Buying the Neighborhood
You may find a jewel of a property; no needed repairs or refurbishing, and lawn in pristine condition; the perfect investment property. Unfortunately, the lawn next door is a jungle; requiring a machete to reach the front door. The house on the other side has a garage door hanging by a prayer; and the vintage car they’ve been meaning to restore has been up on blocks in the front yard for a decade. Your potential goldmine has just dropped in value from $200,000 to $125,000; and there’s not much you can do to change the neighborhood.
Not all adverse neighborhood conditions are that obvious. It pays to drive by on a weekend; when neighbors may be outside mowing their lawns or pulling weeds. No one knows what’s going on in a neighborhood more than those who live there. Remember, you ‘re looking for neighborhood gossip. What you ‘re after is information on the possible closing of the neighborhood elementary school; the proposed big-box retailer that is scheduled to break ground at the end of the street within the year; the pending class action lawsuit against the builder for improper grading that has caused every home on the street to sink and produce huge interior cracks; or the fact, God forbid, that the property you are considering is labeled as “blighted”, because of the murder-suicide that took place there six months ago.
These are all factors that you probably won’t discover in your research of county records and number-crunching, but each one could cost you thousands, as you continue making payments on the property, while waiting for a buyer who is willing to overlook all the negatives to take the property off your hands.
You may also find, in your query , that some positive changes are planned for the neighborhood, like the area has qualified for special low-interest financing for the refurbishment you planned to do anyway. This will give you a huge advantage in the bidding process.
The Ugly Duckling
It is human nature to be attracted to beautiful things, but don’t overlook the ugliest house on the block. Remember the dream house in the nightmare neighborhood? It is a whole lot easier to fix up one house than it is to refurbish the entire neighborhood. Don’t overlook the ugliest house on the street just because of its current condition. Try to visualize what it will take to improve its appearance, and have it fit in better with the surrounding homes. You may discover that some new siding, a new garage door, and some fresh paint on the eaves and trim is all it takes to make a rundown shack look like a charming bungalow.
A good rule-of-thumb to remember in residential real estate is: The smallest, ugliest house in a nice neighborhood has better investment potential than the biggest nicest home in a rundown neighborhood.
Let Me Show You
If you want to find YOUR Ugly Duckling, I can help. I have just the ticket: the Nationwide Funding Tour. Register to attend an upcoming tuition-paid Funding Tour and immediately receive a $250,000 pre-approval letter for buying real estate investment properties!