Investing 101: 3 Reasons Why I Buy In Less Than Great Neighborhoods and You Should Too!
You've probably heard over and over again to stay away from “The Hood” when it comes to real estate investing because it's considered a very risky investment. Well, I'm here to tell you that "YES" it is considered a “riskier” investment but compared to other forms of real estate investing its marginally so. The key is to learn ways to mitigate the risk and enjoy the steady cash flow. Here are 3 reasons why you SHOULD buy in the hood.
-Lower Purchase Price-
In comparison to the rest of the local market, “Hood” properties are relatively cheaper because of a number of reasons these include; crime rate, school district performance, and surrounding property upkeep. The key is to find a “Hood” property that is in an area that is beginning to change. This process is referred to as “Gentrification” which is the process of renovating and improving a house or district so that it conforms to middle-class taste. I personally buy my properties at 60% of ARV (after renovation value ) minus the repairs. After fixing up the property I rent it out and enjoy a pretty nice monthly income.
-Section 8 or Government Assistance-
When it comes to investing in “Hood” properties government assistance is a must. After renovating my property I want to make sure that steady rent is coming in. The best way to ensure this is to have the government pay the tenant's rent every month. Every 1st of the month like clockwork, I can expect a rent check to be deposited. No need to hassle the tenant for rent every month unless they have a portion to pay themselves. Government assistance programs will pay anywhere from 40% to 100% of all living expenses.
-Lower Vacancy-
Another benefit of renting in lower socioeconomic is the low vacancy of your property. I've heard of tenants living in the same property for decades, and when they move out, there are several more potential tenants waiting to find housing. Unfortunately, due to our affordable housing crisis, there are hundreds of families receiving government assistance looking for housing. This provides a steady tenant pool for landlords to tap into.
Those are my "3 Reasons Why I Buy in the Hood and You Should Too". If you're looking for your next great deal you need affordable skip traces visit us at skiptracewizard.com or visit our parter company Threefiveholdingsllc.com and check out their inventory.