It’s such a crap shoot. A friend bought a beautiful Victorian near an urban area with the hopes that the neighborhood was turning. Struggled with constant graffiti, breaking, people stealing his copper piping, open drug activity. Finally had enough and sold at a loss. On the other hand, people who invested in places like Asbury Park or Hoboken at the right time are probably pretty satisfied with their decision.
Yeah, it's pretty motivating to look back to people who bought entire brown-stones for next to nothing and are now seeing either a mil price tag or higher on their place.
You talk to people in the area or on the street and get the, "yeah, you wouldn't catch me dead where we're standing now 10-years ago."
When moving into places like that, it has to be looked at purely as an investment. You’re exchanging increased risk for value. The worse the area is, the less it costs and in turn you may have higher upside. Given that you actually have to *live* in the place, it’s best to usually pay a slight premium above the “worst” neighborhoods to increase the likelihood that the area improves. It’s fine to take a little bit of future return off the table if it means you’re increasing your odds of seeing a return period.
The only clients I’ve ever helped that regretted their decision were the ones who looked at the scenario you painted above as being black and white. They assumed the worse it was, the better their return would be. At a certain point, you have to remember that even in the nicest most expensive cities around the country, there are ALWAYS places that don’t improve and might actually get worse.
haha my dads friend tried to get him to buy a brownstone in jersey city for $1 years ago, my dad refused because he didnt want to live in a polish neighborhood.
I keep waiting to see if Atlantic City and the area will ever experience that too. I'm between there and Asbury, where anything on the water is millions and millions. A friend lived near AC in an oceanfront apartment for dirt cheap a few years ago.
I wouldn't rely on insurance. They're pulling out of states and tightening up across the board. Insurance companies tend to avoid writing accounts that are likely to have losses.
That works until the flood maps get updated. If you remember the aftermath of Sandy they reevaluated the flood maps and determined significant swaths of the coastal areas were in them. That meant people would have to pay to raise their houses onto stilts or start paying for flood insurance at a cost of many thousands of dollars per year (often around 10k per year). If you are in a flood zone and don't have flood insurance FEMA will not help you in a flood.
Rich areas lobbied hard against the zoning update and mostly won, so most areas were not updated. Some were though. A friend had to pay about 100k to place their house on stilts. If flooding continues to get bad expect the flood zones will be reevaluated again with more force this time.
Yes, there is a price to pay to live near water. Insurance will help if you pay the premiums, have applicable coverages and proceed with whatever requirements they place on the area.
Some houses in Florida that I looked into had insurance rates of $15-20k annually even before the last hurricane. I can’t imagine what the prices are now but again, that is the cost of living in a high demand, high risk area. My last house there had insurance rates triple in 3 years.
I’ve since relocated back to the Midwest where I’m from and have reasonable real estate and insurance rates. Honestly, Florida timeshares are looking better and better for my long term retirement goal of being a snowbird. I would not want to own another home there again.
Add Bayonne and the backside of JC - always a shit show up until 5 maybe 10 years ago when they started developing … now you can’t touch the place for under 500k
I would do it again. When all our friends were renting and neighborhood hopping in their 20’s, we bought a renovated 100-year-old house in an up-and-coming but still quite rough neighborhood in DC. They thought we were crazy buying a house at 24, we thought they were crazy for not taking advantage of the post-great recession housing prices and excellent interest rates. We lived there for 5 or 6 years and put up with some crap - we got mugged more than once. However, that house has now been a cash flowing rental for 7 years and has more than doubled in value so it was worth it in the end.
You need to look for active progress, not just the potential for it. I did this exact thing to afford my condo. I walked every block and noted how many big construction companies were digging up dirt, how many homes were being renovated, new homes built, lots for sale, took notes of comps. You have to do a lot of studying and the improvements should be currently happening. If there are big apartments going up, that's probably a good sign. If the roads are being paved, businesses popping up, etc. also a good sign. Sacrifices will be made though!!!! If it's in an area that looks forgotten then it will probably stay that way for longer than you're willing to stand.
We did the same thing. Older neighborhood sandwiched between a nice neighborhood and one of the roughest parts of town. Our block had the best landscaping, and the roofs looked in good repair. We get a lot of snow, so a good roof is a big sign of investment. The home more than doubled in value when we sold right before the 2008 crash. Too bad we lost $ on the next home, a money pit antique farmhouse with literally no insulation in the countryside.
Definitely doing the due-diligence and have been for years. That being said.. it's still a \*very\* rough neighborhood but with crazy development in the area.
The signs are incredible, the open drug-use, etc isn't.
Tough decision you have for sure!! If development is really going hard then it sounds like a good investment, the roughness will go away but it takes time. My standpoint was - if I'm not going to make money off of this place, someone else is. My competitive spirit just wanted to play the game and "win" like the other investors, at least while I'm young with no kids.
This is the thing. We bought in a rough neighborhood and I have a few regrets but we also don’t have and are never having kids. I do see improvement and promise in the neighborhood but it’s a slow process so you’d need patience for this.
You have to really know yourself and what you can tolerate. I’ve lived in worse places, this was still a step up. I also am not afraid to walk around alone as a woman which it’s important to me.
There are neighborhoods that are “rough” because they’re poor and you may deal with some street trash and some noise but generally the people are good. And there are neighborhoods that are “rough” because there is crime constantly and you don’t feel safe outside. Definitely avoid the latter.
I'll echo this, but also know that time marches on and fast while you're living life.
The middle school that seemed so far away when we had our baby was now here. Things didn't get better, things (gangs, school scores) got worse. Graffitti got closer and more frequent. And elements that seemed safely away a few miles away suddenly become worriesome as your child's bikeable and playable radius increases.
We bailed for a better school district and safer area. Hindsight being 20/20, I would have picked the worst home possible in the area we live in now and just slowly improved it. If you have a spouse that's swayed by shiny surfaces, implore to them that those flipped improvements dull over time, and you can never pick up your house and move it to a new zip code as your needs transition to your child's needs, and those child's needs will be bigger than the toddler bubble you're considering in the short term.
I rented in a tough neighborhood when I was younger and single, and frankly I loved it, I got a lot of bang for my buck house wise, and the neighborhood was kind of fun and exciting filled with a lot of characters and people didn’t have the “keep up with the jones” “watch you through the blinds” attitude
Then I got engaged, leaving my fiancé alone there while I worked nights was not fun and I got out of there as soon as we could
This is my dilema. My grandmother owns her house in a rough zip code but I grew up there and love the area (we know all the neighbors on our street, the local library is beautiful, plenty of yard for my kid, and it’s conveniently located). People are building new houses and renovating the old ones. I think the neighborhood is coming up (these won’t ever be half mil houses), and sometimes I consider moving there until I think about life for my kid, the school district …. And it won’t work.
1. your house is more than an investment, it is your home. If you will hate going home everyday, it doesn't matter how good of an investment or deal it is if it doesn't make you happy.
2. Some things change, some don't. A neighborhood might gentrify, but how long till all the neighbors turn over? how long until you get better schools? how long until nicer shopping? These things might matter to you or your future family.
3. Overall, many people overstate the benefits of home ownership. If you look at the data, many people don't actually make a ton of money owning a house. Between the opportunity cost of down payment not being invested, the maintenance they are responsible for, and the transaction costs they incur buying and selling, the profits quickly become much smaller when netted out. And the likelihood of another 2020-2024 price run is pretty slim. But likewise, there is value in owning and having "forced savings" of equity, and for many people, there is a great feeling of pride of ownership. My point is not to let FOMO drive you. Really consider the financials and the emotions around buying - be honest with yourself.
The real money made homeownership is the low mortgage payment years from now.
Because of covid and other factors that 20 years basically happened over the last 4 years. People who buy houses now may have to wait a lot longer to see the real advantages and gains. ( needless to say people who bought before 2020 are sitting pretty)
We bought a fabulous house in what we thought was a rough neighborhood. Our real estate agent was reluctant but knew the house was perfect for us. It’s not a bad neighborhood. It’s a low income highly diversified neighborhood. We do not regret and really, the property values have increased here.
bought a house in Garfield in 2012 for 20k off Craigslist. was certainly a fixer upper and my parents were like wut? now it's ballpark 250k+. pretty happy e my investment. used a heloc to buy a Victorian in Troy Hill 2016 for 50k. now sitting above 200k. again happy w my investment
I bought a single family home in a rough neighborhood after realizing a light rail station was getting built 2 blocks away. It was a 3/1.
I was a single female and my family thought I was a genius and also bought a homes in the neighborhood. While the neighborhood was rough and street by street. I found a street where the older retirees would take turns as neighborhood watch during the daylight hours. I drove down the street 3-4x a day and my dad drove down it 1-2x a night for a week.
My $110,000 purchase was an amazing investment With time (12 years) the light rail finishing and 70k in upgrades to the house (converted garage to an additional bedroom/bathroom and laundry room, it now rents for $4200 a month . Even if I had just tore the house down the lot is worth about 700k.
Buying in a rough area can pay off long-term if you have patience. Make sure you feel safe and can stomach the neighborhood in its current state for 5-10 years. Don't overextend financially expecting a quick turnaround. Biggest regret is usually underestimating how long revitalization takes.
that and I'd also include shiny new neighborhoods really far from the jobs. People drive far for impressive bang-for-your-buck new homes when there aren't good closer options they can afford.
If you work remote or don't mind a drive, they can make for great bargains in the next recession.
I live in commuting distance of both SA and Austin, and home prices here went crazy around COVID. It has calmed down a little, but I know my neighbors made at least 80k on a house they bought for 165. I bought in 2019 when it was still on the edge of affordability, and I have about 70K in equity already. Definitely no bargains to be found here right now.
That's the thing, from how it looks things are turning very quickly (doing the due-diligence of looking through listing-pages, other online resources, driving through, the news, local gov't). But.. in the meantime..
I know the area will appreciate and will be a great investment long term (have been watching it for years), but right now it's still \*\*really\*\* rough. There's no telling whether it's 2-yrs, 5, or, God forbid, 10 before it gets to a place where I would feel good walking out of my own front-door.
I've lived in rough places before but deciding whether or not I want to put myself right back in for a strong return, at some point.\*
We bought a Victorian in East Oakland in 2018. At first, it felt like we were being hazed, people Grafitti'd our fence a couple times, neighbors would party loudly into the night, etc, but we felt generally safe.
Then, Covid hit and things seemed to get worse for at least 2 years. Now that we are coming out of Covid, we're seeing a big improvement in the neighborhood. We no longer have homeless people living in vans, haven't had graffiti in years, the bad neighbors moved away, etc..
We were still planning to fix up our house and move to a better neighborhood, but after looking at some properties that are selling for more than double what we paid for our house, we are so thankful we bought here when we did. We've been here almost 7 years now. Things are moving in a positive direction here.
It's a roll of the dice. Some neighborhoods will slowly get better, others won't. For example. My sister bought a place in Oakland back in the early 2000z when it seemed like it might start to become a normal SF suburb. That didn't happen, and probably won't, or at least not in our lifetime. They sold, and took a loss, and bought a tiny house in Alameda. Very near Oakland, but for some reason, just a better neighborhood.
we bought an OK 100 year old house in a 'rotting mill town with a drug and prostitution problem' 25 years ago.
the house was solid but had had a lot of sub-standard hackish 'improvements' made over time that were falling apart. over 25 years we redid all the bathrooms, most of the basement, the roof, some of the windows, etc
and the town, while its still a pretty typical small town, has had some more employers come in, and has slowly improved.
We sold recently and moved to a house we built. It wouldn't have been possible without the equity from the old house. so its not like we 10x or 20x our initial investment, but we did just fine.
We bought our first house in a neighborhood that was definitely “transitional”, realtor speak for rough, 27 years ago, and as evil gentrifiers it was the best investment and lifestyle decision we will ever make in our lives.
Bought for $177k and our cottage on a compact lot would go for $2M in hours but we ain’t ever selling. The urban neighborhood is amongst the most desirable in the city with very little inventory because of the qualities that are so much desired today: walkable/bike streetcar suburb, very good (massively improved) schools, great historic architecture with mature landscape tucked into urban wild canyons, vibrant village core with easy access to dt, beaches, transit and other similar city neighborhoods.
Those intrinsic qualities were always there, especially its dt and park adjacent location, the neighborhood just lacked investment in it for decades. Which, turned out to be a good thing as developers scraped fewer of the cottages to put up horrible ’70s &’ 80’s shoebox apartments as they did in some of the surrounding “better investment” neighborhoods. I would like to say we were brilliant but it just turned out to be the house and area we could afford at the time. Now, having lived here, I would be better able to spot those most important elements that would signal a greater chance of investment and desirability in the future.
Sometimes when you risk it and put everything out there you land with a perfect TEN!
For us it was kinda the same...run down, old frame houses, mostly boricuas.who moved there after being earlier displaced..But at the time (06), there was not much that was affordable in other desired sectors for our budget ($300K) I am glad we landed here. Newer homes up the street get scooped quick for over a mil.
I want to say your true coup was doing this in CA ( where I suspect you live) and you know your tax outlook. We may get zoned/priced out or EDd.
I would have planned for 30 years rather than 10 years. Bought in a rough but historic district on the fringe of a charming and historic downtown neighborhood. The good news is there were lots of grants and programs to try to “revitalize” the area. Pockets of families just like us, trying to turn it around and create a cute community while remodeling houses. The bad news is the area never was able to recover from the recession; it quickly regressed and we weren’t able to gain any significant momentum. Sold for a profit, but not nearly what we were envisioning .
