Array Management Group

Posts Tagged ‘low income neighborhoods’

Buying real estate in low income neighborhoods can be beneficial to investors as they can provide high yields for a low initial investment amount.  So lets say you’ve found a property in a low income neighborhood and as a result of due diligence you realize the property is in excellent condition and will bring positive cash flow. Now the question is: Should I buy it?

Before you do, consider these tips and determine whether or not they apply to your potential investment property.

This article is not about how to find deals in today’s market. Anyone with a pulse can find an undervalued property in this current real estate environment. This section outlines guidelines and potential warning signs when purchasing real estate in low income areas.

1. Invest in areas that are in close proximity to schools, shopping centers, and highways.

2.  As a general rule, don’t purchase property with a fire damaged home as a neighbor. Fire damaged homes are  usually slow to sell in this economy due to the large inventory of foreclosures and bank owned properties on the market.  Because cities are strapped for cash, these properties probably won’t be torn down anytime soon.

 3. Too many vacant properties on a block are also a red flag. In this market its hard to avoid vacancies even if the best neighborhoods but try to stay away from situations where vacancies equal occupied homes on a single block.

4. WATCH OUT FOR TRAP HOUSES – A “trap” house is a slang term for a house that has illegal activities. These types of properties can be identified by high traffic volumes in and out of the properties. Trust your gut when looking out for these types of properties. If the area you invest in has lower traffic and a nice mixture of home owners verses renters, you shouldn’t have a problem with trap houses. People who do illegal activities generally don’t target areas where neighbors have pride of ownership.