, most people living in rental properties are in the lowest stratus of the population.  They are typically lower-middle to lower class citizens.   Don't confuse what is desirable for you with what is desirable for a tenant.  They are not the same.

The numbers that you posted are pretty good.  If you could buy a $65K duplex for $50,000 and receive $550 to $650 per side, that should be a good deal.

Good Luck,

Mike  

[kdhastedt]

At least in my case, there'e a HUGE difference between a neighborhood I wouldn't live in and a "ghetto"...my judge of a neighborhood is whether it is safe for my wife to work in by herself (and she's a liberal, so she doesn't "pack" because the Democratic leadership told her "guns are bad")...

Keith

[DannyTheGreat]

There are some undesireable neighborhoods in the US. I haven't found any I'd call a war zone. There might be the occasional drug deal gone bad or gang retaliation but no one bothers outsiders unless they leave their Rolls Royce unattended with the keys in the ignition or wear Mr. T. gold jewelry. People live in bad areas and people live in war zones (Baghdad and Fallujah). As long as you can sell or rent the property you buy for a profit, that's a good deal. Low income tenants aren't known for their housekeeping abilities or handyman skills so that's always as much of a problem as you let it become. Most of your rent will come from the government so there will be less Mafia-style rent collecting needed.

I wouldn't let a particlar neighborhood stop me from buying properties just because I would never live in it.

[aak5454]

the numbers looks pretty good.  don't be shy about "working class" neighborhoods; there is money to be made there.  Things that make me proceed with caution is 1) high percentages of homes abandon/boarded up and 2) too many "entrepreneurs" hangin' out in front of the corner liquor store.  

[Bluemoon06]

I would get a property manager

Remember a manager is not going to watch your property like you would your own.  Since this neighborhood is a problem place, you will probably need to go there more than other places.  Since you are not willing to go there and deal with the people, you may want to reconsider.

[propertymanager]

and she's a liberal, so she doesn't "pack" because the Democratic leadership told her "guns are bad")...

I wonder if the Democratic leadership shows up when some scumbag with a handgun tries to rob a fellow Democrat?

Anyway, don't give up - there is always time for a conversion to the right way of thinking.  A 44 Magnum makes an excellent birthday present!

Mike

[Bluemoon06]

I wonder if the Democratic leadership shows up when some scumbag with a handgun tries to rob a fellow Democrat?

Of course not because that scumbag is only the victim of his upbringing.  You know he was abused when he was growing up.

[propertymanager]

I keep forgetting that everyone is a victim unless proven otherwise.

Mike

[motivatedceo]

In Dallas, for example, virtually everything except for a large wedge shaped area north of downtown Dallas [probably less than 15% of the city] can be deemed the ghetto. To give you an idea, lets divide the city into 8 virtual segments...with downtown Dallas being the starting point.

Those segments are...
North, Northeast, East, Southeast, South, Southwest, West, Northwest

Anything "North" is safe. A few parts of the "Northeast" and "Northwest" areas are also nice. Anything else can be declared the ghetto, or undesirable, with very few exceptions. Some areas are being redeveloped, some are older 'nicer' neighborhoods, but the vast majority of those areas are highly undesirable for the average white collar worker. Most nicer areas around this area in in the suburbs.

I live in a suburb! LOL

BUT...there is a lot of opportunity here. The ghettos are still desired by decent, lower class people....and so you can make some good rent money.

[rlack72]

I with ya on that motivatedceo. I live in downtown dallas but do most of my dealing in Fort Worth for now. I am from that area, therefore I know what the prices and areas better.
 
 

[rlack72]

Dallas even has me talking like I am from the ghetto  :-[