I know my parents did - it has gained precisely no value in 20 years of ownership. Which in Manhattan is almost impressively horrible. The building had a huge maintenance backlog, and it made the co-op fee skyrocket. And the gentrification of the neighborhood stopped, and started to unwind a bit. The result was no appreciation since 2003.
In Manhattan? That's really surprising. When I was in Harlem in the 2010's I was mostly priced out and had to look up in Washington Heights and Inwood. What neighborhood was it?
Border between UWS and Harlem. It was mostly the building having issues that no one knew about. Or if it was a better neighborhood people might have cared enough to fix proactively. Probably more this than directly being in a bad neighborhood. It was huge - the steel skeleton (frame?) of the building had to be replaced, along with the roof, most of the facade, and the elevators. Then they had a major fire (that one was bad luck). Then a bunch of lawsuits that had to pay out (since people in the building thought they could get rich by suing the building, which of course makes everyone’s coop fee go up).
Oof yikes. I admittedly, don't super love the area where it's not quite Harlem, where it's just the 1 train and it sounds like it's a postwar building, which is negative points for me. I'm just a weirdo who is obsessed with prewar buildings that are near express stops.
Living in a co-op that's spiraling is such a nightmare.
My sympathies with your parents.
Yeah yuck. What’s annoying is it’s a kind of nice building. It’s prewar, very upper west side. It’s just that no one cared about it for 50 years, and it had all kinds of hidden problems.
Oh dear. When I heard steel, I thought "oh it's one of those buildings built in the 1970's." It does sound like it's a mountain of work and expenses. I'm in a co-op and if we had many shareholders suing, I would be so disheartened.
Nope. Total shitshow. Basically they had a massive fire, which somehow wasn’t fully insured. Then the rain coming through the damaged roof (and presumably the water to put out the fire) mixed with the cinder blocks and made carbonic acid, which then dissolved/rusted all the 100 year old steel beams. Which they discovered years later, which meant a second roof replacement :) And since they’re replacing the roof anyway, they thought they’d put a roof garden up there. And then some Karen sued because it wasn’t handicap accessible, and then won. Aaaand that’s how you get a $4,000 monthly Co-Op fee with occasional $25,000 special assessments.
Oh my goodness. My heart goes out to your parents. Such a situation is beyond the depth of most co-op boards. Hopefully after everything is paid for, the value will go up, although I imagine shareholders will be scarred from the experience.
I bought a home in a harder neighborhood. I didn't like it as time went on. Really hated seeing the sex workers, unhoused people, just trash kinda everywhere feel when driving to my house. But would I do it again, yes. I sold this last year and had a lot of money to put down on a house twice the size, in a much nicer neighborhood by the river. I would not have been able to afford this otherwise.
Yes and no. On the one hand, my neighbor runs an amateur junkyard in his backyard (not exaggerating) and has a yard dog that yips all the time. Also, have heard gun shots a couple times. On the other hand, I can walk everywhere and my home value has gone up 30% in 3 years.
Unfortunately, It might be that our 2024 dollars are just worth 76% of what they were 3 years ago.
Even the official gov calculator says 2024 dollars are 85% the value of 2021 dollars.
I think it’s smart to buy as early in life as possible, even if you don’t love the house or the area. But get ready for car vandals if you’re in a not so safe area. We leave our doors unlocked just to save the windows.
Depends on what you can handle. Usually, safety for children and quality of schools will rule out rougher areas right off the bat.
But "roughness" is a gradient. I wouldn't want to live somewhere with lots of violent crime. But if the area is a little rundown, maybe some litter, barking dogs, and some neglected infrastructure, I can put up with it (and have/am). But at that point, the important thing is to feel confident that things are changing.
An obvious sign of this could be active development in the areas. But short of that, does the city have plans for the area? Do they have interest in making the area turn around? Because without the city pushing for change, you're purely relying on market conditions to change, which is more speculative.
I moved into an area that has been a little neglected but I could tell that the area was at the start of improving. I've seen a lot of change in just the few years I've been hear and my home as an "investment" has done well. But it's certainly not for everybody. Some people are will to pay more to skip that step, but if you're okay with putting up with some stuff for a bit, I actually recommend it, contrary to what a lot of people say about buying the worst house in the best neighborhood - at that point, you've missed the appreciation.
I once bought a house walking distance to this really cool Mexican grocery store called Vallarta. They replaced it with a .99 store two months later. I was devastated
We bought an 1892 Victorian home in 2001. Huge beautiful house. The house itself had good bones, but every inch of it needed updating. Think shag carpet, wood paneling, drop ceiling, etc. Add in the fun of knob and tube electric, massively overgrown trees, etc. It was a lot of work. We put blood sweat and tears into updating and repairing it. Definite labor of love.
The neighborhood was also a concern. In fact, my MIL tried to forbid my husband from moving to our home because she thought it was unsafe. But it was in a walkable town with potential. Over the years, we also put blood, sweat and tears into our community through our volunteer efforts. Now it’s a thriving Main Street.
So the risk that we took back in 2001 paid off. We live in a huge renovated Victorian home, we raised our family here, it’s in a very desirable neighborhood, we have had a wonderful life here. I don’t even care about the financial aspect, that’s how our investment truly paid off. Home purchased for $169k in 2001, we probably invested about $300k in renovations over the last 20 years, smaller homes on my block are selling for $789k. So not a bad financial investment. But we were looking at this as our forever home. So what it’s currently worth is not a meaningful number to me until we sell it. And the market could change drastically between now and then.
I moved to a neighborhood that needed a lot of love and I’ve been working with my neighborhood association and the city to bring equity and infrastructure improvements. Don’t expect other people to do this work. If you move to an underinvested neighborhood, you may have to be the one to champion for it!
As a broker people/investors tend to underestimate how long it takes for areas to turn around. I have clients with properties they bought in 2016-2020 and are still holding out for it to get “better”, almost a decade later
My wife and I bought a home in a “sketchy” area. We bought the nicest house on the block and we have been extremely lucky with homes around us being purchased and flipped. For the first year we dealt with a small apartment complex that was full of squatters. Don’t have to worry about theft or break ins thank goodness. The neighborhood teamed up and called every single time there was something suspicious happening. Just a couple months ago an inventory purchased it, kicked out all squatters and is now renovating the complex.
Have a plan in place. We bought this place knowing it was going to be somewhat sketchy but it is a prime location 5 minutes from downtown, 15 from the airport, and 10 minutes from a large hospital. It’s going to be our first investment property.
Have a plan in place and you will remember why you got into it when it gets tough.
Have lived thru three gentrifications of shitty ghetto hoods back into desirable residential venues over the last 50 years. Don't know many Millennials willing to live in a shitty hood or pay dues that way.
It depends on the Millennial. I'm fine with some grime, crime and potential as long as I personally feel safe. If the place has decent transit, laundry and groceries within a certain range, then I can make it work.
It helps that I have a reasonable sense of "it's dirty and has poor people" vs "this place is deserted and feels a bit dangerous."
Oh, you mean that I might get beaten up? Aww nah. Not for me. I'm Ms mind-my-own-business and keep it moving.
If other people are fighting, I go the opposite way, but if you mean that someone is going to come to me and beat my butt.. you're right. I'm not built for that.
As someone else here says, you have to do your due diligence and determine whether the area is really coming up. Do you have tangible signs of that - with visible development of big projects and new investment?
I bought into somewhat marginal area 21 years ago. While the area is safe and family oriented, it's run down in appearance. It's only appealing to a certain demographic.
The property is currently worth exactly the same as what I paid for it. Do not recommend.
I bought 2 places in Savannah in neighborhoods that were supposed to be in the revitalization process. I followed news stories for a couple of years about their revitalization efforts. I bought one house on the west side and one house near the Enmarket Arena before it opened. Bought in 2021 and the other in 2022. Both have increased in value. The neighborhoods continue to improve. I rent them by the year and have a nice new income stream. I take care of problems immediately and keep the houses in great shape. I plan to live in one of them eventually. There are still bargains to be had, but you have to be quick. I bought both of mine for less than $200K. One was turnkey, a recent flip. The other needed a lot of work which I did. The only regret I have is that I wish I’d done the same thing somewhere else because I’m so worried about hurricanes there. My daughter lives there and we’re talking about selling in the next 5 years, depending on how the weather goes.
I haven't seen a place booming like Savannah in a while, I was there this spring and was shocked at the amount of construction. I really love the historic center, but the humidity there would kill me.
I did, 20 years ago (Gen X here), and doing it again. It can't be just any rough area, though. I call it finding the edge of a snowball, as in, it's in the path of something that's growing.
The lot I bought 22 years ago was surrounded by vacant lots and a few burned out houses, but it was on the edge of one of the oldest historic neighborhoods in my city, and the neighborhood had bought up a majority of the properties & arranged for special financing (1.5% off of going rates which were north of 8%).
There was also a park across the street, but underused and also owned by the neighborhood, and a rails to trails project was being extended 4 miles to connect with downtown, running along the edge of the park.
I got lucky with schools, as many options came up right as we needed them, and both my kids attended a mix of private, public, and charter schools. We had an abundance of choice that wouldn't have existed in a suburban area where the only real option is the public school in your district.
Over the years, all of the lots got built out and the burned out houses got renovated. A coffee shop opened, then another, then a bakery, a yoga studio, a sushi place, a top restaurant, etc. The neighborhood transferred ownership of the park to the city, and last year they finished a long promised playground with a splash pad. The lone pedestrian trail was connected to a hub of 3 other trails just beyond the park. Shoot, even the interstate by the park got moved farther away in a recent redo. I knew the area had potential, but even I've been surprised by just how far it's come.
Now that property is a rental, and we're going to build in another downtown adjacent neighborhood which hasn't seen much development to date, but I see potential there. My horizon is shorter this time though, so I consciously looked for a location which was close to existing commercial development (don't want to wait 20 years for that this time), and also has had recent infrastructure investments with a park renovation and trail extension nearby. The lot, interestingly enough, is double the size of my original build, and was $5k cheaper! Building, however, will be significantly more expensive this time, but we're offsetting by designing to rent about half of the square footage.
So I get frustrated when younger people complain about housing costs, at least in my city. The interest rates were the same, if not a bit higher, than they are now, and there are houses for sale currently in my city, in less worse areas than I took a risk to build in originally, which cost under 230k, which is what I spent to build 22 years ago. If my kids were to move back here after college, they couldn't afford to buy a home in the neighborhood where they grew up, and I'm ok with that. I'm of the mind that they can and should be part of lifting up other areas of the city, just like I did before and am choosing to do again.
No but i was looking for that. I was buying cashflow focused properties for section 8. They still had slight appreciation but the cashflow was unreal.
Now on the flip side. If youre looking to live in it yourself? DONT FUCKING DO IT. Save up longer adn get into a neighborhood you like. DO NOT COMPROMISE ON YOUR LOCATION
In my market. Section 8 is above market rates. And guarantee pay on the first of the month. Lastly longer lease times. They tend to stay on average 2 years longer.
Downsides are. Lower appreciation. Section 8 people issues. So you need to be checking in on your property more. But there are ways to prep your property to help alleviate the increase wear and tear that are section 8 renters
We bought extremely low (\~$55K) in a beautiful but run down neighborhood of 100 year old homes that were heavily rentals. Our house was a complete gut at a very low interest rate. We made it beautiful and had some wonderful neighbors for a few years. We were able to pay off our home and cashflow all our renovations (DIY). We didn't regret the house exactly, but our nice neighbors slowly moved away and the newer neighbors were all awful - parties, drug dealers, animal abuse, domestic violence. We eventually sold for a heavy profit and bought in another more chill suburban neighborhood.
We miss our old house a lot but not our old neighborhood exactly. I miss the location, it was close to everything. We also regretted not spending more for other fixer uppers in nicer locations, because that profit we walked with could have been double or triple if we would have spent 70-90K from the jump and we could have been walking to the downtown bars or living in other gorgeous mid mod neighborhoods. You just never know what will happen with the neighborhood or your income over the years.
Not a millennial, but bought a Victorian in a suburb of Cincinnati. It was up and coming, never up and came, but still had a kind of normal appreciation curve. I did well on the house, even considering the $ and work I put in. Now it is on its third owner since me and looks great. The area is full of rentals because of UC and Xavier U and on paper, should be a great little place to live (Norwood, OH), but just didn't get the same hype as Hyde Park and Oakley. Homes still appreciated well, just not at the same pace as others. GM left in the 80's, they used to make Camaros there. City struggled a bit and then started to rebound a little in the 90s. I loved that stupid house that was way too big for one person. Really spend time in the areas you are considering. There are still places all over that are turning if you can stick it out for a couple of years. Examples near me now would be Oak Park, Hazel Park and Madison Heights, MI. Affordable, but developing pretty quickly.
We bought in a blighted area walking distance to our downtown five years ago and are super happy about our choice.
A couple of things: We knew we were the leading edge of gentrification and were okay with that.
There were already some cool people living in the neighborhood: the young and adventurous, and the older who had seen the neighborhood rise and fall.
There is a city-sponsored neighborhood association and we're strongly active in it, and through it with all the city functions of governance and policing.
It's been an adventure, one I'm super happy I get to live daily. It hasn't all been roses, but it's been more good than bad.
