Aug 17, 2009
The Benefits of Buying Real Estate in a Bad Neighborhood
When people call me, typically one of the first requests they make is for a house in a “nice” neighborhood. And this makes sense to want a neighborhood that is safe and enjoyable. But there are some benefits to buying real estate in the rough part of town or on the wrong side of the tracks. This article highlights some of them.
- There is less worry of your neighborhood going downhill because it is already downhill. Good neighborhoods can get bad and bad neighborhoods can get better. Since the price usually reflects the current condition, buying in a neighborhood that has room for improvement might be a good idea.
- If you are buying a rental, you usually get better cash flow in rough neighborhoods. If you are renting your property, there are more renters and they are more long term. It’s difficult to rent in good neighborhoods because fewer people are looking to rent and those who do are generally there short term while they look for a house to buy.
- You can look better in comparison to other landlords. Landlords in rough areas frequently don’t maintain their properties as well as people in nice areas. Therefore, if you maintain your properties, you can blow away your competition, and charge more for it.
- If you are in a rough neighborhood, you can propose that your property change will improve the neighborhood and you have a better chance of getting a different zoning. Conversely, if you are in a good neighborhood, it’s hard to make the same argument.
- You can buy more property. If you want to spend 500k, you can either buy one house in an upscale neighborhood or six or seven houses in a rougher neighborhood.
- They’re more recession proof. When the economy goes south, real estate in rough neighborhoods is less affected.
In summary, I am not saying you have to buy in a bad neighborhood. But simply that if you are looking for long term investments sometimes its a good idea to wander over the tracks and look around a bit.
Watch the video related to real estate investment
Introduction to www.thepowertobefree.com Michigan Based Commercial Real Estate Investment Club. Darrick Scruggs – one of the founders of The Power To Be Free , the real estate investor with over 10 years of experience in investing in SFH and apartment buildings gives a brief introduction about himself and the club
Help answer the question about real estate investment
Are there any real estate investment courses out there that arent scams?
I am basically looking for a course, if anyone knows of one that isnt a scam, that teaches the basics of real estate investment.
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Working in Central Texas Escapeso Austin Real Estate is a small team of realty professionals. Their website provides a description of the different Austin Condos and Austin neighborhoods.
Seller’s pay the agent’s commission. So the REO company already has that figured into their price. So if you can somehow circumvent the Realtor the REO company is just keeping that commission. In other words the seller keeps the profit, not you.
Your best bet, and it is a bet since gambling is involved, is to start an investment club. This would probably be local and you could have meetings etc. Just open a bank account under the name to be used. Collect investment money and go for it.
Now an investment fund would give the idea of a mutual fund. A lot of time and red tape involved with selling stock on the market. This would also cost you the start up and leave nothing for investing.
Profits based on pre arrangments made at time of investments.
Normally 1/3 each, after costs are settled.
Profts are divded after all actual costs involved. So first, all receipts must be settled. Investor 1, and even 2 and 3 may have made payments necessary (preferrably as agreed), and will be paid off.
Investor one received quid pro quo benefits by living at the site and in turn was responsible for a degree of on site presence (such as overall supervision and being on site daily). But investor 1 is entitled to receive compensation for actual trade work at a rate prearranged to. Some people would say that investor one should not get a bigger cut, and they would be right. But investor one can file a receipt for payment of actual work (such as building something, or doing certain specific measurable jobs, like laying tile, carpentry, even painting). Cleanings, supervising, worrying, running errands, grappling with issues, and being a hero do not count as tangible work, unless pre-arranged to as the "general contractor" payment.
I'm in the same boat and looking to buy my first property as well.
I set it up as an LLC.
Sole Proprietor is generally a bad move in my opinion as it offers no protection of personal assets should something happen to that property.
If you want to send me an email through the system here, I'm more than happy to chat about what I've done, who I've talked to, and what contacts I've made.
REITs have had a great run these last several years. Be aware it may not continue. I do not know the best one. But there are some index funds of REITs. Think about investing in those. They were among the best performing REITs this year.
RWR and VNQ and IYR. Each is up about 38% ytd. Sort of a broad brush approach to picking the best. Just pick them all.
You need a team.
See if there are any real estate investment groups in your town. Google it.
Then go to yahoo groups, msn groups and google groups and search for real estate investment groups in your community.
Find out when they meet and go sit in on the meetings. Don't discuss your plans until you know who you're dealing with. You're there to learn first, network second, and do business third.
Your goal is to build your team (investors – contractors – etc)
I think you are right on starting as a corporation.
HOWEVER…as legalities vary from state to state on private investors, I think you really need to find a good small business attorney in your area, pay him a fee, and find out the in's and out's from there. A lot to consider with investors. 1) Are they going to be silent partners? Or 2) Are they going to have an equal say in how the company is run? Would be worth the fee.to find a good business attorney to lay it all out for you. Or find a book on amazon about starting a business. Once you are using someone elses' money, the company is no longer yours exclusively, unless you have a proven track record and your investors are willing to leave you in full control.
Yahoo answers is probably the wrong place for your question. It's too important.
If you really want to find your answer online try http://www.justanswer.com. This is a pay per question site where the questions are answered by verified industry professionals.
Once you have an idea of what you should do, I'd suggest confirming it with your local tax agent.