OfflineOkay, so I have done looking around for foreclosures(in NY) and I realized that most if not all foreclosures are located in a bad and poor neighborhood. So my question to you all is this, does location still matter if the deal is good? I understand that the location is built into the price of the property, but should I break out of the REI creed of "location, location, location" and buy cheap properties at a bad neighborhood?
What would you do?
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I am from N.Y. also. If its a good deal i don't think it really matters where the area is. If its a steal then i would do it. mho.
Just want to know from more people - if the deal is right, does the location really matter?
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It is important to find out the property's comps (comparable in the SAME neighborhood)! You might be surprised to find out that a $50,000 house is expensive in a bad neighborhood, whereas a $50,000 house anywhere else would be a steal! If you buy a cheap house in a bad neighborhood, how easy would it be to get renters or buyers in that neighborhood?
Also, make sure the house has no hidden problems! You may be stuck with back taxes, asbestos, etc. that could be very expensive.
Fixing up a cheap house in a bad neighborhood could be a constant headache, especially if you need to rent it out. Vandalism is more rampant.
I am curious if anyone could share a personal story. I have heard a few bad stories, but have never AND WILL NEVER buy a house in a bad neighborhood, but that's my opinion.
Dean's suggestion is to buy an "ugly house in a good neighborhood." There are lots of them in NY. Be patient.
Andrew
"Be very careful, then, how you live- not as unwise, but as wise, making the most out of every opportunity..." Apostle Paul writing to the church in Ephesus
What is a bad neighborhood?
To me a bad neighborhood is one which has huge amounts of crime, a war zone if you will.
Many, including me, have gone into an area that is below our current income level and thought the area is a bad area when in reality it may be better in crime than the area we live in.
How do we know? If I go into a new area I will call the police in the area and ask for the public relations officer. They can often give you a website to check on for statistics or they may just tell you what the statistics of a certain area are. You may be surprised how this can make a bad area a good area or a bad area a really bad area.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Yes, location absolutely does matter. First, what is your exit strategy??
It is typically some form of sale or lease.
If you were looking to buy or rent a home, would you be wanting to live in a war zone? This absolutely will affect the quality of tenant you attract (in cases of leasing). You will have more problems, more vandalism, moer turnover, more collection problems.
For sales, I would guess your sales times will be longer. Thus, your carrying costs will be higher.
I am trying to get an idea and playing around with some numbers and possibilites. I have a neighbor that is in forclosure and the balance is 277k on thier loan. I have the exact same model of home across the street and was apprasied at 410 2 months ago. Now I am not assuming they have all the improvments and upgrades , however the house itself sold at 350k sooo....I am curious if this is a potential deal and if so what I would need to do to start? I have not gotten the book yet, however dont want to pass up a deal that is literally right in front of my face.
Any thoughts
I'm new to all this but I think an Assignment would be the way to go-maybe lock up a contract with the seller for ?$250k and then try to locate an investor who will buy the property for around ?$275k (or more) and charge a finders fee to the buyer where you get the difference.........how bout the experienced people here on the site? Good Luck to you.
JER 29:11 Thoughts of Hope; thoughts of a blessed Future
If you lock it up at 250 then either the seller will have to bring cash to the close or the bank will have to take less than the mortgage (short sale).
If the value is 350 and they owe 275 then that is 78% of FMV. Not a lot in this market. I think you are looking at a short sale. If you want to take the time for that I would look at locking it up around 200.
Do I use a realator to do the lock up with the seller and the bank and tell them this is what I will offer? I am a bit confused on the actual step and parties that need to be involved in a transaction like this.
Thanks in advance for your help.
You dont need a realtor.. Does the neighbor even want to sell?? Is it listed??
If it's listed, you need to go to the neighbor's realtor who would tak your offer to the bank?
If it's not listed, you need to go to the owner and get all kinds of CYA and permission forms before the bank will even talk to you.
If the property is listed you may try this:
Give an offer with an addendum that states that you will work the short sale with the bank. You will also want to add that you shall recieve an authorization to release and you get the rights to speak with the seller.
Realtors hate this but sellers don't seem to mind to much.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Getting back to your thread that has been walked on a few times. Let me know what part of NY you are talking about, and if it is in my neck of the woods I will let you know what the areas are like. I am a firm believer in location. If I wouldn't live there, I won't invest in it.....Jan
I have purchased 3 properties in an area that I used to consider "bad"....I used to live in a very prosperous neighborhood on a golf course in a 4100 square foot home. Then came the divorce, my husbands death, the foreclosure, the Deed in Lieu of foreclosure on dirt we owned, the closing of my business, facing possible bankruptcy and losing everything I had worked so hard for....
In doing the renovations on these properties, we have made friends with all the neighbors up and down the street, have taken a man who was living on the streets (he recently got out of prison and his wife kicked him out of the house) off the streets who now does all of our labor and helps my boyfriend on the job. Today, this man learned how to use the drywall texture machine! He is now living in one of our 1 bedroom guest houses that is on one of the properties. So far, he's stopped drinking (per our requirements) and he really wants to turn his life around. We will have been a contributing factor in helping this person make a better life.
We are giving a neighbor all the wood fencing that we are tearing down - she asked us if that would be OK - I'd rather do that than throw it in the dumpster. We cut down our 70 year old next door neighbors dead tree in her front yard. She couldn't get anyone to show up to do it and she can't afford to pay someone to do it. It helped her and us! We are helping to improve the neighborhood - and have had a couple people in the neighborhood interested in purchasing one of the newly renovated properties that we will be selling. It's not that they don't have the money...they just can't purchase it the conventional way.
So, "bad neighborhood".....you tell me.