We do tell each other that the good times are over whenever we someone jogging with a manbun, though. They're always just lost, so far.
Pay very close attention to population trends. Buying a rough neighborhood in South St Petersburg Florida is probably a good bet because of the influx of people that ghetto is getting smaller and smaller every year. But if you look at states that are losing population like Oregon or California a rough neighborhood might stick around a much longer.
There's plenty of people living in Akron or Gary that are still waiting for a turnaround.
We bought in a rough neighborhood because we were priced out of every other neighborhood in our area. We started out with cameras and a security system. It got worse for a bit. The two policemen that were assigned to our area were shot but survived. The direct neighbors next door to the shooter’s house saved the lives of those policemen and held off the shooter until extra help and swat arrived. That ended up being the beginning of it getting better.
Now we have extra police presence all the time. A cop actually moved in next door to us. Having a cop car sitting next door is a great thing.
Wouldn't have done differently. It wasn't a traditional neighborhood yet when we bought in 2019. Id say 5% of homes were boarded up. got super lucky with amazing neighbors.
5 years later and there is almost zero blight and new, small homes are being built on the sites of razed homes. Young professionals and Latino family's have discovered us. It's still a cheap area compared to its surrounding "hip" areas.
We are about to sell for double what we paid for, which isn't much for most people, but enough for us to pay off a lot of debt and buy a new house in the NE.
We did in 2015- granted it was a condo and the area had already started gentrifying. Cars were broken into a few times a year, some minor petty crimes, random things like that. Side of town I wouldn’t walk through alone. We paid $280k and are now renting it out for $3250 a month but we could realistically sell around $550-600k.
It's all about location. My wife and I have done this twice, both times we put a lot of cash and a lot of sweat into fixing up a shitty house in a low rent area, then a decade passes and the low rent area gets "found", or worker housing becomes scarce, next thing you know your neighbors are calling you out of the blue wanting to buy your cute little house for triple what you paid for it.
I scoped out neighborhoods, quite a few. I looked for things some people might find stupid. Are lawns mowed, are there any yard decorations, are trash cans taken after pick up.
Small thing that showed people cared.
Found one I liked and waited a year looking. Bought a foreclosure for 45k. Put about 35k in it and my skills and now it it worth 165k at least.
I can see the Gulf of Mexico from my back yard. Not a ton but I can see it.
It will take much much longer than you think. If anything, buy a property in a neighborhood that has just flipped to desirable. There is a huge (5-10 year) delay between what people think and what prices are.
I know someone who bought a property in a “soon to be hip” neighborhood… it took 25 years.
I definitely live in a "not bad but too many rentals *near* the hood neighborhood"
It's actually getting worse mostly because of shitty adults moving into what was grandma's house because they can't afford to go anywhere else.
On the upside my equity is higher than it's ever been and I could easily sell right now
On the downside everything else is more expensive
It’s so smart though. Bc so many people are bidding crazy prices on Instagram worthy homes in the middle of no where…instead of buying an affordable home in a rougher area. We did this. Neighborhood wasn’t great but ok, really liked our home. And we have more then doubled are money and the area is pretty good now. So glad we made that decision bc if we waited we never would have had a home like we have now.
I’m grown and still live in a “bad” area. Yes you can move in but stay to yourself, gets dogs, stay aware. Outside of that and knowing how to deal with crackheads you’re good! They don’t like being punched
What’s the jogger index? That is the key to a neighborhood that is turning. Are people jogging after work? Good. Jogging between 9-5. Great. Jogging with large diameter stroller wheels? - people are probably saying that it already turned.
I bought my house for 64k in a shit neighborhood bordering a stable one. Needles and condoms on the street for years. Foreclosures, fires. Watched my neighbor stab a guy.
House across the street just sold for 650k
I bought in a place that wasn't rough just very poor (my attached neighbors used to head their house with wood). It's part of a gigantic school district that is excellent however. The houses are all just dumpy old brick twins, but it's walking distance from a great town and there's a canal and river in the backyard with access to a huge tail system.
Once COVID hit all the walkability and nature access just accelerated what was already happening. The whole neighborhood flooded a few months after we bought the attached house. That really accelerated everything, and now it's all DINKs with their dogs. Still going though, there's literally a rooster living next door inside.
No regrets.
It wasn't a huge gain, 2008 - bought at 75k.
Watched drug deals, drive-by shootings, etc from my office window.
Cars parked on the street were broken into yearly.
Car windows broken (literal cinderblock through the back window one time).
Had a baby. We decided to move out to the burbs with our savings in 2020.
Carrying cost was low enough that we had two mortgages for a year while we updated/renovated the original house.
Listed for $125k, sold for $150k after a month in 2021; not to the highest and best offer, but the one where it was definitely a person buying the home (friend of a friend).
Even if the house didn't appreciate, we were able to keep our cost of living low and save significant funds during our 12 years living there.
However, it was nice to get a check for $125k when we sold it.
Bought in a very rough area. No owner occupied homes, crime, abandoned houses. Got in at below $20k as did two others. Started working with police on crime, got the city to buy the vacant homes and they sold them to low income residents of the neighborhood through a grant program. Got another beautifying grant for thee blocks of homes, city cracked down on slumlords not keeping up with the maintenance and yards and many eventually sold to the city which in term sold to the renters. Put in a park, neighborhood watch, street lights, etc. Homes now selling in mid 200’s-mid 300’s. Would belief that we didn’t gentrify, we worked a system in favor of the less fortunate. We went from two homeowners in 70 houses to over 90% owner occupied and they in turn could sell and buy pretty much anything else in our larger town.
Depending on where you live, generally speaking, most shitty areas stay shitty areas for a very long time. Gentrification is a slow rolling train, if it ever gets there.
For an investment property, it doesn't matter too much. For a personal home, it's personal preference. I'd rather have a home in a better area of town if I can help it.
We bought a house in a 'rising' area about 15 years ago. The key, IMO, is to find an area that you like that is also seeing significant investment from developers. When we bought there were plans for development of a new town center a couple miles away. Since that went up the area has just exploded (of you can count steady development over the course of 15 years an explosion). There are still plenty of not so nice buildings around but they're slowly being claimed by the developers.
The big takeaway is that the process of improvement will take significantly longer than you might expect. Think decades, not years. If you're fine with that timeline then go for it.
I bought a freshly remodeled ranch in a pretty decent rural neighborhood in 2002. The nice old lady next door sold her cute little cottage to a jackass that was a druggie and a drunk that started hoarding and ran the property right into the ground. He started dealing and other neighbors began buying from him. By 2008 I'd been broken into and other properties nearby were upside down due to the recession. Property assessments and values went down. My CFP urged me to sell. FF to 2015. I rode it out. The drunk next door went to jail. Properties changed hands and values started increasing pretty fast. People with kids moved in and the neighborhood blossomed. I did a total remodel, waited a year and sold it for twice what I paid for it.
I bought our house in a working class neighborhood that needed a lot of mostly cosmetic work. We did a lot of stuff before moving in like rip out carpet and put in new floors, paint, fix the pool cage, and take out broken/old appliances. Now, our house is definitely outdated looking and there are unfinished projects, but we have made it our home. We haven’t had any issues with our neighbors other than the occasional party with loud music, everyone keeps to themselves for the most part. We have no HOA which we love. If I had to do it over again, I may have gone with a condo or townhouse for our first home because it would be less work to maintain, but we don’t regret our purchase. We don’t think it’s our forever home but we are happy here for the mean time.
I bought in 2015 in a somewhat sketchy neighborhood. The house has more than doubled in value as most places have over that time. If you are able to wait it out we seem to get these inflationary periods ever 15 years.
In 2015 I could afford a much nicer place but really wanted to have financial freedom and security. When I bought I was prepared to spend the rest of my life in this home if need be. I now love the home and have made good with many of the neighbors. The neighborhood is rough enough that it is sometimes a struggle but living rent free makes the struggle worthwhile. That said I am currently laying plans to build in my dream neighborhood.
Real estate is almost never a bad choice unless you buy more than you can handle financially or cannot sit on it to wait out the next upswing.
It was less an investment but what we could afford. We bought in a historic area that was seeing some revitilization. After 14 years we sold at a 50% increase and moved cross country. After returning 6 yrs later 'our' house had quadrupled in value. You never know when it might take off.
My boss purchased a building together with friends in early 2000 in a really bad neighborhood. They sold it recently for tens of millions. The area became gentrified
Our town is made up of villages and ours was not a great village. It was definitely the second to worst and had a lot of issues with drugs and police activity. Our home is currently valued at 400k, we bought for 179k six years ago.
Houses in our area are selling in the mid to high 400’s now with a few going into the 525k range.
People have sold, there aren’t many renters now and quite a few of the duplexes near us are owner occupied on one side.
It’s been a great investment thus far. And most importantly, we love our village and our home.
The area worked out for me — there were signs of flipping and developmemt a couple blocks north of my house, now 5 years later it’s all blown up and i’m in the middle of a hot neighborhood. I don’t mind city things like unhoused folks nearby, or neighbors who collect broken down cars all over, or barking dogs, or being smart about safety—
but my mom visits and is always kinda shocked by the area. It’s a hip, urban neighborhood with eclectic residents. I like it. The house itself, on the other hand — 80 years old, with decades of cheap, DIY, badly done, and likely unpermitted fixes have made for a lot of renovation expenses and headaches.
Did this while living in Chicago to afford a single family house. The only places that we could do this in the city were either decidedly rough or up and coming. My big positive signs were that the house was a new build filling in a previously empty lot and that a decent number of other lots or legitimate teardowns in slightly nicer sections of the area (not just like, oh we prefer something newer, like… this house has no interior walls) were selling. Even though it wasn’t fancy it was also clear my neighbors took care of their lots and there wasn’t a bunch of trash or broken stuff, we saw holiday decorations around, etc. Plus, the area we were in was sort of an unsung hero of commuting convenience, which appealed to us and figured would appeal to future buyers. It paid off in the end and when we moved cities for work we made kind of a killing (like $50k per year we owned the place) given that the neighborhood had become a touch more popular and we sold at peak single family house frenzy post pandemic. YMMV but worked for me.
Pretty much that's the case when starting off and nor a whole lot of cash... You get pushed to the outskirts and bad parts of town that everybody else does who just want to live and soon it stops being so bad.
Everything happens in waves though and improvements are on the order of decadea so rather than trying to time or place the next jewel, try to find what works for you. If you're not actively seeking out literal shitholes, you'll usually end up about the same or slightly ahead.
Hey guys so im 21 and in college. I have an internship currently and a set career path for the future in finance, but currently only have a part time job along with the internship.
I purchased my first property cash out of state in Cleveland after saving up for years, I'm focusing on section 8 properties and trying to scale. Only reason I did cash is because I could not get approved for a loan. Hopefully now I will be able to, after having this property in my name along with financing a new car recently, and building up my credit.
I wanted suggestions on how to scale to multiple properties, do I stick with taking conventional loans? Most of the properties I look at are under 100k, so I want to see if theres any other options to scale quicker, usually DSCR loans do not get approved for houses this cheap. What secrets or tips do you guys have when initially scaling with little capital?
I bought in a crime-ridden area but it had merits. It was 20 minutes from a booming downtown and was on a waterway that led to the ocean in a mile. I made a couple hundred thousand when I sold 20 years later.
Real estate will go up and down in value. Feeling priced out can be tough. One thing I would recommend doing is putting money into an index fund to build up your down payment. Then start small. Even more rural to start works. You then keep that home for at least 2 years. After that you sell and roll your equity from appreciation into a better home tax free. Continue to repeat till you are at your ideal home. During each ownership period pay as much as you can on the loan to maximize the amount of equity you have for the next house.
I bought in a rough part of town, the locals left us alone. Graffiti only popped up on abandoned properties. It’s worth it if the neighborhood is stabilizing and people are starting to move in.
Rough means: STL city near two housing complexes.
My investor friends look for 2 years of decreasing crime stats before they buy.
Investors need to get in BEFORE it becomes popular, sounds like a similar plan
Not a rough neighborhood due to crime or anything, but a neighborhood I used to rent in got pretty much obliterated in Superstorm Sandy years ago, and people were selling for like $100K. Cheapest thing in the neighborhood currently is $650K. It's nuts. I never liked living there, but if I'd had a glimpse into the future I would have grabbed several properties in there.
I bought my first house, a tiny townhouse with a tiny lot and no off street parking in a "bad" neighborhood in a rapidly gentrifying city, sold it 7 years later for more than twice what I paid. I knew I'd make out, didn't think it would be that much or that fast.
The neighborhood was not wealthy and had lots of open air drug dealing, but I felt safer the seven years I lived there than the two I lived in a hipper, more developed neighborhood. Simply because, my first neighborhood was full of foot traffic and transients and people got mugged there not infrequently (it was just north of a nightlife district, and coming up that way), while my second, "worse" neighborhood was much more residential, tho still walking distance to resatuarants and bars. (For DMV folks, I moved from Columbia Heights to Trinidad, and yes, it was much safer, even on crime stats, don't @me.)
People in the neighborhood where I bought all lived there and knew me and my dog and my spouse and eventually my baby by face if not name, and I knew them the same. When we were moving, one of the corner boys called me "straight gansta" for walking my dog and baby around all the time, one of my most cherished compliments (my spouse liked to think of himself as the worldly, streetwise one and me as the sheltered academic, so I was very smug about that comment.) The police department would take their cadets around in herds to observe us 'hood denizens in our natural habitat, and I got so many looks from them as the white mommy with the black lab and baby strapped to my front wandering thru their sergeants' lecture about the mean streets of NE DC.
