investment question

[gixxerboy1]

ok there are alot of towns and areas in the US that are doing real bad. You can literally buy a home there for under $1000. Granted they are run down or some look like they should be condemned. Some say no back bills do. (taxes, utilities)
I would think eventually these towns would have to come back in some way. So in 20 years that property would have to be worth more. The only bill you would have would be the taxes on the place.
Bad idea? Am i missing something

[Java Man]

Depends on where the property is. If its in a part of town you wouldn't walk around in during the day unarmed, it probably is a bad idea at any price. I have had opportunities to buy inner city properties for almost nothing. Basically crackhouses. I passed. if nobody will ever want that property it will never have value. In neighborhoods like that the land value is all you'd be looking at. The structures are usually destroyed and actually devalue the raw land. This is a very broad based question gixx.

[gixxerboy1]

Depends on where the property is. If its in a part of town you wouldn't walk around in during the day unarmed, it probably is a bad idea at any price. I have had opportunities to buy inner city properties for almost nothing. Basically crackhouses. I passed. if nobody will ever want that property it will never have value. In neighborhoods like that the land value is all you'd be looking at. The structures are usually destroyed and actually devalue the raw land. This is a very broad based question gixx.

just started thinking about it or looking into it. So yea i guess a broad question. I agree it would be just for the land value.
Just trying to weigh the risk of virtually no money to the chance in years it could be worth something.
look at Harlem, property is way up there. In the late 80's early 90's it was all crack houses.

[Mp859]

just started thinking about it or looking into it. So yea i guess a broad question. I agree it would be just for the land value.
Just trying to weigh the risk of virtually no money to the chance in years it could be worth something.
look at Harlem, property is way up there. In the late 80's early 90's it was all crack houses.

If there was money to be made the properties wouldn't be available.real estate investors swoop up profitable properties almost instantly. It's what they do and they know what will make them money.

The inner city real estate market doesn't fluctuate very much. It's always in the shittter.

You would be better off flipping houses in a decent area. But this requires a little bit of capitol.

[Igifuno]

Few things you should look into gixx..

Communities do have the chance to 'rebound', and you should contact the city planning commissioners office to see if you can learn about any potential or definitive plans to revitalize the community over the next 10 years and see if you can find out details surround any such revitilization efforts to help determine the future value of the asset.

Also, look into any exising or open violations that, as the owner, you would be responsible for correcting. This could end up being very costly. C and D class assets can still produce positive cash flow, but can also come along with headaches such as turnover. I'm assuming you're looking into investing and renting? Keep in mind that, with the type of asset you invest in, the same class renter will come along with it, so prepare yourself for the potential need to evict for non-payment of rent, and to cover costs for damages and rehab (paint, cleaning, appliances). Yes you can sue for losses, but bad debt recovery from C and D class renters are not highly successful.

[gixxerboy1]

Few things you should look into gixx..

Communities do have the chance to 'rebound', and you should contact the city planning commissioners office to see if you can learn about any potential or definitive plans to revitalize the community over the next 10 years and see if you can find out details surround any such revitilization efforts to help determine the future value of the asset.

Also, look into any exising or open violations that, as the owner, you would be responsible for correcting. This could end up being very costly. C and D class assets can still produce positive cash flow, but can also come along with headaches such as turnover. I'm assuming you're looking into investing and renting? Keep in mind that, with the type of asset you invest in, the same class renter will come along with it, so prepare yourself for the potential need to evict for non-payment of rent, and to cover costs for damages and rehab (paint, cleaning, appliances). Yes you can sue for losses, but bad debt recovery from C and D class renters are not highly successful.

Good idea about the planning commision
i thought about the open violations, back taxes. Some in the ads mention there are none but of course i would check before purchasing
I probably wouldnt rent. What you could get in rent probably isnt worth the headache or repairs. I was more thinking of it for the land. Purchase it and just stick the dead in a safe and wait years.

As far as the other comments about real estate investors would purchase them. I dont think many people that invest for a living are looking to hold onto something as a long term investment

[Mp859]

That is true about the long term.

[Igifuno]

there are definitely different investment strategies. short term holds are just as common as mid or long term. There are prestige investments and what's called opportunistic investments where the goal is to, in fact, capture as much 'bad' real estate as possible, particularly in a poor economy. This could be a gold mine if the community is up for revitilization in the following few years.

[Igifuno]

I happen to be a real estate Investment Manager. .lol..

[DAAS]

Areas damaged by natural disasters would be a better investment than drug and gang areas. Detroit is so bad right now idk if id buy a house for $1,000

[Igifuno]

Detroit will take a long while to rebound. Same with Vegas. Phoenix was a badly hurting market and is now recovering slowly. My company is heavily focused on that market (as well as Houston, Atlanta, Nashville). I manage real estate all over the East Coast.

[gixxerboy1]

there are definitely different investment strategies. short term holds are just as common as mid or long term. There are prestige investments and what's called opportunistic investments where the goal is to, in fact, capture as much 'bad' real estate as possible, particularly in a poor economy. This could be a gold mine if the community is up for revitilization in the following few years.

The only other concern i thought of. If you did buy a depressed property. At some point would the city make you tare the structure down? Or could you just fence off the structure? Was just trying to think of what expense i may have with a property like that in the future besides the taxes. Figure would keep the utilities off

[Igifuno]

The only other concern i thought of. If you did buy a depressed property. At some point would the city make you tare the structure down? Or could you just fence off the structure? Was just trying to think of what expense i may have with a property like that in the future besides the taxes. Figure would keep the utilities off

Legit concern.. this happens often actually. The legal term is "eminent domain". The power is derived from the 5th Amendment of the United States Constitution. ...nor shall private property be taken for public use, without just compensation.

