I am thinking about making my first investment in Camden NJ. This is about 22 miles from my house. I want to do this because the ARV on a duplex in good shape can be as low as 65K. Gross rents are $550-$650 per side. The gross rents compared to ARM is better than in my area. That and If I pay 70% of 65k I am paying under 50k for a duplex that grosses $1000-$1100. I would get a property manager that would be recommended and used by someone in my REI club.
Can some one give me advice form their experience in investing in non-desirable neighborhoods?
It depends on what you call “non-desirable neighborhoods”. My wife would not live in ANY of my rentals, so to her they would all be undesirable. There is very little market demand for higher prices rental houses in MOST areas (I’m not talking NYC or Hilton Head here). Therefore, depending on your standard of living, nearly all rental properties may be undesirable.
By definition, most people living in rental properties are in the lowest stratus of the population. They are typically lower-middle to lower class citizens. Don’t confuse what is desirable for you with what is desirable for a tenant. They are not the same.
The numbers that you posted are pretty good. If you could buy a $65K duplex for $50,000 and receive $550 to $650 per side, that should be a good deal.
At least in my case, there’e a HUGE difference between a neighborhood I wouldn’t live in and a “ghetto”…my judge of a neighborhood is whether it is safe for my wife to work in by herself (and she’s a liberal, so she doesn’t “pack” because the Democratic leadership told her “guns are bad”)…
There are some undesireable neighborhoods in the US. I haven’t found any I’d call a war zone. There might be the occasional drug deal gone bad or gang retaliation but no one bothers outsiders unless they leave their Rolls Royce unattended with the keys in the ignition or wear Mr. T. gold jewelry. People live in bad areas and people live in war zones (Baghdad and Fallujah). As long as you can sell or rent the property you buy for a profit, that’s a good deal. Low income tenants aren’t known for their housekeeping abilities or handyman skills so that’s always as much of a problem as you let it become. Most of your rent will come from the government so there will be less Mafia-style rent collecting needed.
I wouldn’t let a particlar neighborhood stop me from buying properties just because I would never live in it.
the numbers looks pretty good. don’t be shy about “working class” neighborhoods; there is money to be made there. Things that make me proceed with caution is 1) high percentages of homes abandon/boarded up and 2) too many “entrepreneurs” hangin’ out in front of the corner liquor store.
Remember a manager is not going to watch your property like you would your own. Since this neighborhood is a problem place, you will probably need to go there more than other places. Since you are not willing to go there and deal with the people, you may want to reconsider.
In Dallas, for example, virtually everything except for a large wedge shaped area north of downtown Dallas [probably less than 15% of the city] can be deemed the ghetto. To give you an idea, lets divide the city into 8 virtual segments…with downtown Dallas being the starting point.
Anything “North” is safe. A few parts of the “Northeast” and “Northwest” areas are also nice. Anything else can be declared the ghetto, or undesirable, with very few exceptions. Some areas are being redeveloped, some are older ‘nicer’ neighborhoods, but the vast majority of those areas are highly undesirable for the average white collar worker. Most nicer areas around this area in in the suburbs.
I live in a suburb! LOL
BUT…there is a lot of opportunity here. The ghettos are still desired by decent, lower class people…and so you can make some good rent money.
What a useless bunch of hypocrites the aclu is, and Hillary (hold on while I go throw up) :-X
I invest in “working class neighborhoods” Low income and some dont even work, they are on welfare. whatever. I dont invest in the slums which are burned out crack houses. I invest in the next section up from that. Low income housing is high profit housing with guaranteed rent checks and they rent fast. Yes there are headaches but thats part of the business. I have just as many headaches with my mortgage broker. How do you think Donald Trump got his money? From his father investing in low income housing projects. ;D