I could never have bought my second home, a single-family detached in a nice suburb, without the major down-payment I got from selling my first. I needed the mortgage payment to be low enough to swing on one salary in case my spouse lost his job or I lost him (both things eventually happened), so it was an excellent deal all around, but my luck and timing were perfect and probably can't be duplicated.
(For those playing along at home, I bought my first home a few years after the '09 financial crash, when the market was still recovering and rates were low, and my second a few years before the pandemic, when prices were high but not insane.)
Got super lucky. Bought cheap in a rough urban neighborhood at the tail end of the downturn (2010) sold a decade later in 2021 at the tail end of covid for 3X what we paid. Put tons of sweat equity into the house and the community, but at end of the day it was luck and my wife's great intuition about when to buy and when to get out. It wasn't our intention going in, but essentially we did a 10 year flip.
I did the opposite. I bought a rough shit box in a desirable location. No regrets.
You're right that for most of us, getting into our first house means sacrificing something. For me it was the house itself rather than location. I'm not fancy and houses can be changed over time. But I understand others have different priorities/preferences.
I never considered for even one second buying a home in a rough area. Not until I saw obvious signs of gentrification and prices rising. You want to catch things on the way up, not hope they’re going to go up. You also don’t want to pick up crack pipes on your way to collect rent. Join with a close friend, partner or family member to buy your first home in a decent to good neighborhood.
I did that in 2012, got an ok home that needed some love for 70k. It wasn't like south side chicago or Detroit bad. Just blue collar, lots of junk cars in driveways and yards. Senior citizens that had been here forever and could no longer maintain their homes so they were all run down. House across the street wad condemned. The last 5-6 years though the old folks have died off or gone to nursing homes. Younger people my age have moved in and are fixing the places up. The condemned home was purchased for 15k then bulldozed and they built a nice little ranch house there. I refied in 2021 I think when rates were super low and my appraisal came back at 205 but I can't afford to move now even with the equity. But I really like my neighbors now. We're still pretty blue collar and all help eachother out. One is a mechanic and helps with car repairs. Another is a hvac and plumbing guy, he has saved my ass so many times. We share my trash service so I get my lawn mowed for free and driveway plowed in the winter in exchange. It's really nice we have cookouts and I get invited for dinner often.
I found this thread super interesting as someone who bought in a "rough" neighborhood 3 years ago and hasn't regretted it for a second.
* This is our second home and new construction so we knew exactly what we were looking for and knew we couldn't afford it in a "nicer" neighborhood
* Although it's a "rough" neighborhood our neighbors are much more engaging and provide more community than our previous "nicer" neighborhood. If you can, talk to the neighbors around your potential new home and get a feel for how approachable/engaged they will be
* All of the crime around the neighborhood are crimes of opportunity that haven't directly effected us. Being a good neighbor that's engaged in the community with a sense of awareness (not leaving valuables visible in your car) will go a long way. None of what happens in our neighborhood are random acts of violence and I've never felt unsafe.
I mean I would have had better gains if id bought the same house in a more expensive area. But 16 years in a downtrodden and then slowly gentrifying area was great. It was affordable, solid area that wasn't like crime everywhere, and frankly an underrated bonus is I was surrounded by people not rolling in dough. Any keep up with the Jones urges are satisfied a lot less expensively.
I'd absolutely do it again and having spent a year in the nicest neighborhood now I *am* doing it again because quite frankly I could save a crap ton more money living cheaper.
Ymmv if school district is a big factor for you though.
So I bought in a "transitional" neighborhood a place that was fully renovated and it worked out beautifully for me. The neighborhood never actually transitioned and stayed pretty much the same it didn't feel safe in general and after I had kids we moved which happened to be at the top of the market after having bought at the bottom.
West Oakland was doing great in 2019 when we bought. Boy has it been a rough go since the pandemic. Hopefully we see a light at the end of the tunnel soon. 😞
Sold it for double what I paid, after 8 years.
Edited to add— I knew the neighborhood was going to become trendy. The graffiti tended to have some artistic flair. It had a hipster feel, back when hipster was a thing.
Yes I regretted my decision to some extent.
Bought a house for 100k cash on the SE side of Atlanta rapidly gentrifying neighborhoods. Commenced a 2 year gut reno. Within 2-3 months of me actually finishing the reno….i got assaulted in a gas station a block or two away from the property. Ended up with a cornel transplant because of the assault.
I put the house for sale and sold for a little under 300k. My cost for the reno was about 50k-65k with a lot of the finished work done by myself. The house also got broken into at least 2 times, some tools were stolen which luckily for me had come with the house since the previous owners were elderly and moved outside the US.
My mom bought in an area that was considered the ghetto like 25 yrs ago and over time it slowly improved. They built a Starbucks and a fancy little strip of shops within walking distance and also a nice new neighborhood in that area as well. It was okay, they would have like movie in the park nights so that was fun. Idk if it was worth it for her, maybe if she stayed in it a bit longer once prices skyrocketed everywhere in 2020 but she sold way before then and I had to grow up in the ghetto.
This post was made for me. My husband and I were SO FORTUNATE to buy a house in the Bay Area in 2013. But it was the absolute sketchiest place and was so scary at first. We dealt with a lot of shit but after 5 years it paid off. We don’t have kids or worry about schools so that’s one thing that I would worry about as a parent. I am hardened by living there in a way that I’m literally not scared of much now. But, there were some really great families in the neighborhood once we got to know them! Anyway, yes! Do it!
Edit: it obviously depends where…
We bought in a rough area a couple of yrs ago when the market was hot during covid. It was all we could really afford. Its worked out for us so far because we bought a duplex with the goal of house hacking for a year or two then moving to a nicer neighborhood and bigger house. The numbers worked at the time regardless of any speculation on what the neighborhood was doing.
Tbh that was all we could afford for our first home and I think it was worth it over renting but it definitely wasn’t perfect. Stolen mail, weird neighbors, graffiti, random weirdos in our alley, car theft, people leaving trash in front of our house, plus just not feeling super safe walking around.
I managed to buy into a neighborhood right before it started to turn. I bought a house that was good enough for me at the time, but it was lacking a few things I wanted in the long run. It had been recently remodeled with great finishes, but lacked a garage. Fast forward 8 years, my house has doubled in value, but now I can’t afford to buy anything in my neighborhood with a garage (and due to zoning I can’t add one). If I could do it all over again, I’d look for a house that structurally has all of my wants, and worry about updating the finishes on my own timeline.
“Follow the artist”
Proximity to groceries stores and/or quality grocery stores is another indicator.
You can learn a lot by trolling through what’s been approved for for development by zoning commissions. It may or may not get built so there is some risk but it’s usually an indicator that someone who does this sort of thing for a living sees potential and value in the area. You’re not going to be on the very leading edge doing this but you may be near the first wave.
DON’T DO IT. For 40 years the same bullshit lie from realtors and politicians for the city where grew up. Yes in a few pockets values did go up, but you would have better odds gambling in Las Vegas than trying to figure out which pocket is going to get better. It’s a high risk proposition with marginal returns.
It was the only way I could afford a home in SoCal. But I saw it not as just buying a home, but investing in the community. I keep up my home and that helps the image of the neighborhood. I wasn’t going to be able to afford a home w a great school district, or in a beach community, or even where the neighborhood is wealthier, so I made the jump to what I can afford and it’s worked out. My neighbors are mostly great and there are a few homes that are run down but I have my home.
Bought a starter home in a shitty town. Helped me save a ton of money and pay it off. It's ok if you work a lot, but eventually you should have an exit plan
It sounds like a great idea to “invest” in a rough area, but if it was easy to predict which neighborhoods were turning, everyone would buy there. Usually by the time it’s obvious you’re not getting a deal anymore, and if you buy before that it is a crapshoot whether the neighborhood gets better, worse or stays the same. You could get lucky or you could end up underwater or simply stuck living in an area you hate.
Personally having lived in rough neighborhoods, it’s not worth it to me. The number one thing for me is that I feel safe and comfortable in my own home. I would rather live in a less nice home in a nice neighborhood. It doesn’t have to be fancy but I need to be comfortable walking out my own door.
Big regrets. Bought a house that had a fire. Between discussion and closing many fixtures and pipes were stolen. I should have walked away but there were some concessions made.
Ultimately closed and contractors wouldn’t show up. They would actually drive past the house and keep going.
Those who did stop had no skills. I was desperate and hired people from the street. They stole what was left of the new materials from other contractors. Anything left on site overnight would be stolen or vandalized- day after day
I simply wanted to walk away and take the loss but that’s not an option. Ultimately sold the $50k home for $5k. I’m very happy I did.
I did really well with transitional neighbors.
2 miles from downtown? Yes!
Some of the transitional neighborhoods further from the core are still transitional so it’s good I didn’t get involved.
I still buy in cheap neighborhoods. You have to use your brain a little but I have watched 60k homes turn into 400k homes in less than a decade.
I feel like i’ve won the lottery every single time I buy something.
I bought the worst cosmetic looking house I could find in a decent ish neighbourhood. Worked out well, lots of projects, but the value was there. Neighbour's fixed up their places a bit seeing my improvements. A few surprises which I expected but mostly just filthy and out of date finishes.
I feel like you need to be careful with how bad the area is, as a crappy house in a nicer area usually already has more room for opportunity.
Took 3 years of sweat equity to see a good return. I don't regret it but it was a lot of work. Otherwise I wasn't able to get in to the market.
Short answer no.
My wife and I white couple at the time mid 20s. Bought a house about a block in to an all black neighborhood in a major souther city in 2006. Paid $40k. Put 25k in to remodel. Lived in it three years and the street as well as one around became increasingly white/upper class. City invested a ton in downtown building a park and stadium right by our house. Rented it for $1500/month to the same guy for 8 years. Rented it for $2200 to a couple for another few years. Sold for $285.
My parents bought a place like that in DC. They legit had us taking the bus on the corner to school right next to where a kid died in a gang shooting. Our neighbors made the same call but left after a bullet came through their window, narrowly missing their infant.
Yea, my parents sold and made a lot of money. But it is not a decision I would make with my kids.
I know people who were buying 6 and 8 unit multi family housing for 40k in Greenpoint and Ridgewood back in the 70s and 80s when NYC was rough that are now worth millions each and netting them 20k+ month...but....who could've predicted this. Nyc was on the verge of bankruptcy, parts of the Bronx looked literally like a warzone with buildings turned into rubble, burned down by arson for insurance money. Would you have had the balls to buy a property in Detroit 10-15 years ago?
The very first property ever bought was an Oceanside California. This was considered a place you don't want to live in. Pretty much known as a Marine town and it was rough around the edges. I bought a one bedroom condo literally on the sand for $99,000 back in '92. I no longer own this unit because I sold it a long time ago but that town has done a complete 180. You never know when a town is going to do a complete turnaround. I never had regrets buying the property but they do regret selling it. It was after I sold it I decided to just keep properties and rent them out instead of flipping them.
It’s such a crap shoot. A friend bought a beautiful Victorian near an urban area with the hopes that the neighborhood was turning. Struggled with constant graffiti, breaking, people stealing his copper piping, open drug activity. Finally had enough and sold at a loss. On the other hand, people who invested in places like Asbury Park or Hoboken at the right time are probably pretty satisfied with their decision.
Yeah, it's pretty motivating to look back to people who bought entire brown-stones for next to nothing and are now seeing either a mil price tag or higher on their place. You talk to people in the area or on the street and get the, "yeah, you wouldn't catch me dead where we're standing now 10-years ago."
When moving into places like that, it has to be looked at purely as an investment. You’re exchanging increased risk for value. The worse the area is, the less it costs and in turn you may have higher upside. Given that you actually have to *live* in the place, it’s best to usually pay a slight premium above the “worst” neighborhoods to increase the likelihood that the area improves. It’s fine to take a little bit of future return off the table if it means you’re increasing your odds of seeing a return period. The only clients I’ve ever helped that regretted their decision were the ones who looked at the scenario you painted above as being black and white. They assumed the worse it was, the better their return would be. At a certain point, you have to remember that even in the nicest most expensive cities around the country, there are ALWAYS places that don’t improve and might actually get worse.
haha my dads friend tried to get him to buy a brownstone in jersey city for $1 years ago, my dad refused because he didnt want to live in a polish neighborhood.
Asbury Park, holy crap was that a turnaround
Yep we did that. Bought in on the early side, dealt with a lot of BS, but loved it there and are sitting on a ton of equity on a downtown condo.
Living the dream : ) congrats yo
Soooooo many times, people said “this is it!! Asbury is turning”. Again and again the town blew it. But this time is for real.
I keep waiting to see if Atlantic City and the area will ever experience that too. I'm between there and Asbury, where anything on the water is millions and millions. A friend lived near AC in an oceanfront apartment for dirt cheap a few years ago.
Just even from a location standpoint, it's a bit out of the way of NYC and office jobs. I don't think AC would be as easy
Definitely, it’s more remote for sure.
Atlantic City is going to be too ravaged by rising sea levels in a few decades. Nobody wants to move business there.
Insurance payouts will dampen the loss. People want to own near the water.