So if that does happen, you'll be paid for the value of the asset by the government.

[gixxerboy1]

Legit concern.. this happens often actually. The legal term is "eminent domain". The power is derived from the 5th Amendment of the United States Constitution. ...nor shall private property be taken for public use, without just compensation.

So if that does happen, you'll be paid for the value of the asset by the government.

I thought that only happened if they needed the land for some public use. Like building of a road

[DAAS]

Legit concern.. this happens often actually. The legal term is "eminent domain". The power is derived from the 5th Amendment of the United States Constitution. ...nor shall private property be taken for public use, without just compensation.

So if that does happen, you'll be paid for the value of the asset by the government.

who determines that value

[Igifuno]

I thought that only happened if they needed the land for some public use. Like building of a road

correct.. so if they made you tear it down for public use, like building a through way or another means of egress, but they can also use eminent domain for condemnation. So if, for whatever reason, they decide to level an entire community becuase a high percentate is not habitable, they can take it via eminent domain and compensate owners accordingly.

[Igifuno]

who determines that value

Owners are entitled to fair market value which is the price that would be agreed upon at a voluntary sale in the open market by an owner willing to sell to a purchaser willing to buy.

In an eminent domain situation, owners are not entitled to a “bonus” price because of the forced nature of the transaction, and, likewise, owners are not required to give a “bargain” price because the government needs the property.

[gixxerboy1]

Thanks, you gave me allot of good info and more to think about.

[Igifuno]

Anytime brother.. let me know if you have any more questions about it.

[lovbyts]

The other thing to consider since it's long term is if someone decided to profit from by claiming they got hurt on your property and tries to file a claim.

I have thought about doing the same thing, holding for long term but there are a lot of risks.

[gixxerboy1]

The other thing to consider since it's long term is if someone decided to profit from by claiming they got hurt on your property and tries to file a claim.

I have thought about doing the same thing, holding for long term but there are a lot of risks.

that crossed my mind to, dont know how much it would be to carry some insurance some liability insurance

[Igifuno]

If you contact a carrier they'll ask you a ton of questions (location/purpose of property, do you live in it and/or is it rented or otherwise occupied, does it have cameras/alarm system, does it have a sprinkler system, is it in a flood zone or high crime area, etc. and then will determine the premium.

[lovbyts]

I think it's best to try to purchase an empty lot or raw land somewhere for future prospects since it would have lower risks.

[gixxerboy1]

I think it's best to try to purchase an empty lot or raw land somewhere for future prospects since it would have lower risks.

or have the structure accidentally burn down after your purchase.

[Java Man]

Lol to the above. Oops

I would worry about squatters, too, if the property is unoccupied.

[thegodfather]

One of the best ways to know if an area is going to be up and coming, is to look at where Home Depot and Lowes are building new locations..They spend millions of dollars in research to predict these things, and this information is free to you, by simply finding out where new locations are being built.

[evander87]

Hey Gix if you're thinking long term and are new to investing. Consider the market. Sure there are some pieces of real estate that their value grows rapidly but for the most part many mutual funds have out performed real estate. Now I'm not talking you out of real estate but if you're building a portfolio I'd suggest talking to a financial advisor and looking seriously at mutual funds as a good start at building your portfolio. And with any well diversified portfolio you very well could have real estate. I just wouldn't start with my serious money in land.

Also with eminent domain it's not just for roads. Local governments have used ED to force some people out of their homes to make way for private business. The reason they can get away with it is because of the increased tax revenue is better use of the land for the common good.


EDIT another thing to consider is liquidity. Sure the value of the land might go up and one day you might need the money tied up in the real estate investment. Depending on how bad you need the money you might have to sit on a sale for a long time to get the return you think you deserve. With a mutual fund you can have the money in your bank account in a few days. You can always unload mutual funds. Real estate you might not.

[Igifuno]

Hey Gix if you're thinking long term and are new to investing. Consider the market. Sure there are some pieces of real estate that their value grows rapidly but for the most part many mutual funds have out performed real estate. Now I'm not talking you out of real estate but if you're building a portfolio I'd suggest talking to a financial advisor and looking seriously at mutual funds as a good start at building your portfolio. And with any well diversified portfolio you very well could have real estate. I just wouldn't start with my serious money in land. Also with eminent domain it's not just for roads. Local governments have used ED to force some people out of their homes to make way for private business. The reason they can get away with it is because of the increased tax revenue is better use of the land for the common good. EDIT another thing to consider is liquidity. Sure the value of the land might go up and one day you might need the money tied up in the real estate investment. Depending on how bad you need the money you might have to sit on a sale for a long time to get the return you think you deserve. With a mutual fund you can have the money in your bank account in a few days. You can always unload mutual funds. Real estate you might not.

All good stuff and you're correct about eminent domain. They can commandeer assets for public housing developments as well.

[trikydik]

Here in Indy, there was a prgram where the city would basically take a crack house or other condemned property from the owner and give it to someone else as long as they tore it down or fixed it up.... It lasted for about a year and affected about 30 homes.... a drop in the bucket on the 3000 or so that are abandoned or in foreclosure.

That being said, Indy did have a program where they took a very run down section of the city, just outside center township (downtown), condemned the houses and put up 300k-1MM homes and people bought them. It really is a crap shoot. Another problem you may run into, is if the house was used to make meth, you will have to pay for that clean up.

Treat this investment like gambling at the casino... Once you spend it, its already gone. If you make a profit, fine, but don't get your hopes up.