Real Estate Investing – Buying in a Bad Neighborhood

Real Estate Investing – Buying in a Bad Neighborhood

Most people are always looking to buy property in a “nice” area or neighborhood. Of course if makes sense to want a nice house in an enjoyable and safe area. There are however a few benefits of buying real estate in the bad part of town or in the slumps of a city. I have listed some of the benefit below:

oYou don’t have to worry about the area going bad because it is already a “bad” part of town. What goes up must come down and that which has hit rock bottom can only be improved. What is important to remember is that the price of a property resembles the condition of that property. Buying in a bad part of town may be a good idea.

oA big difference between a property in a good area and a bad area are the tenants. Tenants in a bad area seem to be more long term. There also seem to be more demand for rentals in a bad neighborhood. People who are renting in a good neighborhood are usually there while looking for a place to buy.

oYou can easily be a “brilliant” landlord. Landlords in bad areas are usually not very good with things like maintenance on their property. You can therefore easily provide better service and charge more for it.

oIn a bad area you can always propose that your property will improve the area and may therefore be able to get different zoning. This is very difficult in a good area.

oIt is possible to increase your purchases. The lower cost definitely makes it possible to buy multiple properties where you would otherwise only buy one.

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oReal estate in tough neighborhoods is more resistant when the market falls, like during a recession.

It is not to say that you shouldn’t buy in good neighborhoods. But it’s always good to know what your options are. Good opportunities present themselves in good and bad neighborhoods. Plus it’s always a good idea to look for opportunities where most people aren’t.