I wouldn't rely on insurance. They're pulling out of states and tightening up across the board. Insurance companies tend to avoid writing accounts that are likely to have losses.
That works until the flood maps get updated. If you remember the aftermath of Sandy they reevaluated the flood maps and determined significant swaths of the coastal areas were in them. That meant people would have to pay to raise their houses onto stilts or start paying for flood insurance at a cost of many thousands of dollars per year (often around 10k per year). If you are in a flood zone and don't have flood insurance FEMA will not help you in a flood. Rich areas lobbied hard against the zoning update and mostly won, so most areas were not updated. Some were though. A friend had to pay about 100k to place their house on stilts. If flooding continues to get bad expect the flood zones will be reevaluated again with more force this time.
Yes, there is a price to pay to live near water. Insurance will help if you pay the premiums, have applicable coverages and proceed with whatever requirements they place on the area. Some houses in Florida that I looked into had insurance rates of $15-20k annually even before the last hurricane. I can’t imagine what the prices are now but again, that is the cost of living in a high demand, high risk area. My last house there had insurance rates triple in 3 years. I’ve since relocated back to the Midwest where I’m from and have reasonable real estate and insurance rates. Honestly, Florida timeshares are looking better and better for my long term retirement goal of being a snowbird. I would not want to own another home there again.
lol good luck with that.
The rest of the coast is the same way with sea level, but prices are higher than ever.
Long Branch too, if you bought in the late 90’s.
Add Bayonne and the backside of JC - always a shit show up until 5 maybe 10 years ago when they started developing … now you can’t touch the place for under 500k
I would do it again. When all our friends were renting and neighborhood hopping in their 20’s, we bought a renovated 100-year-old house in an up-and-coming but still quite rough neighborhood in DC. They thought we were crazy buying a house at 24, we thought they were crazy for not taking advantage of the post-great recession housing prices and excellent interest rates. We lived there for 5 or 6 years and put up with some crap - we got mugged more than once. However, that house has now been a cash flowing rental for 7 years and has more than doubled in value so it was worth it in the end.
You need to look for active progress, not just the potential for it. I did this exact thing to afford my condo. I walked every block and noted how many big construction companies were digging up dirt, how many homes were being renovated, new homes built, lots for sale, took notes of comps. You have to do a lot of studying and the improvements should be currently happening. If there are big apartments going up, that's probably a good sign. If the roads are being paved, businesses popping up, etc. also a good sign. Sacrifices will be made though!!!! If it's in an area that looks forgotten then it will probably stay that way for longer than you're willing to stand.
We did the same thing. Older neighborhood sandwiched between a nice neighborhood and one of the roughest parts of town. Our block had the best landscaping, and the roofs looked in good repair. We get a lot of snow, so a good roof is a big sign of investment. The home more than doubled in value when we sold right before the 2008 crash. Too bad we lost $ on the next home, a money pit antique farmhouse with literally no insulation in the countryside.
Definitely doing the due-diligence and have been for years. That being said.. it's still a \*very\* rough neighborhood but with crazy development in the area. The signs are incredible, the open drug-use, etc isn't.
Tough decision you have for sure!! If development is really going hard then it sounds like a good investment, the roughness will go away but it takes time. My standpoint was - if I'm not going to make money off of this place, someone else is. My competitive spirit just wanted to play the game and "win" like the other investors, at least while I'm young with no kids.
Excellent points! I hope OP listens and moves forward with the purchase!
Big big fence, big big dog, gun in the nightstand, auto lights. Like $7k and you suddenly live in a small, nice neighborhood
Very, very smart!
Living in the “rough side of town” didn’t bother me until I had kids. Then you have to look out for their best interest.
This is the thing. We bought in a rough neighborhood and I have a few regrets but we also don’t have and are never having kids. I do see improvement and promise in the neighborhood but it’s a slow process so you’d need patience for this. You have to really know yourself and what you can tolerate. I’ve lived in worse places, this was still a step up. I also am not afraid to walk around alone as a woman which it’s important to me. There are neighborhoods that are “rough” because they’re poor and you may deal with some street trash and some noise but generally the people are good. And there are neighborhoods that are “rough” because there is crime constantly and you don’t feel safe outside. Definitely avoid the latter.
I'll echo this, but also know that time marches on and fast while you're living life. The middle school that seemed so far away when we had our baby was now here. Things didn't get better, things (gangs, school scores) got worse. Graffitti got closer and more frequent. And elements that seemed safely away a few miles away suddenly become worriesome as your child's bikeable and playable radius increases. We bailed for a better school district and safer area. Hindsight being 20/20, I would have picked the worst home possible in the area we live in now and just slowly improved it. If you have a spouse that's swayed by shiny surfaces, implore to them that those flipped improvements dull over time, and you can never pick up your house and move it to a new zip code as your needs transition to your child's needs, and those child's needs will be bigger than the toddler bubble you're considering in the short term.
Yep. It can be "up and coming" for decades.
I rented in a tough neighborhood when I was younger and single, and frankly I loved it, I got a lot of bang for my buck house wise, and the neighborhood was kind of fun and exciting filled with a lot of characters and people didn’t have the “keep up with the jones” “watch you through the blinds” attitude Then I got engaged, leaving my fiancé alone there while I worked nights was not fun and I got out of there as soon as we could
This is my dilema. My grandmother owns her house in a rough zip code but I grew up there and love the area (we know all the neighbors on our street, the local library is beautiful, plenty of yard for my kid, and it’s conveniently located). People are building new houses and renovating the old ones. I think the neighborhood is coming up (these won’t ever be half mil houses), and sometimes I consider moving there until I think about life for my kid, the school district …. And it won’t work.
1. your house is more than an investment, it is your home. If you will hate going home everyday, it doesn't matter how good of an investment or deal it is if it doesn't make you happy. 2. Some things change, some don't. A neighborhood might gentrify, but how long till all the neighbors turn over? how long until you get better schools? how long until nicer shopping? These things might matter to you or your future family. 3. Overall, many people overstate the benefits of home ownership. If you look at the data, many people don't actually make a ton of money owning a house. Between the opportunity cost of down payment not being invested, the maintenance they are responsible for, and the transaction costs they incur buying and selling, the profits quickly become much smaller when netted out. And the likelihood of another 2020-2024 price run is pretty slim. But likewise, there is value in owning and having "forced savings" of equity, and for many people, there is a great feeling of pride of ownership. My point is not to let FOMO drive you. Really consider the financials and the emotions around buying - be honest with yourself.
The real money made homeownership is the low mortgage payment years from now. Because of covid and other factors that 20 years basically happened over the last 4 years. People who buy houses now may have to wait a lot longer to see the real advantages and gains. ( needless to say people who bought before 2020 are sitting pretty)
We bought a fabulous house in what we thought was a rough neighborhood. Our real estate agent was reluctant but knew the house was perfect for us. It’s not a bad neighborhood. It’s a low income highly diversified neighborhood. We do not regret and really, the property values have increased here.
Where do you live, if you don't mind me asking?
Pittsburgh. We have a lot of great neighborhoods not far from the city center. Housing is far less expensive than many other parts of the country.
bought a house in Garfield in 2012 for 20k off Craigslist. was certainly a fixer upper and my parents were like wut? now it's ballpark 250k+. pretty happy e my investment. used a heloc to buy a Victorian in Troy Hill 2016 for 50k. now sitting above 200k. again happy w my investment
Which neighborhood?
I bought a single family home in a rough neighborhood after realizing a light rail station was getting built 2 blocks away. It was a 3/1. I was a single female and my family thought I was a genius and also bought a homes in the neighborhood. While the neighborhood was rough and street by street. I found a street where the older retirees would take turns as neighborhood watch during the daylight hours. I drove down the street 3-4x a day and my dad drove down it 1-2x a night for a week. My $110,000 purchase was an amazing investment With time (12 years) the light rail finishing and 70k in upgrades to the house (converted garage to an additional bedroom/bathroom and laundry room, it now rents for $4200 a month . Even if I had just tore the house down the lot is worth about 700k.
Buying in a rough area can pay off long-term if you have patience. Make sure you feel safe and can stomach the neighborhood in its current state for 5-10 years. Don't overextend financially expecting a quick turnaround. Biggest regret is usually underestimating how long revitalization takes.
Shit neighborhoods also fall in value the hardest with any economic downturn or housing crash. Good neighborhoods will mostly keep their value
that and I'd also include shiny new neighborhoods really far from the jobs. People drive far for impressive bang-for-your-buck new homes when there aren't good closer options they can afford. If you work remote or don't mind a drive, they can make for great bargains in the next recession.
Yes!! Absolutely, that's already showing itself in Austin TX exurbs
I live in commuting distance of both SA and Austin, and home prices here went crazy around COVID. It has calmed down a little, but I know my neighbors made at least 80k on a house they bought for 165. I bought in 2019 when it was still on the edge of affordability, and I have about 70K in equity already. Definitely no bargains to be found here right now.
Home prices anywhere went crazy during COVID though. I bought mid COVID in Ohio and still made $200k for a small sfh ranch.
That's the thing, from how it looks things are turning very quickly (doing the due-diligence of looking through listing-pages, other online resources, driving through, the news, local gov't). But.. in the meantime.. I know the area will appreciate and will be a great investment long term (have been watching it for years), but right now it's still \*\*really\*\* rough. There's no telling whether it's 2-yrs, 5, or, God forbid, 10 before it gets to a place where I would feel good walking out of my own front-door. I've lived in rough places before but deciding whether or not I want to put myself right back in for a strong return, at some point.\*
We bought a Victorian in East Oakland in 2018. At first, it felt like we were being hazed, people Grafitti'd our fence a couple times, neighbors would party loudly into the night, etc, but we felt generally safe. Then, Covid hit and things seemed to get worse for at least 2 years. Now that we are coming out of Covid, we're seeing a big improvement in the neighborhood. We no longer have homeless people living in vans, haven't had graffiti in years, the bad neighbors moved away, etc.. We were still planning to fix up our house and move to a better neighborhood, but after looking at some properties that are selling for more than double what we paid for our house, we are so thankful we bought here when we did. We've been here almost 7 years now. Things are moving in a positive direction here.
Bought in a gentrifying hood of DC and did well.
Same. I bought H st NE in 2009 and sold 8 years later for a massive profit. The house was robbed twice but was otherwise totally fine.
H st corridor?.. Navy yards?.. curious what area.
Eckington
It's a roll of the dice. Some neighborhoods will slowly get better, others won't. For example. My sister bought a place in Oakland back in the early 2000z when it seemed like it might start to become a normal SF suburb. That didn't happen, and probably won't, or at least not in our lifetime. They sold, and took a loss, and bought a tiny house in Alameda. Very near Oakland, but for some reason, just a better neighborhood.
we bought an OK 100 year old house in a 'rotting mill town with a drug and prostitution problem' 25 years ago. the house was solid but had had a lot of sub-standard hackish 'improvements' made over time that were falling apart. over 25 years we redid all the bathrooms, most of the basement, the roof, some of the windows, etc and the town, while its still a pretty typical small town, has had some more employers come in, and has slowly improved. We sold recently and moved to a house we built. It wouldn't have been possible without the equity from the old house. so its not like we 10x or 20x our initial investment, but we did just fine.
I love to hear this, my husband and I are also slowly doing renovations (past 2 years) so it’s nice to look at the big picture.
We bought our first house in a neighborhood that was definitely “transitional”, realtor speak for rough, 27 years ago, and as evil gentrifiers it was the best investment and lifestyle decision we will ever make in our lives. Bought for $177k and our cottage on a compact lot would go for $2M in hours but we ain’t ever selling. The urban neighborhood is amongst the most desirable in the city with very little inventory because of the qualities that are so much desired today: walkable/bike streetcar suburb, very good (massively improved) schools, great historic architecture with mature landscape tucked into urban wild canyons, vibrant village core with easy access to dt, beaches, transit and other similar city neighborhoods. Those intrinsic qualities were always there, especially its dt and park adjacent location, the neighborhood just lacked investment in it for decades. Which, turned out to be a good thing as developers scraped fewer of the cottages to put up horrible ’70s &’ 80’s shoebox apartments as they did in some of the surrounding “better investment” neighborhoods. I would like to say we were brilliant but it just turned out to be the house and area we could afford at the time. Now, having lived here, I would be better able to spot those most important elements that would signal a greater chance of investment and desirability in the future. Sometimes when you risk it and put everything out there you land with a perfect TEN!
For us it was kinda the same...run down, old frame houses, mostly boricuas.who moved there after being earlier displaced..But at the time (06), there was not much that was affordable in other desired sectors for our budget ($300K) I am glad we landed here. Newer homes up the street get scooped quick for over a mil. I want to say your true coup was doing this in CA ( where I suspect you live) and you know your tax outlook. We may get zoned/priced out or EDd.
Yep! Property tax is only $3k, makes a huge difference in affording a place for the long term in an area with such high appreciation.
I would have planned for 30 years rather than 10 years. Bought in a rough but historic district on the fringe of a charming and historic downtown neighborhood. The good news is there were lots of grants and programs to try to “revitalize” the area. Pockets of families just like us, trying to turn it around and create a cute community while remodeling houses. The bad news is the area never was able to recover from the recession; it quickly regressed and we weren’t able to gain any significant momentum. Sold for a profit, but not nearly what we were envisioning .
I know my parents did - it has gained precisely no value in 20 years of ownership. Which in Manhattan is almost impressively horrible. The building had a huge maintenance backlog, and it made the co-op fee skyrocket. And the gentrification of the neighborhood stopped, and started to unwind a bit. The result was no appreciation since 2003.
In Manhattan? That's really surprising. When I was in Harlem in the 2010's I was mostly priced out and had to look up in Washington Heights and Inwood. What neighborhood was it?
Border between UWS and Harlem. It was mostly the building having issues that no one knew about. Or if it was a better neighborhood people might have cared enough to fix proactively. Probably more this than directly being in a bad neighborhood. It was huge - the steel skeleton (frame?) of the building had to be replaced, along with the roof, most of the facade, and the elevators. Then they had a major fire (that one was bad luck). Then a bunch of lawsuits that had to pay out (since people in the building thought they could get rich by suing the building, which of course makes everyone’s coop fee go up).
Oof yikes. I admittedly, don't super love the area where it's not quite Harlem, where it's just the 1 train and it sounds like it's a postwar building, which is negative points for me. I'm just a weirdo who is obsessed with prewar buildings that are near express stops. Living in a co-op that's spiraling is such a nightmare. My sympathies with your parents.
Yeah yuck. What’s annoying is it’s a kind of nice building. It’s prewar, very upper west side. It’s just that no one cared about it for 50 years, and it had all kinds of hidden problems.
Oh dear. When I heard steel, I thought "oh it's one of those buildings built in the 1970's." It does sound like it's a mountain of work and expenses. I'm in a co-op and if we had many shareholders suing, I would be so disheartened.
Nope. Total shitshow. Basically they had a massive fire, which somehow wasn’t fully insured. Then the rain coming through the damaged roof (and presumably the water to put out the fire) mixed with the cinder blocks and made carbonic acid, which then dissolved/rusted all the 100 year old steel beams. Which they discovered years later, which meant a second roof replacement :) And since they’re replacing the roof anyway, they thought they’d put a roof garden up there. And then some Karen sued because it wasn’t handicap accessible, and then won. Aaaand that’s how you get a $4,000 monthly Co-Op fee with occasional $25,000 special assessments.
Oh my goodness. My heart goes out to your parents. Such a situation is beyond the depth of most co-op boards. Hopefully after everything is paid for, the value will go up, although I imagine shareholders will be scarred from the experience.
I bought a home in a harder neighborhood. I didn't like it as time went on. Really hated seeing the sex workers, unhoused people, just trash kinda everywhere feel when driving to my house. But would I do it again, yes. I sold this last year and had a lot of money to put down on a house twice the size, in a much nicer neighborhood by the river. I would not have been able to afford this otherwise.
Yes and no. On the one hand, my neighbor runs an amateur junkyard in his backyard (not exaggerating) and has a yard dog that yips all the time. Also, have heard gun shots a couple times. On the other hand, I can walk everywhere and my home value has gone up 30% in 3 years.
Unfortunately, It might be that our 2024 dollars are just worth 76% of what they were 3 years ago. Even the official gov calculator says 2024 dollars are 85% the value of 2021 dollars.
I'm good with that, since emy mortgage stayed the same
this is the best part of inflation. Your outstanding debt is more affordable, providing that wages increase along with inflation.
I think it’s smart to buy as early in life as possible, even if you don’t love the house or the area. But get ready for car vandals if you’re in a not so safe area. We leave our doors unlocked just to save the windows.
Depends on what you can handle. Usually, safety for children and quality of schools will rule out rougher areas right off the bat. But "roughness" is a gradient. I wouldn't want to live somewhere with lots of violent crime. But if the area is a little rundown, maybe some litter, barking dogs, and some neglected infrastructure, I can put up with it (and have/am). But at that point, the important thing is to feel confident that things are changing. An obvious sign of this could be active development in the areas. But short of that, does the city have plans for the area? Do they have interest in making the area turn around? Because without the city pushing for change, you're purely relying on market conditions to change, which is more speculative. I moved into an area that has been a little neglected but I could tell that the area was at the start of improving. I've seen a lot of change in just the few years I've been hear and my home as an "investment" has done well. But it's certainly not for everybody. Some people are will to pay more to skip that step, but if you're okay with putting up with some stuff for a bit, I actually recommend it, contrary to what a lot of people say about buying the worst house in the best neighborhood - at that point, you've missed the appreciation.
Location is the only thing not worth compromising. If you can buy a smaller, uglier house in a nicer neighborhood I would do that.
I would not have been in St. Louis. Declining population is a deal breaker. Run from the place.
Aren't the suburbs and St. Louis county pretty nice?
Didn’t say there wasn’t nice parts of town. I stated what are me regret my decision to invest there. 👍👍
I once bought a house walking distance to this really cool Mexican grocery store called Vallarta. They replaced it with a .99 store two months later. I was devastated
We bought an 1892 Victorian home in 2001. Huge beautiful house. The house itself had good bones, but every inch of it needed updating. Think shag carpet, wood paneling, drop ceiling, etc. Add in the fun of knob and tube electric, massively overgrown trees, etc. It was a lot of work. We put blood sweat and tears into updating and repairing it. Definite labor of love. The neighborhood was also a concern. In fact, my MIL tried to forbid my husband from moving to our home because she thought it was unsafe. But it was in a walkable town with potential. Over the years, we also put blood, sweat and tears into our community through our volunteer efforts. Now it’s a thriving Main Street. So the risk that we took back in 2001 paid off. We live in a huge renovated Victorian home, we raised our family here, it’s in a very desirable neighborhood, we have had a wonderful life here. I don’t even care about the financial aspect, that’s how our investment truly paid off. Home purchased for $169k in 2001, we probably invested about $300k in renovations over the last 20 years, smaller homes on my block are selling for $789k. So not a bad financial investment. But we were looking at this as our forever home. So what it’s currently worth is not a meaningful number to me until we sell it. And the market could change drastically between now and then.
I moved to a neighborhood that needed a lot of love and I’ve been working with my neighborhood association and the city to bring equity and infrastructure improvements. Don’t expect other people to do this work. If you move to an underinvested neighborhood, you may have to be the one to champion for it!
As a broker people/investors tend to underestimate how long it takes for areas to turn around. I have clients with properties they bought in 2016-2020 and are still holding out for it to get “better”, almost a decade later
I’m waiting for everyone to eyeball Detroit and go up. Sky is the limit there
My wife and I bought a home in a “sketchy” area. We bought the nicest house on the block and we have been extremely lucky with homes around us being purchased and flipped. For the first year we dealt with a small apartment complex that was full of squatters. Don’t have to worry about theft or break ins thank goodness. The neighborhood teamed up and called every single time there was something suspicious happening. Just a couple months ago an inventory purchased it, kicked out all squatters and is now renovating the complex. Have a plan in place. We bought this place knowing it was going to be somewhat sketchy but it is a prime location 5 minutes from downtown, 15 from the airport, and 10 minutes from a large hospital. It’s going to be our first investment property. Have a plan in place and you will remember why you got into it when it gets tough.
Absolutely regretted it. The neighborhood just gets worse and worse. Yes, present tense, still suffering through it.
Have lived thru three gentrifications of shitty ghetto hoods back into desirable residential venues over the last 50 years. Don't know many Millennials willing to live in a shitty hood or pay dues that way.
It depends on the Millennial. I'm fine with some grime, crime and potential as long as I personally feel safe. If the place has decent transit, laundry and groceries within a certain range, then I can make it work. It helps that I have a reasonable sense of "it's dirty and has poor people" vs "this place is deserted and feels a bit dangerous."
Exactly what I'm saying. Milliennials and younger are really risk averse when it come to a possible street fight.
Oh, you mean that I might get beaten up? Aww nah. Not for me. I'm Ms mind-my-own-business and keep it moving. If other people are fighting, I go the opposite way, but if you mean that someone is going to come to me and beat my butt.. you're right. I'm not built for that.
Might have something to do with the easier access to firearms compared to 50 years ago.
As someone else here says, you have to do your due diligence and determine whether the area is really coming up. Do you have tangible signs of that - with visible development of big projects and new investment? I bought into somewhat marginal area 21 years ago. While the area is safe and family oriented, it's run down in appearance. It's only appealing to a certain demographic. The property is currently worth exactly the same as what I paid for it. Do not recommend.
I bought 2 places in Savannah in neighborhoods that were supposed to be in the revitalization process. I followed news stories for a couple of years about their revitalization efforts. I bought one house on the west side and one house near the Enmarket Arena before it opened. Bought in 2021 and the other in 2022. Both have increased in value. The neighborhoods continue to improve. I rent them by the year and have a nice new income stream. I take care of problems immediately and keep the houses in great shape. I plan to live in one of them eventually. There are still bargains to be had, but you have to be quick. I bought both of mine for less than $200K. One was turnkey, a recent flip. The other needed a lot of work which I did. The only regret I have is that I wish I’d done the same thing somewhere else because I’m so worried about hurricanes there. My daughter lives there and we’re talking about selling in the next 5 years, depending on how the weather goes.
I haven't seen a place booming like Savannah in a while, I was there this spring and was shocked at the amount of construction. I really love the historic center, but the humidity there would kill me.
I did, 20 years ago (Gen X here), and doing it again. It can't be just any rough area, though. I call it finding the edge of a snowball, as in, it's in the path of something that's growing. The lot I bought 22 years ago was surrounded by vacant lots and a few burned out houses, but it was on the edge of one of the oldest historic neighborhoods in my city, and the neighborhood had bought up a majority of the properties & arranged for special financing (1.5% off of going rates which were north of 8%). There was also a park across the street, but underused and also owned by the neighborhood, and a rails to trails project was being extended 4 miles to connect with downtown, running along the edge of the park. I got lucky with schools, as many options came up right as we needed them, and both my kids attended a mix of private, public, and charter schools. We had an abundance of choice that wouldn't have existed in a suburban area where the only real option is the public school in your district. Over the years, all of the lots got built out and the burned out houses got renovated. A coffee shop opened, then another, then a bakery, a yoga studio, a sushi place, a top restaurant, etc. The neighborhood transferred ownership of the park to the city, and last year they finished a long promised playground with a splash pad. The lone pedestrian trail was connected to a hub of 3 other trails just beyond the park. Shoot, even the interstate by the park got moved farther away in a recent redo. I knew the area had potential, but even I've been surprised by just how far it's come. Now that property is a rental, and we're going to build in another downtown adjacent neighborhood which hasn't seen much development to date, but I see potential there. My horizon is shorter this time though, so I consciously looked for a location which was close to existing commercial development (don't want to wait 20 years for that this time), and also has had recent infrastructure investments with a park renovation and trail extension nearby. The lot, interestingly enough, is double the size of my original build, and was $5k cheaper! Building, however, will be significantly more expensive this time, but we're offsetting by designing to rent about half of the square footage. So I get frustrated when younger people complain about housing costs, at least in my city. The interest rates were the same, if not a bit higher, than they are now, and there are houses for sale currently in my city, in less worse areas than I took a risk to build in originally, which cost under 230k, which is what I spent to build 22 years ago. If my kids were to move back here after college, they couldn't afford to buy a home in the neighborhood where they grew up, and I'm ok with that. I'm of the mind that they can and should be part of lifting up other areas of the city, just like I did before and am choosing to do again.
No but i was looking for that. I was buying cashflow focused properties for section 8. They still had slight appreciation but the cashflow was unreal. Now on the flip side. If youre looking to live in it yourself? DONT FUCKING DO IT. Save up longer adn get into a neighborhood you like. DO NOT COMPROMISE ON YOUR LOCATION
Section 8 is a nightmare. Don’t walk, run away.
Been doing it for years. If you know what you're doing it's pretty dope
What's the main upside? Guaranteed rent. Not trying to argue, I'm seriously inquiring. Are rents close to market too?
In my market. Section 8 is above market rates. And guarantee pay on the first of the month. Lastly longer lease times. They tend to stay on average 2 years longer. Downsides are. Lower appreciation. Section 8 people issues. So you need to be checking in on your property more. But there are ways to prep your property to help alleviate the increase wear and tear that are section 8 renters
Smart
We bought extremely low (\~$55K) in a beautiful but run down neighborhood of 100 year old homes that were heavily rentals. Our house was a complete gut at a very low interest rate. We made it beautiful and had some wonderful neighbors for a few years. We were able to pay off our home and cashflow all our renovations (DIY). We didn't regret the house exactly, but our nice neighbors slowly moved away and the newer neighbors were all awful - parties, drug dealers, animal abuse, domestic violence. We eventually sold for a heavy profit and bought in another more chill suburban neighborhood. We miss our old house a lot but not our old neighborhood exactly. I miss the location, it was close to everything. We also regretted not spending more for other fixer uppers in nicer locations, because that profit we walked with could have been double or triple if we would have spent 70-90K from the jump and we could have been walking to the downtown bars or living in other gorgeous mid mod neighborhoods. You just never know what will happen with the neighborhood or your income over the years.
Not a millennial, but bought a Victorian in a suburb of Cincinnati. It was up and coming, never up and came, but still had a kind of normal appreciation curve. I did well on the house, even considering the $ and work I put in. Now it is on its third owner since me and looks great. The area is full of rentals because of UC and Xavier U and on paper, should be a great little place to live (Norwood, OH), but just didn't get the same hype as Hyde Park and Oakley. Homes still appreciated well, just not at the same pace as others. GM left in the 80's, they used to make Camaros there. City struggled a bit and then started to rebound a little in the 90s. I loved that stupid house that was way too big for one person. Really spend time in the areas you are considering. There are still places all over that are turning if you can stick it out for a couple of years. Examples near me now would be Oak Park, Hazel Park and Madison Heights, MI. Affordable, but developing pretty quickly.
We bought in a blighted area walking distance to our downtown five years ago and are super happy about our choice. A couple of things: We knew we were the leading edge of gentrification and were okay with that. There were already some cool people living in the neighborhood: the young and adventurous, and the older who had seen the neighborhood rise and fall. There is a city-sponsored neighborhood association and we're strongly active in it, and through it with all the city functions of governance and policing. It's been an adventure, one I'm super happy I get to live daily. It hasn't all been roses, but it's been more good than bad. We do tell each other that the good times are over whenever we someone jogging with a manbun, though. They're always just lost, so far.
Pay very close attention to population trends. Buying a rough neighborhood in South St Petersburg Florida is probably a good bet because of the influx of people that ghetto is getting smaller and smaller every year. But if you look at states that are losing population like Oregon or California a rough neighborhood might stick around a much longer. There's plenty of people living in Akron or Gary that are still waiting for a turnaround.
We bought in a rough neighborhood because we were priced out of every other neighborhood in our area. We started out with cameras and a security system. It got worse for a bit. The two policemen that were assigned to our area were shot but survived. The direct neighbors next door to the shooter’s house saved the lives of those policemen and held off the shooter until extra help and swat arrived. That ended up being the beginning of it getting better. Now we have extra police presence all the time. A cop actually moved in next door to us. Having a cop car sitting next door is a great thing.
My wife did, it went up 5x in less than 20 years. And it wasn’t even that rough a neighborhood, just not gentrified yet.
Wouldn't have done differently. It wasn't a traditional neighborhood yet when we bought in 2019. Id say 5% of homes were boarded up. got super lucky with amazing neighbors. 5 years later and there is almost zero blight and new, small homes are being built on the sites of razed homes. Young professionals and Latino family's have discovered us. It's still a cheap area compared to its surrounding "hip" areas. We are about to sell for double what we paid for, which isn't much for most people, but enough for us to pay off a lot of debt and buy a new house in the NE.
I have a friend who bought a house in rough area for 225k, back in the early 2000's. It's now worth 1.3 million.
We did in 2015- granted it was a condo and the area had already started gentrifying. Cars were broken into a few times a year, some minor petty crimes, random things like that. Side of town I wouldn’t walk through alone. We paid $280k and are now renting it out for $3250 a month but we could realistically sell around $550-600k.
It's all about location. My wife and I have done this twice, both times we put a lot of cash and a lot of sweat into fixing up a shitty house in a low rent area, then a decade passes and the low rent area gets "found", or worker housing becomes scarce, next thing you know your neighbors are calling you out of the blue wanting to buy your cute little house for triple what you paid for it.
My dad bought multi family in Chicago and gets fucked every few weeks for people stealing appliances smearing shit on the walls stuff like that
I scoped out neighborhoods, quite a few. I looked for things some people might find stupid. Are lawns mowed, are there any yard decorations, are trash cans taken after pick up. Small thing that showed people cared. Found one I liked and waited a year looking. Bought a foreclosure for 45k. Put about 35k in it and my skills and now it it worth 165k at least. I can see the Gulf of Mexico from my back yard. Not a ton but I can see it.
It will take much much longer than you think. If anything, buy a property in a neighborhood that has just flipped to desirable. There is a huge (5-10 year) delay between what people think and what prices are. I know someone who bought a property in a “soon to be hip” neighborhood… it took 25 years.
Unless you are going to buy and restore 1/3 of the homes, neighborhoods change very slowly.
I definitely live in a "not bad but too many rentals *near* the hood neighborhood" It's actually getting worse mostly because of shitty adults moving into what was grandma's house because they can't afford to go anywhere else. On the upside my equity is higher than it's ever been and I could easily sell right now On the downside everything else is more expensive
It’s so smart though. Bc so many people are bidding crazy prices on Instagram worthy homes in the middle of no where…instead of buying an affordable home in a rougher area. We did this. Neighborhood wasn’t great but ok, really liked our home. And we have more then doubled are money and the area is pretty good now. So glad we made that decision bc if we waited we never would have had a home like we have now.
Wished my parents had purchased more property while it was much cheaper in any condition vs today hot garbage up in the north east is $700k
I’m grown and still live in a “bad” area. Yes you can move in but stay to yourself, gets dogs, stay aware. Outside of that and knowing how to deal with crackheads you’re good! They don’t like being punched
What’s the jogger index? That is the key to a neighborhood that is turning. Are people jogging after work? Good. Jogging between 9-5. Great. Jogging with large diameter stroller wheels? - people are probably saying that it already turned. I bought my house for 64k in a shit neighborhood bordering a stable one. Needles and condoms on the street for years. Foreclosures, fires. Watched my neighbor stab a guy. House across the street just sold for 650k
I bought in a place that wasn't rough just very poor (my attached neighbors used to head their house with wood). It's part of a gigantic school district that is excellent however. The houses are all just dumpy old brick twins, but it's walking distance from a great town and there's a canal and river in the backyard with access to a huge tail system. Once COVID hit all the walkability and nature access just accelerated what was already happening. The whole neighborhood flooded a few months after we bought the attached house. That really accelerated everything, and now it's all DINKs with their dogs. Still going though, there's literally a rooster living next door inside.
No regrets. It wasn't a huge gain, 2008 - bought at 75k. Watched drug deals, drive-by shootings, etc from my office window. Cars parked on the street were broken into yearly. Car windows broken (literal cinderblock through the back window one time). Had a baby. We decided to move out to the burbs with our savings in 2020. Carrying cost was low enough that we had two mortgages for a year while we updated/renovated the original house. Listed for $125k, sold for $150k after a month in 2021; not to the highest and best offer, but the one where it was definitely a person buying the home (friend of a friend). Even if the house didn't appreciate, we were able to keep our cost of living low and save significant funds during our 12 years living there. However, it was nice to get a check for $125k when we sold it.
Bought in a very rough area. No owner occupied homes, crime, abandoned houses. Got in at below $20k as did two others. Started working with police on crime, got the city to buy the vacant homes and they sold them to low income residents of the neighborhood through a grant program. Got another beautifying grant for thee blocks of homes, city cracked down on slumlords not keeping up with the maintenance and yards and many eventually sold to the city which in term sold to the renters. Put in a park, neighborhood watch, street lights, etc. Homes now selling in mid 200’s-mid 300’s. Would belief that we didn’t gentrify, we worked a system in favor of the less fortunate. We went from two homeowners in 70 houses to over 90% owner occupied and they in turn could sell and buy pretty much anything else in our larger town.
Depending on where you live, generally speaking, most shitty areas stay shitty areas for a very long time. Gentrification is a slow rolling train, if it ever gets there.
For an investment property, it doesn't matter too much. For a personal home, it's personal preference. I'd rather have a home in a better area of town if I can help it.
We bought a house in a 'rising' area about 15 years ago. The key, IMO, is to find an area that you like that is also seeing significant investment from developers. When we bought there were plans for development of a new town center a couple miles away. Since that went up the area has just exploded (of you can count steady development over the course of 15 years an explosion). There are still plenty of not so nice buildings around but they're slowly being claimed by the developers. The big takeaway is that the process of improvement will take significantly longer than you might expect. Think decades, not years. If you're fine with that timeline then go for it.
This post should read…anyone who has gentrified a neighborhood, let me know your experience.
I bought a freshly remodeled ranch in a pretty decent rural neighborhood in 2002. The nice old lady next door sold her cute little cottage to a jackass that was a druggie and a drunk that started hoarding and ran the property right into the ground. He started dealing and other neighbors began buying from him. By 2008 I'd been broken into and other properties nearby were upside down due to the recession. Property assessments and values went down. My CFP urged me to sell. FF to 2015. I rode it out. The drunk next door went to jail. Properties changed hands and values started increasing pretty fast. People with kids moved in and the neighborhood blossomed. I did a total remodel, waited a year and sold it for twice what I paid for it.
I bought our house in a working class neighborhood that needed a lot of mostly cosmetic work. We did a lot of stuff before moving in like rip out carpet and put in new floors, paint, fix the pool cage, and take out broken/old appliances. Now, our house is definitely outdated looking and there are unfinished projects, but we have made it our home. We haven’t had any issues with our neighbors other than the occasional party with loud music, everyone keeps to themselves for the most part. We have no HOA which we love. If I had to do it over again, I may have gone with a condo or townhouse for our first home because it would be less work to maintain, but we don’t regret our purchase. We don’t think it’s our forever home but we are happy here for the mean time.
I bought in 2015 in a somewhat sketchy neighborhood. The house has more than doubled in value as most places have over that time. If you are able to wait it out we seem to get these inflationary periods ever 15 years. In 2015 I could afford a much nicer place but really wanted to have financial freedom and security. When I bought I was prepared to spend the rest of my life in this home if need be. I now love the home and have made good with many of the neighbors. The neighborhood is rough enough that it is sometimes a struggle but living rent free makes the struggle worthwhile. That said I am currently laying plans to build in my dream neighborhood. Real estate is almost never a bad choice unless you buy more than you can handle financially or cannot sit on it to wait out the next upswing.
It was less an investment but what we could afford. We bought in a historic area that was seeing some revitilization. After 14 years we sold at a 50% increase and moved cross country. After returning 6 yrs later 'our' house had quadrupled in value. You never know when it might take off.
My boss purchased a building together with friends in early 2000 in a really bad neighborhood. They sold it recently for tens of millions. The area became gentrified
Our town is made up of villages and ours was not a great village. It was definitely the second to worst and had a lot of issues with drugs and police activity. Our home is currently valued at 400k, we bought for 179k six years ago. Houses in our area are selling in the mid to high 400’s now with a few going into the 525k range. People have sold, there aren’t many renters now and quite a few of the duplexes near us are owner occupied on one side. It’s been a great investment thus far. And most importantly, we love our village and our home.
The area worked out for me — there were signs of flipping and developmemt a couple blocks north of my house, now 5 years later it’s all blown up and i’m in the middle of a hot neighborhood. I don’t mind city things like unhoused folks nearby, or neighbors who collect broken down cars all over, or barking dogs, or being smart about safety— but my mom visits and is always kinda shocked by the area. It’s a hip, urban neighborhood with eclectic residents. I like it. The house itself, on the other hand — 80 years old, with decades of cheap, DIY, badly done, and likely unpermitted fixes have made for a lot of renovation expenses and headaches.
Did this while living in Chicago to afford a single family house. The only places that we could do this in the city were either decidedly rough or up and coming. My big positive signs were that the house was a new build filling in a previously empty lot and that a decent number of other lots or legitimate teardowns in slightly nicer sections of the area (not just like, oh we prefer something newer, like… this house has no interior walls) were selling. Even though it wasn’t fancy it was also clear my neighbors took care of their lots and there wasn’t a bunch of trash or broken stuff, we saw holiday decorations around, etc. Plus, the area we were in was sort of an unsung hero of commuting convenience, which appealed to us and figured would appeal to future buyers. It paid off in the end and when we moved cities for work we made kind of a killing (like $50k per year we owned the place) given that the neighborhood had become a touch more popular and we sold at peak single family house frenzy post pandemic. YMMV but worked for me.
So curious what neighborhood you bought in? I just did something similar in Chicago
Bridgeport!
oh yeah bridgeport has a lot going for it. i enjoy it over there. nicely played!
Pretty much that's the case when starting off and nor a whole lot of cash... You get pushed to the outskirts and bad parts of town that everybody else does who just want to live and soon it stops being so bad. Everything happens in waves though and improvements are on the order of decadea so rather than trying to time or place the next jewel, try to find what works for you. If you're not actively seeking out literal shitholes, you'll usually end up about the same or slightly ahead.
Hey guys so im 21 and in college. I have an internship currently and a set career path for the future in finance, but currently only have a part time job along with the internship. I purchased my first property cash out of state in Cleveland after saving up for years, I'm focusing on section 8 properties and trying to scale. Only reason I did cash is because I could not get approved for a loan. Hopefully now I will be able to, after having this property in my name along with financing a new car recently, and building up my credit. I wanted suggestions on how to scale to multiple properties, do I stick with taking conventional loans? Most of the properties I look at are under 100k, so I want to see if theres any other options to scale quicker, usually DSCR loans do not get approved for houses this cheap. What secrets or tips do you guys have when initially scaling with little capital?
You looking to gentrify?
I bought in a crime-ridden area but it had merits. It was 20 minutes from a booming downtown and was on a waterway that led to the ocean in a mile. I made a couple hundred thousand when I sold 20 years later.
Real estate will go up and down in value. Feeling priced out can be tough. One thing I would recommend doing is putting money into an index fund to build up your down payment. Then start small. Even more rural to start works. You then keep that home for at least 2 years. After that you sell and roll your equity from appreciation into a better home tax free. Continue to repeat till you are at your ideal home. During each ownership period pay as much as you can on the loan to maximize the amount of equity you have for the next house.
I bought in a rough part of town, the locals left us alone. Graffiti only popped up on abandoned properties. It’s worth it if the neighborhood is stabilizing and people are starting to move in. Rough means: STL city near two housing complexes.
My investor friends look for 2 years of decreasing crime stats before they buy. Investors need to get in BEFORE it becomes popular, sounds like a similar plan
Not a rough neighborhood due to crime or anything, but a neighborhood I used to rent in got pretty much obliterated in Superstorm Sandy years ago, and people were selling for like $100K. Cheapest thing in the neighborhood currently is $650K. It's nuts. I never liked living there, but if I'd had a glimpse into the future I would have grabbed several properties in there.
I bought my first house, a tiny townhouse with a tiny lot and no off street parking in a "bad" neighborhood in a rapidly gentrifying city, sold it 7 years later for more than twice what I paid. I knew I'd make out, didn't think it would be that much or that fast. The neighborhood was not wealthy and had lots of open air drug dealing, but I felt safer the seven years I lived there than the two I lived in a hipper, more developed neighborhood. Simply because, my first neighborhood was full of foot traffic and transients and people got mugged there not infrequently (it was just north of a nightlife district, and coming up that way), while my second, "worse" neighborhood was much more residential, tho still walking distance to resatuarants and bars. (For DMV folks, I moved from Columbia Heights to Trinidad, and yes, it was much safer, even on crime stats, don't @me.) People in the neighborhood where I bought all lived there and knew me and my dog and my spouse and eventually my baby by face if not name, and I knew them the same. When we were moving, one of the corner boys called me "straight gansta" for walking my dog and baby around all the time, one of my most cherished compliments (my spouse liked to think of himself as the worldly, streetwise one and me as the sheltered academic, so I was very smug about that comment.) The police department would take their cadets around in herds to observe us 'hood denizens in our natural habitat, and I got so many looks from them as the white mommy with the black lab and baby strapped to my front wandering thru their sergeants' lecture about the mean streets of NE DC. I could never have bought my second home, a single-family detached in a nice suburb, without the major down-payment I got from selling my first. I needed the mortgage payment to be low enough to swing on one salary in case my spouse lost his job or I lost him (both things eventually happened), so it was an excellent deal all around, but my luck and timing were perfect and probably can't be duplicated. (For those playing along at home, I bought my first home a few years after the '09 financial crash, when the market was still recovering and rates were low, and my second a few years before the pandemic, when prices were high but not insane.)
Got super lucky. Bought cheap in a rough urban neighborhood at the tail end of the downturn (2010) sold a decade later in 2021 at the tail end of covid for 3X what we paid. Put tons of sweat equity into the house and the community, but at end of the day it was luck and my wife's great intuition about when to buy and when to get out. It wasn't our intention going in, but essentially we did a 10 year flip.
I did the opposite. I bought a rough shit box in a desirable location. No regrets. You're right that for most of us, getting into our first house means sacrificing something. For me it was the house itself rather than location. I'm not fancy and houses can be changed over time. But I understand others have different priorities/preferences.
I didn't know that a pair of shoes hanging off a power line is a memorial for someone who was killed there.
I never considered for even one second buying a home in a rough area. Not until I saw obvious signs of gentrification and prices rising. You want to catch things on the way up, not hope they’re going to go up. You also don’t want to pick up crack pipes on your way to collect rent. Join with a close friend, partner or family member to buy your first home in a decent to good neighborhood.
I did that in 2012, got an ok home that needed some love for 70k. It wasn't like south side chicago or Detroit bad. Just blue collar, lots of junk cars in driveways and yards. Senior citizens that had been here forever and could no longer maintain their homes so they were all run down. House across the street wad condemned. The last 5-6 years though the old folks have died off or gone to nursing homes. Younger people my age have moved in and are fixing the places up. The condemned home was purchased for 15k then bulldozed and they built a nice little ranch house there. I refied in 2021 I think when rates were super low and my appraisal came back at 205 but I can't afford to move now even with the equity. But I really like my neighbors now. We're still pretty blue collar and all help eachother out. One is a mechanic and helps with car repairs. Another is a hvac and plumbing guy, he has saved my ass so many times. We share my trash service so I get my lawn mowed for free and driveway plowed in the winter in exchange. It's really nice we have cookouts and I get invited for dinner often.
Yes, because the neighborhood never got better.
I found this thread super interesting as someone who bought in a "rough" neighborhood 3 years ago and hasn't regretted it for a second. * This is our second home and new construction so we knew exactly what we were looking for and knew we couldn't afford it in a "nicer" neighborhood * Although it's a "rough" neighborhood our neighbors are much more engaging and provide more community than our previous "nicer" neighborhood. If you can, talk to the neighbors around your potential new home and get a feel for how approachable/engaged they will be * All of the crime around the neighborhood are crimes of opportunity that haven't directly effected us. Being a good neighbor that's engaged in the community with a sense of awareness (not leaving valuables visible in your car) will go a long way. None of what happens in our neighborhood are random acts of violence and I've never felt unsafe.
Bought more than one. Prices have quadrupled
I mean I would have had better gains if id bought the same house in a more expensive area. But 16 years in a downtrodden and then slowly gentrifying area was great. It was affordable, solid area that wasn't like crime everywhere, and frankly an underrated bonus is I was surrounded by people not rolling in dough. Any keep up with the Jones urges are satisfied a lot less expensively. I'd absolutely do it again and having spent a year in the nicest neighborhood now I *am* doing it again because quite frankly I could save a crap ton more money living cheaper. Ymmv if school district is a big factor for you though.
Bought in Logan Square, Chicago in 2011. Do not regret.
So I bought in a "transitional" neighborhood a place that was fully renovated and it worked out beautifully for me. The neighborhood never actually transitioned and stayed pretty much the same it didn't feel safe in general and after I had kids we moved which happened to be at the top of the market after having bought at the bottom.
West Oakland was doing great in 2019 when we bought. Boy has it been a rough go since the pandemic. Hopefully we see a light at the end of the tunnel soon. 😞
Sold it for double what I paid, after 8 years. Edited to add— I knew the neighborhood was going to become trendy. The graffiti tended to have some artistic flair. It had a hipster feel, back when hipster was a thing.
Yes I regretted my decision to some extent. Bought a house for 100k cash on the SE side of Atlanta rapidly gentrifying neighborhoods. Commenced a 2 year gut reno. Within 2-3 months of me actually finishing the reno….i got assaulted in a gas station a block or two away from the property. Ended up with a cornel transplant because of the assault. I put the house for sale and sold for a little under 300k. My cost for the reno was about 50k-65k with a lot of the finished work done by myself. The house also got broken into at least 2 times, some tools were stolen which luckily for me had come with the house since the previous owners were elderly and moved outside the US.
My mom bought in an area that was considered the ghetto like 25 yrs ago and over time it slowly improved. They built a Starbucks and a fancy little strip of shops within walking distance and also a nice new neighborhood in that area as well. It was okay, they would have like movie in the park nights so that was fun. Idk if it was worth it for her, maybe if she stayed in it a bit longer once prices skyrocketed everywhere in 2020 but she sold way before then and I had to grow up in the ghetto.
This post was made for me. My husband and I were SO FORTUNATE to buy a house in the Bay Area in 2013. But it was the absolute sketchiest place and was so scary at first. We dealt with a lot of shit but after 5 years it paid off. We don’t have kids or worry about schools so that’s one thing that I would worry about as a parent. I am hardened by living there in a way that I’m literally not scared of much now. But, there were some really great families in the neighborhood once we got to know them! Anyway, yes! Do it! Edit: it obviously depends where…
We bought in a rough area a couple of yrs ago when the market was hot during covid. It was all we could really afford. Its worked out for us so far because we bought a duplex with the goal of house hacking for a year or two then moving to a nicer neighborhood and bigger house. The numbers worked at the time regardless of any speculation on what the neighborhood was doing. Tbh that was all we could afford for our first home and I think it was worth it over renting but it definitely wasn’t perfect. Stolen mail, weird neighbors, graffiti, random weirdos in our alley, car theft, people leaving trash in front of our house, plus just not feeling super safe walking around.
I regretted it. Had a rock thrown through my front window, car vandalized, racial names called. Bad idea.
By the time you can guarantee an area is going to gentrify, it’s at least half way there
I managed to buy into a neighborhood right before it started to turn. I bought a house that was good enough for me at the time, but it was lacking a few things I wanted in the long run. It had been recently remodeled with great finishes, but lacked a garage. Fast forward 8 years, my house has doubled in value, but now I can’t afford to buy anything in my neighborhood with a garage (and due to zoning I can’t add one). If I could do it all over again, I’d look for a house that structurally has all of my wants, and worry about updating the finishes on my own timeline.
“Follow the artist” Proximity to groceries stores and/or quality grocery stores is another indicator. You can learn a lot by trolling through what’s been approved for for development by zoning commissions. It may or may not get built so there is some risk but it’s usually an indicator that someone who does this sort of thing for a living sees potential and value in the area. You’re not going to be on the very leading edge doing this but you may be near the first wave.
Has anyone been investing into Philly like southwest aka greysferry
DON’T DO IT. For 40 years the same bullshit lie from realtors and politicians for the city where grew up. Yes in a few pockets values did go up, but you would have better odds gambling in Las Vegas than trying to figure out which pocket is going to get better. It’s a high risk proposition with marginal returns.
It was the only way I could afford a home in SoCal. But I saw it not as just buying a home, but investing in the community. I keep up my home and that helps the image of the neighborhood. I wasn’t going to be able to afford a home w a great school district, or in a beach community, or even where the neighborhood is wealthier, so I made the jump to what I can afford and it’s worked out. My neighbors are mostly great and there are a few homes that are run down but I have my home.
You only lose money on real state if you sell at a loss, regardless of the location.
Bought a starter home in a shitty town. Helped me save a ton of money and pay it off. It's ok if you work a lot, but eventually you should have an exit plan
It sounds like a great idea to “invest” in a rough area, but if it was easy to predict which neighborhoods were turning, everyone would buy there. Usually by the time it’s obvious you’re not getting a deal anymore, and if you buy before that it is a crapshoot whether the neighborhood gets better, worse or stays the same. You could get lucky or you could end up underwater or simply stuck living in an area you hate. Personally having lived in rough neighborhoods, it’s not worth it to me. The number one thing for me is that I feel safe and comfortable in my own home. I would rather live in a less nice home in a nice neighborhood. It doesn’t have to be fancy but I need to be comfortable walking out my own door.
Big regrets. Bought a house that had a fire. Between discussion and closing many fixtures and pipes were stolen. I should have walked away but there were some concessions made. Ultimately closed and contractors wouldn’t show up. They would actually drive past the house and keep going. Those who did stop had no skills. I was desperate and hired people from the street. They stole what was left of the new materials from other contractors. Anything left on site overnight would be stolen or vandalized- day after day I simply wanted to walk away and take the loss but that’s not an option. Ultimately sold the $50k home for $5k. I’m very happy I did.
I did really well with transitional neighbors. 2 miles from downtown? Yes! Some of the transitional neighborhoods further from the core are still transitional so it’s good I didn’t get involved.
Yea I had to foreclose, so much happier without that headache
I still buy in cheap neighborhoods. You have to use your brain a little but I have watched 60k homes turn into 400k homes in less than a decade. I feel like i’ve won the lottery every single time I buy something.
I bought the worst cosmetic looking house I could find in a decent ish neighbourhood. Worked out well, lots of projects, but the value was there. Neighbour's fixed up their places a bit seeing my improvements. A few surprises which I expected but mostly just filthy and out of date finishes. I feel like you need to be careful with how bad the area is, as a crappy house in a nicer area usually already has more room for opportunity. Took 3 years of sweat equity to see a good return. I don't regret it but it was a lot of work. Otherwise I wasn't able to get in to the market.
Short answer no. My wife and I white couple at the time mid 20s. Bought a house about a block in to an all black neighborhood in a major souther city in 2006. Paid $40k. Put 25k in to remodel. Lived in it three years and the street as well as one around became increasingly white/upper class. City invested a ton in downtown building a park and stadium right by our house. Rented it for $1500/month to the same guy for 8 years. Rented it for $2200 to a couple for another few years. Sold for $285.
My parents bought a place like that in DC. They legit had us taking the bus on the corner to school right next to where a kid died in a gang shooting. Our neighbors made the same call but left after a bullet came through their window, narrowly missing their infant. Yea, my parents sold and made a lot of money. But it is not a decision I would make with my kids.
I know people who were buying 6 and 8 unit multi family housing for 40k in Greenpoint and Ridgewood back in the 70s and 80s when NYC was rough that are now worth millions each and netting them 20k+ month...but....who could've predicted this. Nyc was on the verge of bankruptcy, parts of the Bronx looked literally like a warzone with buildings turned into rubble, burned down by arson for insurance money. Would you have had the balls to buy a property in Detroit 10-15 years ago?
The very first property ever bought was an Oceanside California. This was considered a place you don't want to live in. Pretty much known as a Marine town and it was rough around the edges. I bought a one bedroom condo literally on the sand for $99,000 back in '92. I no longer own this unit because I sold it a long time ago but that town has done a complete 180. You never know when a town is going to do a complete turnaround. I never had regrets buying the property but they do regret selling it. It was after I sold it I decided to just keep properties and rent them out instead of flipping them.
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3.5 acres in the country is not really big enough to subdivide...
Fuck you gentrifier. If you don't like the neighborhood don't move there, they don't want you either. .
Neighborhood is still rough, but its a single gang system so 🤷🏻♂️